Overview: Positive Outlook for Thailand’s Healthcare Sector

Maybank Securities (Thailand) PCL maintains a POSITIVE outlook on Thailand’s healthcare sector, with Praram 9 Hospital (PR9) highlighted as the top pick. Following a successful roadshow and Thai Corporate Day in Kuala Lumpur and Singapore, investors expressed confidence in the sector’s fundamentals despite challenges like co-pay insurance policies and Middle East patient issues. Key players in the sector offer attractive valuations and robust growth potential, making it a favorable time for investment.

Bangkok Dusit Medical Services (BDMS)

Recommendation: Buy | Target Price: THB31 | Upside: 29%

Bangkok Dusit Medical Services (BDMS) attracted significant investor interest during the roadshows. The company is well-positioned to weather potential impacts from co-pay insurance policies, with management estimating a minimal 1-2% revenue impact. Key highlights include:

• Targeting long-term revenue growth of 2-3 times GDP growth, with a mix of volume and intensity-driven strategies.
• Bangkok hospitals focusing on intensity growth, while upcountry facilities prioritize volume increases.
• Price adjustments aligned with medical inflation rates at 2-3%.
• Margin improvements anticipated in 2025 thanks to revenue growth and cost controls.
• 4Q24 revenue growth in low-to-mid single digits due to a high flu outbreak base, with stronger performance expected in 1Q25.
• Expansion plans on track, with bed capacity projected to rise from 8,800 in 2024 to 9,300 by 2027, supported by a capex allocation of 8-10% of sales.
• Ambitions to grow the Social Security Office (SSO) segment, targeting 1 million registered members by 2025, up from 920,000 in 3Q24.
• Confidence in Phuket market growth, driven by increasing tourist demand.
• Progress on the Silver Wellness Project, with construction expected to commence next year and operations targeted for 2030.

BDMS remains attractively valued at 22x P/E with a dividend yield exceeding 3%, making it a compelling investment opportunity.

Bumrungrad Hospital (BH)

Recommendation: Buy | Target Price: THB250 | Upside: 28%

Bumrungrad Hospital (BH) has a strong reputation for high-quality care and international clientele. However, the company faces ongoing uncertainties related to Middle Eastern patients, which have created some overhang. Despite this, BH offers a robust valuation and steady earnings potential, appealing to investors seeking stability in healthcare investments.

Bangkok Chain Hospital (BCH)

Recommendation: Hold | Target Price: THB18.50 | Upside: 20%

Bangkok Chain Hospital (BCH) is a key player in the SSO segment. While the company has significant potential, it is currently less favored than its peer CHG due to valuation concerns and lingering issues with Kuwaiti patients. BCH maintains a steady growth outlook but is recommended as a hold for now.

Chularat Hospital (CHG)

Recommendation: Buy | Target Price: THB3.50 | Upside: 47%

Chularat Hospital (CHG) has emerged as a strong contender in the healthcare sector with double-digit revenue growth expected in 2025. Key drivers include:

• Higher SSO revenue from the RW>2 rate increase to THB12k/RW.
• Momentum from Mae Sot Hospital, which is expected to break even in specific quarters of 2025.
• Reversal of RW>2 income in 4Q24, with an estimated value of THB90 million.
• Unrecognized COVID-19 income of THB250 million, likely to be booked in 4Q24 to offset RW>2 impacts.
• Expansion of over 600 beds by 2028, representing a 10% CAGR from FY24-28.
• A strategic pivot towards high-intensity care and cash-paying patients, which offer higher margins compared to SSO patients.

Despite recent share price drops, CHG is viewed as an attractive buy, with overhang issues subsiding and robust growth expected in the coming year.

Praram 9 Hospital (PR9)

Recommendation: Buy | Target Price: THB32 | Upside: 24%

Praram 9 Hospital (PR9) continues to shine as a rising star in the healthcare sector. Investors agree on its strong earnings visibility and long-term growth potential, driven by:

• A projected +14% CAGR in FY24-26E.
• Successful entry into the Middle East market.
• Completion of its capex cycle, providing sufficient capacity for expansion.
• Strong fundamentals and robust earnings growth supporting a higher valuation.

While PR9’s smaller size and lower liquidity deter some funds, its growth trajectory and market position make it a standout investment in the sector.