Analyst Expects IVF Business to Drive EKH’s Earnings in 2021, Recomm. “BUY” at ฿6.4

Ekachai Medical Care Public Company Limited (EKH) is expected to recover from the Covid-19 crisis this year with the key highlights to follow, including 1) the company’s revenue and earnings growth target of 20%YoY and 30%YoY, respectively, from In Vitro Fertilization (IVF) business and the return of foreign visitors in the second half of 2021.

 

2) Revenue continues to remain positive in 1Q21 due to the Covid-19 test with an average of 100 cases per day between Jan-Feb 2021, compared to an average of 500 cases per day in 4Q20 after the number of daily confirmed cases in Samut Sakhon dropped to 38 from 800.

 

3) IPD utilization rate was as high as 80% during Jan-Feb due to the resurgence of Covid-19 outbreak. 

 

Consequently, KTBST Securities (KTBST) maintained a 2021 earnings forecast of 95 million baht, a 31% increase YoY despite 1Q21 outlook could contract QoQ after gross profit margin fell to 40.4% in 4Q20 due to the Covid-19 test fee reduction from 4,500 baht to 2,500 baht.

 

For a full-year outlook, KTBST expected EKH will reap the most benefits from the return of Chinese customers. EKH has the largest IVF market share, particularly Chinese customers after China has relaxed its family planning law by reducing expenses relative to pregnancy and childbirth. KTBST had a “BUY” recommendation on EKH with a target price of ฿6.40/share.