TNH 9M65 earnings account for 73% of the FY22 forecast.

Due to the spread of the COVID-19 virus New strains are increasing. The hospital has expanded its RT-PCR screening service, opened an alternative quarantine facility (ASQ/AQ) and a hospital for special patients (Hospitel) to serve patients with mild symptoms. (Green group) since 4Q21 increased the rate of bed occupancy and income per inpatient admission. Gross margin of 29% improved from 24% in 3Q21, but dropped from 31% in 2Q22, resulting in a net profit of Bt113mn, growing 108%YoY, down 4%QoQ, although 3Q22 profit was lower than expected. will grow high YoY, stable QoQ, but profit for 9M65 was 373 million baht (up 212%YoY), representing 86% of the previous projection of 20, which has been revised up by 20% to 432 million baht in the previous review after submitting the financial statements for the period. 2Q65

– Revised earnings forecast for year 65 to increase by 10% : Covid-19 epidemic There are still ongoing and new outbreaks from omikron strains that are simpler than previous strains, but the number of critically ill patients has declined. while the number of patients undergoing annual health checks and minor surgery increases In addition, the hospital provides laboratory testing services for COVID-19 infection. and RT-PCR testing services, and the opening of a rehabilitation clinic for patients with Long Covid symptoms, as well as a return to normal service policy in the services of the Thainakarin Wellness Center, Radiation Cancer Center. Consequently, earnings in 4Q22 (end of July 20) are expected to remain stable QoQ and grow YoY. To reflect good revenue growth, the research department has revised up its revenue forecast by 2% to Bt2610mn, an increase of 28%YoY. Increase the gross profit margin assumption from 28.4% to 30% and increase the forecast of selling and administrative expenses by 4%, resulting in the net profit forecast for the year 65 (end of July 20) increased by 10% to 471 million baht, which Growing up to 60%YoY, setting an all-time high.

– Expected average growth rate (CAGR) between 2019-23 around 49% per year: the future growth of the hospital business is in line with Thailand’s long-term strategic plan to become a Medical Hub, in line with the establishment of Subsidiaries operate health and hotel businesses to help expand their customer base who are elderly and dependents. and a health rehabilitation clinic for long covid patients. The opening of the Linac Center for cancer patients helps to generate additional income in the long run. As for the Thai Nakarin Hospital 2 project, which has been restructured to be a gradual phase-by-phase, there is no borrowing burden because the operating cash flow can be used as working capital for construction, which has already been reflected in the projection. For the fiscal year ’66 (ending 31 Jul ’66), the research department expects the revenue from medical services to grow from a high base of at least 3% to 2,682 million baht on a 29.7% gross margin assumption, close to that. 30% in ’22, resulting in a profit projected in ’66 at approximately 480 million baht, a growth of 3% YoY from the highest record net profit base in ’22 with an average growth rate (CAGR) between 2019-23 is 49%. per year

– Maintain “Buy” recommendation, adjust the fair price for 66 to 48 baht : The research department still has a positive view on the business trend that generates consistent cash flow. In a fair valuation based on Prospective P/E revised down to 18x from 20x (as earnings growth rate declined from a high FY65 earnings base), but still lower than the mai segment P/E. At 37.29x and SET Group P/E at 26x, current price is trading at a P/E of 13.15x. Research has adjusted the fair price for 66 by evaluating earnings per share of 2.67 baht per share, calculating the fair price of 48. baht, which has the site up from the last closing price With an expected dividend yield of around 2.2% per annum, we maintain our BUY recommendation.

risk factors

1) The number of patients decreased from before the situation with the spread of the COVID-19 virus.
2) The construction of Thai Nakarin 2 Hospital was delayed from the plan due to the review of all new projects.
3) The start of holistic health center services is later than planned.
4) More competitors in the neighborhood