Outbreak a mixed bag for medical providers

Medical tourism hospitals have experienced direct, adverse effects from the coronavirus epidemic, while medical appliance manufacturers and pharmaceutical and supplement makers could benefit from increasing awareness of health and hygiene.

The scale of the impact of the virus outbreak on Thailand’s stock market is not limited to the tourism sector. It extends to hospitals for which medical tourism is among the main sources of revenue.

Combined shares of the SET-listed healthcare sector were down -6.7% on a year-to-date basis as of Feb 21, led by Ekachai Medical Care Plc (EKH, -16.4%), Thonburi Healthcare Group Plc (THG, -13.3%), Bumrungrad Hospital Plc (BH, -13.3%), Bangkok Chain Hospital Plc (BCH, -12.3%), Vibhavadi Medical Center Plc (VIBHA, -12.3%) and Wattanapat Hospital Trading Plc (WPH, -10.6%).

Suwat Wattanapornprom, assistant vice-president of Asia Plus Securities (ASP), said that based on his survey and site visits, some hospitals have started to feel the pinch from the decline in foreign customers, of whom half are expatriates and half are walk-in foreign patients, which coincides with the falling number of Chinese tourists.

“There are some risks that have prompted our research team to revise down our revenue and profit projection for the first quarter, as some of them are facing the impact from the Covid-19 outbreak,” Mr Suwat said, using the medical jargon for the coronavirus.

BH has the largest proportion of foreign patients, contributing 65% of total revenue, followed by Bangkok Dusit Medical Services (25%), Praram 9 Hospital (15%) and Kasemrad Hospital (10%).

Despite the lower profit projection, ASP still recommends clients invest in BCH shares, with revenue projected to expand by 12.9% this year as the Social Security Office benefits from an increase in per-person revenue for patients.

Although medical tourism is reeling from the virus outbreak as the epidemic compels people to refrain from travelling overseas, this is expected to last only for the first half of the year, said Thanadech Rungsrithananon, senior vice-president of UOB Kay Hian Securities Thailand.

In Thailand, healthcare stocks usually gain when there is an epidemic, he said, as there is higher demand for medicines, medical appliances and nutritious foods and supplements to strengthen the body’s immunity.


Although equity investment has been under pressure from fear of a coronavirus pandemic, opportunity lies in crisis for companies involved with the supply chain of medical appliances and supplements.

Two identified stocks could post gains amid the virus outbreak: Sri Trang Agro-Industry Plc (STA), a leading fully integrated natural rubber company, and Asian Phytoceuticals Plc (APCO), a manufacturer and exporter of healthcare, beauty and anti-ageing products developed from scientific research.

Pichaet Wiriyachitra, APCO’s executive chairman, said without disclosing any numbers that the company is partnering with hospitals in China on a product, developed from research on mangosteens, that helps boost the body’s immunity.

The product is a 100%-natural plant-based supplement that helps increase immunity for those with diabetes or cancer.

Naree Apisawaittakan, vice-president of Phillip Securities, said STA has informed her that orders for medical gloves have increased, including orders from China, since the beginning stage when news of the coronavirus outbreak first surfaced.

In 2018, medical gloves contributed 16-17% of STA’s total revenue, while revenue for the first nine months of 2019 saw a 21% year-on-year rise.

Ms Naree said the company’s earnings are likely to improve on last year’s, driven by the rise in world rubber prices, higher efficiency of cost management and greater demand for medical gloves.

“The contribution of revenue medical rubber gloves grows by at least 5% each year,” she said.

There are, however, other factors to consider. These include global economic growth and the domestic auto industry whose sales have yet to recover, Ms Naree said.

But the second complication could be offset by benefits from auto production plants relocating from China — especially Wuhan, the outbreak epicentre — to Thailand, she said.