Analyst Revises Up IMH’s TP to ฿8.00 in Projection of Historic Earnings in 2Q21

Intermedical Care and Lab Hospital Public Company Limited (IMH) is expected to report historic profit and revenue in 2Q21, as the number of clients for Covid-19 tasting climbed to 50,000, up from 41,200 in the previous quarter.

Meanwhile, Prachapat Hospital, a 100-bed hospital, serves at full capacity due to its acceptance of Covid-19 patients.

Furthermore, the company benefited in the second quarter from the antibody test for Covid-19 following vaccination, which costs 550 baht per person. So far, over 1.85 million Thais have had a first vaccine dose and about 960,000 have had a second.

Also, the company earns additional revenue from Prachapat Hospital as a result of the growing number of Social Security insured persons. Prachapat sought to raise the insured number to 30,000. When combined with the admission of patients transferring from the IMH group, profit margins increase.

IMH serves both Thai and foreign workers and has a capacity to vaccinate approximately 200,000 doses per year. If the government allocates the vaccine, the company will be able to distribute the vaccine immediately via the Mobile cars.

Trinity Securities raised its profit forecast for 2021 by 9.2 percent, from 54 million to 59 million baht, due to greater gross margins on COVID-19 testing services, which have a higher gross margin than other services. Moreover, the IMH plans to grow revenue by increasing the number of hospitals in the group and by spinning off the hospital business in the future.

As a result, Trinity maintained a BUY recommendation on IMH with a new target price of 8.00 baht (previously 5.35 baht) and a DCF yield of 7.5% using the WACC-based DCF technique. IMH is currently trading at a P/E ratio of 21x, which is still lower than the medical group average. However, it is developing rapidly and has a PEG of 0.17x.