Healthcare operators to return to non-Covid treatment as Thailand shifts to endemic era

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Thailand’s healthcare sector is expected to see less Covid-related income in the second half of the year as the nation eases more travel rules and moves to label Covid as endemic, experts said on Tuesday.

“A key highlight for Thailand’s healthcare outlook would be a change from ‘pandemic’ to ‘endemic’ from July 1,” said Parin Kitchatornpitak, an analyst at KGI Securities. 

In the first quarter of 2022, when the Omicron variant emerged, hospital stocks rallied robustly in light of sentiment on their strong earnings enhanced by Covid-19 patients, as well as vaccination services. 

Bangkok Chain Hospital Plc (BCH) booked profits of 2 billion baht, up 527 per cent  from a year earlier. Bumrungrad Hospital Plc (BH) saw its profits jump by 696 per cent year-on-year. 

“Medium to smaller hospitals were the prime beneficiaries of the Covid-19 outbreak,” Parin noted. “These hospitals had well prepared platforms to support medical treatment.” 

Looking forward, KGI Securities predicted that the hospitals, which recorded high contributions from Covid-related income earlier, will see more non-Covid income as the outbreak situation in Thailand becomes less severe.

Daily reported Covid-19 cases in Thailand once peaked at about 24,000 cases in March, before falling more recently to a few thousands per day. 

Despite lower Covid-19 patient volume, analysts are optimistic that the new endemic era will still support hospitals’ profitability given the removal of the country’s entry requirement, which paves the way for medical tourism. 

“The return of both domestic and international patients for medical treatment would be the key for future growth of the sector,” Parin noted. 

The sector’s top pick, according to KGI, is Bangkok Dusit Medical Services Plc (BDMS), with a target price of 31 baht. As of the morning session, BDMS traded at 24.50 baht, up 0.83 per cent from its prior closing.

Meanwhile, Bualuang Securities gave a target price for BDMS at 26 baht, forecasting the hospital’s second-quarter results to soften compared to the strong first quarter. BDMS recorded a year-on-year jump of 157 per cent to 3.4 billion baht in the first quarter.

“Revenues from Covid-19 will likely drop significantly,” said Bualuang analyst Puwadon Pusordngern. “The Covid-19 revenues accounted for 17 per cent of the hospital’s first-quarter results.” 

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