Thailand's hospital profits may treble in Q1 on Covid, but cases could peak soon: CGS-CIMB

MOST hospitals in Thailand are set to report a year-on-year spike in Q1 financials given the recent surge in Covid-19 infections which may be ending soon, according to CGS-CIMB.

The brokerage foresees 6 hospitals’ aggregate recurring net profit to have trebled on-year in Q1 of 2022 from the previous year’s low base, and a 19 per cent drop in aggregate recurring net profit on a quarterly basis due to lower margins.

“The number of new Covid-19 cases based on reverse transcription polymerase chain reaction tests averaged 15,610 in Q1 2022, versus only 244 in Q1 2021 and 6,726 in Q4 2021. In addition, the number of new Covid-19 cases based on rapid antigen tests averaged 23,029 during Feb 25 to Mar 31, 2022,” observed analyst Kasem Prunratanamala in a report on Tuesday (Apr 19).

While he anticipates a surge of Covid-19 cases in Thailand over the Thai New Year holidays which will "bode well" for hospitals in H1, he foresees this to peak in late April after the festivities subside.

Noting that Thailand’s healthcare sector index has performed well as a risk-off option since the Russia-Ukraine crisis began, Prunratanamala believes investors may also have anticipated a jump in Covid-19 infections this month.

This is given how the sector index has risen 19 per cent versus the 1 per cent decline in the Thai composite stock market index, he said. 

CGS-CIMB has therefore downgraded its call on the Thai hospital sector to “neutral” from “overweight” previously.

Bangkok Chain Hospital remains its top sector pick as the counter is currently cheapest among its peers – although the brokerage is expecting its Covid-19 revenues to decline substantially over both this year and the next.