BCH Jumps 7%, Analyst Raises as Top Pick amid Covid-19’s 3rd Wave, Giving TP at ฿20.20

The share price of Bangkok Chain Hospital (BCH) rose ฿1.30/share or 7.34% to ฿19.00/share as of 15:55 local time in Thailand, with a trading value of 2,204 million baht. 

 

KTBST Securities (KTBST) maintained a BUY rating on BCH and a target price of ฿20.20 based on DCF (WACC of 7.1% and terminal growth of 2.5%), which is equivalent to 2021E PER of 37x. KTBST forecasted 2021E net profit to grow +24% YoY, +14% QoQ to Bt320mn in the expectations that 1) revenue from COVID-19 tests will reach 360 million baht (15% of total revenue) based on the daily tests of 120k at 3,000 baht each; and 2) gross profit margin will widen YoY, QoQ to 33.2% (32.3% in 4Q20, 30.9% in 1Q20) given benefits of economies of scale after the number of COVID-19 tests surged by twofold QoQ (47% of BCH’s COVID-19 tests in 2020).

 

BCH’s 2021E net profit forecast unchanged at 1.36 billion baht, which indicates a growth of +11% YoY. KTBST saw upside to its forecast after 1) the number of COVID-19 tests has increased to 6-7,000 per day, compared to an average of 1,340 in 1Q21E, while 2021E COVID-19 tests are estimated at 160k; and 2) expecting a new stream of revenue from COVID-19 vaccine alternatives.

 

Additionally, KTBST has recommended hospital play as daily COVID-19 confirmed cases spiked to an average of over 2,500 and the number of COVID-19 tests surged to 7,000-8,000 a day. As a consequence, revenue from the hospital sector could be higher than expectation. Top pick is BCH.