DBS Vickers Recommends 3 Best Hospital Stocks to Buy This Week

The SET Index is expected to move between 1,530 and 1,610 points this week (May 10-14), according to DBS Vickers Securities (DBSVS). As shown by a strong turnaround in the Purchasing Managers’ Index (PMI) of China, Europe, and the United States in April, the global economy is improving.

Fears about the Fed’s QE cut and raise interest rates rapidly have been alleviated in the short term after the United States’ non-farm employment increased by just 266,0000 jobs in April, compared to a market forecast of 1 million jobs, while the unemployment rate remained at 6.1%.  

The Colonial Pipeline hack attack in the United States is expected to boost refinery stocks in the near term.

Apart from foreign influences, the SET Index this week will be driven by the delivery of the Covid-19 vaccine. Furthermore, the government has prepared to seek more vaccines and has authorized the private sector to import them.

New stimulus packages to boost public spendings, such as loan payment holidays for retail and SMEs, are also important catalysts for the Thai stock market.

Hence, DBS Vickers Securities (DBSVS) has listed the 3 best stocks to buy this week.

 

BCH : “BUY” rating and target price of ฿23.00/share with 25% upside

Bangkok Chain Hospital Public Company Limited (BCH) is one of the leading Covid-19 services providers. Covid-19 testing increased from 600 per day in 4Q20 to 1,333 per day in 1Q21 and 4,000-7,000 per day in April. As a result, the total number of Covid-19 tests in 1Q21 and 2Q21 could reach 120,000 and 220,000, respectively.

With 3,300 beds, BCH has the most Hospital rooms in Bangkok. However, about 2,000 beds have been occupied so far.

BCH’s net profit is expected to increase 20% YoY and 12% QoQ to 312 million baht in 1Q21, while net profit in 2Q21 is expected to increase both QoQ and YoY. Earnings are expected to increase by 13% YoY for the full year.

 

BDMS : “BUY” rating and target price of ฿28.00/share with 29% upside

Since the share price of Bangkok Dusit Medical Services Public Company Limited (BDMS) is decreasing, DBSVS believes it is a good time to buy. 1Q21 net profit is expected to improve QoQ but remains poor YoY, coming in at 1.34 billion baht (+9% QoQ, -48%).

Revenue will be 20% lower YoY and 12% lower QoQ in 1Q21, and the GPM will be 27.3%, down from 31.0% in 1Q20 and 28.1% in 4Q20.

Earnings are expected to increase YoY and QoQ in 2Q21 due to higher revenue from Thai patients and Covid-19 testing services. However, DBSVS has cut its operating results forecast for 2021-2022 by 9% and 8%, respectively, due to the slower-than-expected recovery of international patients and GPM.

BDMS is also likely to be exposed to 1) a slower-than-expected recovery in medical tourism, 2) a greater loss from the Wellness center, and 3) the third wave of the Covid-19 outbreak.

DBSVS concluded by recommending “BUY” as a long-term investment.

 

EKH : “BUY” rating and target price of ฿7.00/share with 9% upside

Ekachai Medical Care Public Company Limited (EKH) is a leading hospital in Samut Sakhon Province and the only one that offers in vitro fertilization (IVF). Revenue is forecast to rise 20% YoY in 2021, accompanied by higher GPM.

In 1Q22, EKH plans to open a 39-bed hospital for the elderly, and also interested in the development of cannabis for medicinal purposes.

For the years 2021-2023, net profit is forecast to increase by 41%, 23%, and 17%, respectively. The main concerns are the possibility of lower-than-expected revenue and the introduction of new competitors.