PRINC chairman sees bright future after stake purchase by RATCH

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Thailand’s ageing demographic and increasing health consciousness would likely propel Principal Capital (PRINC)’s private hospital business to sustainable development, with support of RATCH Group (RATCH), a power generator company, the PRINC chairman told Thai Enquirer on Thursday.

This week RATCH Group announced that it had expanded its business model into the healthcare sector by purchasing a 10-per-cent stake in a private hospital operator Principal Capital.

RATCH purchased 346.23 million newly issued ordinary shares of Principal Capital at 4.09 baht. The transaction value was around 1.55 billion baht.

Both RATCH and Principal Capital shared the same objective “to be of support service to the community,” John Lee Kohshun, Chairman of the Board of Directors at Principal Capital, told Thai Enquirer.

The company will be focusing on “maximizing service rather than maximizing profits,” said Lee, as a plan is to offer healthcare services from middle- to lower-middle-class groups across  the nation.

Kijja Sripatthangkura, RATCH’s Chief Executive Officer, said in the press release that he saw a long-term growth potential in Thailand’s healthcare business based on ageing society and growing health consciousness resulting from the Covid-19 pandemic.

Initially, both will drive the strategic plan to set up operation bases in secondary cities to enhance access to quality healthcare for people through innovation and cutting-edge technology, said Kijja.

The details on medical innovations from their synergy are currently in the working process, Lee told Thai Enquirer.

Principal Capital operates 11 private hospitals in 10 provinces and is targeting to achieve 20 hospitals by 2022, including actively expanding its medical clinic network to reach 100 units nationwide.

The clinics are called “Klai-baan-klai-Jai” (Close to home and heart) to bring more innovative methods to provide healthcare service near people’s homes. Principal Capital will also collaborate with a Japanese firm to launch a joint venture focusing on healthcare services for senior citizens, Lee said.

Even though the company has some projects in Bangkok, it is not “our main target right now,” Lee told Thai enquirer, saying that the company has a target to operate in “underserved” areas outside where there is less competition and have lots of demand.

Such factors would drive Principal Capital’s growth potential in the future, Lee added.

Analyst’s comment

Tisco Securities noted that RATCH’s move to diversify into the healthcare business was considered to vary its portfolio as a holding company in the long-term plans, intriguing some questions on the growth aspect of the company.

RATCH has set a target to cut revenue proportions from its power generation business to 60 per cent in 2025 and increase revenue from its infrastructure business to 40 per cent.

However, the change in earnings for RATCH in the near term was still small with no dividend payment from Principal Capital anytime soon, said the analyst. Tisco said that this investment should still be dubious in the long term.

An absence of medical tourism

Unlike other big-capitalization healthcare firms, Principal Capital saw only a small impact from the international travel restrictions that froze the medical tourism business in Thailand.

The only hospital nearby the airport, Princ Hospital Suvarnabhumi, had a tiny proportion of medical tourism, with a “very low percentage around 5 per cent” of total income generated, Lee told Thai Enquirer.

When asked about financial performance, Lee told Thai Enquirer that from last year the company reported losses mainly from the Covid-19 impact and management cost for new hospital bases.

“We are slowly recovering to profit in the next few years,” he said. Five of 11 hospitals under Principal Capital operation are recently opened.

According to local media Mitihoon, analysts expected Principal Capital to report an average growth per year of 42 per cent in earnings following the company’s guidance, particularly with the revenue from Covd-19 screening test in the second quarter.

Principal Capital once was a residential property developer before stepping into private hospital management business in 2017.


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