Broker: UOB Kay Hian
Date: 30 October 2024
Thailand Economic and Corporate Insights for 2024
The Thai market, as highlighted in recent earnings reports, faces a mixed outlook as companies grapple with economic challenges, including elevated operating costs and regional uncertainties. This report delves into the performance and projections for notable Thai companies such as Home Product Center, SCGP, and Bangkok Dusit Medical Services (BDMS), detailing their strategic adjustments and the anticipated trends shaping the final quarter of 2024.
Home Product Center: Adjustments Amidst Flat Growth
Home Product Center (HMPRO), Thailand’s largest home improvement retailer, reported a stable yet unremarkable performance in 3Q24. With a slowdown in discount offerings, the company’s ability to attract a broad customer base has faced challenges, prompting a strategic downgrade.
Financial Performance
- 3Q24 Net Earnings: HMPRO’s earnings aligned with forecasts, yet growth remained flat compared to previous quarters. Limited discount pricing strategies contributed to a modest customer response.
- Investment Outlook: With minimal growth catalysts in the near term, HMPRO has been downgraded to a “HOLD” recommendation. The target price is set at Bt11.00, with an emphasis on maintaining core market segments without aggressive expansion.
SCGP: Navigating Profitability Amidst Cost Pressures
SCG Packaging (SCGP) reported a dip in 3Q24 profits, reflecting a challenging environment for Thailand’s packaging industry. The company’s profitability was impacted by rising raw material costs and competitive pressures, particularly in the ASEAN market.
Earnings Overview
- 3Q24 Profit Decrease: SCGP’s net profit fell short of expectations, with a decrease driven largely by higher-than-anticipated costs and subdued demand from core export markets.
- Outlook: Although SCGP remains a crucial player in regional packaging, recovery may require strategic adjustments to manage cost pressures effectively. A continued “HOLD” position is advised, with a target price of Bt26.00.
Bangkok Dusit Medical Services (BDMS): A Strong Quarter Amid Increased Patient Volume
Bangkok Dusit Medical Services (BDMS), Thailand’s largest private hospital network, reported record-high net profit in 3Q24. This robust performance was attributed to increased patient volume, particularly among international patients, as well as a successful recovery from operational disruptions caused by flooding in northern provinces.
3Q24 Earnings and Growth Drivers
- Record Profit: BDMS achieved a net profit of Bt4.2 billion in 3Q24, marking a year-over-year increase of 9.1% and a 27.3% quarterly rise. The uptick was driven by a strong patient volume increase during Thailand’s peak rainy season.
- Flood Recovery and Tourism Boost: Following the flooding in northern provinces, BDMS expects an upside in 4Q24 from pent-up demand as patients who had limited access during the flood return for treatment. Additionally, the high tourism season is set to further bolster international patient numbers, with travelers from China, Europe, and the Middle East representing key segments.
Strategic Initiatives and Market Positioning
- New Wellness Hub in Phuket: BDMS has also begun an innovative wellness initiative in collaboration with the Sri Panwa Hotel in Phuket. This project offers patients preventive health services combined with luxury hospitality experiences, tapping into Thailand’s growing medical tourism market. The initiative not only enhances BDMS’s service portfolio but also leverages shared resources from its existing wellness center, positioning BDMS to withstand rising competition from new entrants like Bumrungrad Hospital (BH).
ESG Commitment
- Environmental, Social, and Governance (ESG) Focus: BDMS maintains high standards in energy efficiency, waste management, and ethical governance, earning it an AA SET ESG rating. This commitment reflects BDMS’s dedication to sustainable growth and community engagement, essential in the evolving healthcare landscape.
Valuation and Recommendation
With resilient growth across Thai and international patient segments and a diversified expansion strategy, BDMS retains a “BUY” recommendation with a target price of Bt32.00. The valuation is based on an 18.0x EV/EBITDA multiple, excluding COVID-19 years, highlighting BDMS’s long-term investment appeal amid solid growth projections.
