FSSIA Raises BCH as Top Pick, Seeing Highest Covid-Related Revenue amid Omicron Outbreak
FSSIA believed BCH is the best pick if there is another pandemic outbreak, seeing highest Coivid-related revenue in 2Q-3Q21.
The Healthcare Service sector in the Thai stock market edged slightly lower in the morning session of December 20, 2021, as investors are looking for directions amid uncertainty of the Covid-19 omicron variant with more than 60 import cases in Thailand.
High-end hospitals like Bumrungrad Hospital Public Company Limited (SET: BH) were a top candidate to outshine social security office (SSO)-heavy stocks after the reopening in November that could potentially witness a return of medical tourists. However, the discovery of the omicron variant derailed that prospect, leaving uncertainties in the market as the official study and test results from the lab still varied from mild symptoms to deaths.
Despite the uncertainty in the market, FSS International Investment Advisory (FSSIA) believed that if there is a new wave of Omicron variant infections in Thailand, the healthcare sector would benefit the most from Covid-related services, including Covid screening tests, treatments in hospitals and hospitels and more alternative vaccination revenue.
In addition, FSSIA stated that Bangkok Chain Hospital Public Company Limited (SET: BCH) would be its best pick as it had the largest revenue contribution from Covid-related revenue during the Delta variant third wave, accounting for 56% of total revenue in 2Q21 and 71% in 3Q21. Its EBITDA margin also jumped to 42- 52% over that period, compared to 27-29% during the pre-Covid level due to the high utilisation rate. FSSIA gave a “BUY” recommendation on BCH with a target price of Bt28.50 per share.
The share price of BCH rose ฿0.40/share or 2.04% to ฿20.00/share with a trading value of 352 million baht in the morning session.
Meanwhile, Chularat Hospital Public Company Limited (SET: CHG) rose 2.21% to Bt3.70 and Vibhavadi Medical Center Public Company Limited (SET: VIBHA) gained 3.94% to Bt 2.64 per share this morning.
SET Index closed the morning session at 1,617.97 points, decreased 23.76 points or 1.45% with a trading value of 45.9 billion baht.