Cheap oil, fewer nose jobs hurt Thai hos­pi­tal stocks

Business Mirror - - THE WORLD -

OIL slumps. Mid­dle Eastern pa­tients can­cel treat­ments abroad. Thai hos­pi­tal stocks slide. It’s the but­ter­fly ef­fect in ac­tion. Weak growth out­looks in the Gulf States are prompt­ing greater com­pe­ti­tion from lo­cal clin­ics, stem­ming the flow of vis­i­tors to the world’s top med­i­cal tourism des­ti­na­tion.

That’s cloud­ing the out­look for Thai­land’s health- care shares, which surged more than 800 per­cent over the past seven years, as val­u­a­tions start to look stretched amid the falling de­mand.

Bangkok’s Bum­run­grad Hos­pi­tal Plc., known as the grandaddy of in­ter­na­tional clin­ics, has slumped 16 per­cent since early March after pa­tient vol­umes from the United Arab Emi­rates ( UAE), its sec­ond- big­gest source of over­seas vis­i­tors, fell 20 per­cent in the first quar­ter.

Thai­land at­tracted as many as 1.8 mil­lion in­ter­na­tional pa­tients in 2015, many of whom stayed on after­ward for a beach hol­i­day.

More than one- in- three for­eign­ers treated at Bum­run­grad are from the Gulf states and Kasikorn Se­cu­ri­ties Co. says de­clin­ing growth in the re­gion and a rise in com­pe­ti­tion from clin­ics in the UAE, where the gov­ern­ment is en­cour­ag­ing its cit­i­zens to stay home for med­i­cal care, are curb­ing de­mand.

“In the short term, the eco­nomic slow­down in the Mid­dle East will weaken some in­vestors’ con­fi­dence on earn­ings growth for do­mes­tic hos­pi­tal op­er­a­tors,” said Jin­tana Mekintha­rang­gur, the Bangkok- based di­rec­tor of eq­uity in­vest­ment at Man­ulife As­set Man­age­ment, which oversees about $ 325 bil­lion glob­ally. “We are still bullish on the sec­tor” in the long term, as it will ben­e­fit from growth in coun­tries like Myanmar and Viet­nam that have less- de­vel­oped health sys­tems, she said.

The SET Health Care Ser­vices Index has fallen 2.7 per­cent since clos­ing at a record high on April 21. It’s still the best- per­form­ing in­dus­try group in the SET Index, ral­ly­ing al­most 28 per­cent over the past 12 months. It trades at 6.8 times its book value, com­pared with 3.8 for the MSCI World Health Care Index.

The health gauge fell 0.3 per­cent as of 10: 31 a. m. in Bangkok, the worst per­former among 28 in­dus­try groups on the SET Index, which was up 0.7 per­cent. Bangkok Dusit Med­i­cal Ser­vices Pcl., which has the big­gest weight­ing on the mea­sure, dropped 0.8 per­cent. “Most hos­pi­tal stocks have very stretched val­u­a­tions, which has prob­a­bly spurred some con­cern about over­es­ti­mated earn­ings po­ten­tial,” said Adithep Vanabrik­sha, Bangkok- based chief in­vest­ment of­fi­cer at Aberdeen As­set Man­age­ment Plc. “We still see their growth po­ten­tial, but have to be very care­ful with the cur­rent share prices.”

Between 1.3 mil­lion and 1.8 mil­lion med­i­cal tourists trav­eled to Thai­land last year, ac­cord­ing to fig­ures from Pa­tients Be­yond Borders, a con­sult­ing firm in Chapel Hill, North Carolina.

The coun­try is well known for cos­metic and sex- change pro­ce­dures. Med­i­cal tourism gen­er­ated 107 bil­lion baht ($ 3 bil­lion) of rev­enue in 2014, ac­cord­ing to the lat­est Thai gov­ern­ment es­ti­mate.

Sit­ting at the apex of the in­dus­try is Bum­run­grad, which at­tracts more than half- a- mil­lion for­eign pa­tients a year and has a network of 32 re­fer­ral of­fices ev­ery­where from Mon­go­lia to Ethiopia. Sixty- seven per­cent of rev­enue came from over­seas vis­i­tors last quar­ter, com­pany fig­ures show. Myanmar res­i­dents were the big­gest source, ac­count­ing for 8.4 per­cent of to­tal pa­tients, fol­lowed by 8.3 per­cent from the UAE and 5.9 per­cent from Oman.

Newspapers in English

Newspapers from Philippines

© PressReader. All rights reserved.