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Pi Securities PCL, Thailand

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Equity Bottom-Up

<ul>
<li>Yesterday’s analyst meeting came out with a neutral tone. We expect YoY growth in 4Q21 earnings, backed by robust margin upon recovery of cash patients segment, together with rising Covid-19 </li>
<li>3Q21 earnings was at Bt484m (+302%YoY, +252%QoQ), aided  by record high topline, and wider-than-expected margin from Covid services.</li>
<li>Expect 4Q21 earnings to decline QoQ, but grow YoY due to spike in IPD price, along with contribution from Covid treatment services.</li>
</ul>


Yesterday’s analyst meeting came out with a neutral tone. We expect YoY growth in 4Q21 earnings, backed by robust margin upon recovery of cash patients segment, together with rising Covid-19 
3Q21 earnings was at Bt484m (+302%YoY, +252%QoQ), aided  by record high topline, and wider-than-expected margin from Covid services.
Expect 4Q21 earnings to decline QoQ, but grow YoY due to spike in IPD price, along with contribution from Covid treatment services.


RJH: Building Back Better 22-23E Through Resilient Core Operation

Global Healthcare Analyst

Tina Banerjee

<ul>
<li>
<a href="https://www.smartkarma.com/entities/rajthanee-hospital" target="_blank" data-smartkarma-citation="entities:23729:1" rel="noopener">Rajthanee Hospital (RJH TB)</a> reported triple-digit revenue and net profit growth in Q3, with gross margin reaching all-time high to 57.4%, due to Covid-19-related tailwind.</li>
<li>With the steadily declining new Covid-19 cases in Thailand, Rajthanee’s Q4 revenue is expected to decline sequentially. However, non-Covid business should continue to recover with the resumption of elective procedures.</li>
<li>Despite the shares trading at a reasonable P/E of 17x, I see limited upside due to its small and geographically concentrated operations, with substantial revenue exposure to social security schemes.</li>
</ul>



Rajthanee Hospital (RJH TB) reported triple-digit revenue and net profit growth in Q3, with gross margin reaching all-time high to 57.4%, due to Covid-19-related tailwind.
With the steadily declining new Covid-19 cases in Thailand, Rajthanee’s Q4 revenue is expected to decline sequentially. However, non-Covid business should continue to recover with the resumption of elective procedures.
Despite the shares trading at a reasonable P/E of 17x, I see limited upside due to its small and geographically concentrated operations, with substantial revenue exposure to social security schemes.


Rajthanee Hospital (RJH TB): Q4 Revenue Growth to Decelerate Sequentially as Covid Tailwind Fades

<p><strong>We downgrade our recommendation to HOLD rating, from BUY, with new 2022E target price of Bt40.50, +14% from Bt35.50 previously, derived from 27.6xPE, which is +1SD of its 3-year trading average.</strong></p><div>• RJH 2Q21 net profit was Bt138m (+112%YoY, +29%QoQ).</div><div></div><div>• 1H21 earnings accounted for 47% of our full year forecast.</div><div></div><div>• Covid-19 diagnostic revenue and increased IPD utilization for Covid patients boosted its earning performance.</div><div></div><div>• The company announced interim dividend payment of Bt0.4/share, which is equivalent to 1% upcoming dividend yield. XD on 23-Aug-21.</div><div>
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</div><div>• We revised up 2021-23E earning by 36%, 24% and 22%, respectively, to reflect uplifted Covid related services.</div><div>
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</div><p><strong>We think the Covid windfall should peak soon in term of both stock sentiment and hospital performance.</strong></p>

We downgrade our recommendation to HOLD rating, from BUY, with new 2022E target price of Bt40.50, +14% from Bt35.50 previously, derived from 27.6xPE, which is +1SD of its 3-year trading average.• RJH 2Q21 net profit was Bt138m (+112%YoY, +29%QoQ).• 1H21 earnings accounted for 47% of our full year forecast.• Covid-19 diagnostic revenue and increased IPD utilization for Covid patients boosted its earning performance.• The company announced interim dividend payment of Bt0.4/share, which is equivalent to 1% upcoming dividend yield. XD on 23-Aug-21.
 
• We revised up 2021-23E earning by 36%, 24% and 22%, respectively, to reflect uplifted Covid related services.
 
We think the Covid windfall should peak soon in term of both stock sentiment and hospital performance.

<p><strong>We maintain BUY rating with new 2022E target price of Bt35.50, from Bt29.00, derived from 30.0xPE, which is -1SD of SET Healthcare sector’s during 2017-2019, represented the pre-covid figures.</strong></p><div>• RJH 1Q21 net profit was Bt107m (+29%YoY, -26%QoQ). Excluding extra gain from Social security revenue adjustment at Bt25m, RJH recurring profit was Bt87m (+5%YoY, -16%QoQ).</div><div></div><div>• The earnings accounted for 24% of our full year forecast.</div><div></div><div>• Covid-19 diagnostic revenue of Bt46m (+12%QoQ) helped offsetting Covid-19 impact to patients’ traffic.</div><div></div><div>• We revised up 2021-22E earning by 24% and 8%, respectively.</div><div>
<br>
</div><p><strong>We like RJH for it is one of the cheapest hospital stock in the sector. Meanwhile, its performance during Covid situation is one of the most resilient.</strong></p>

We maintain BUY rating with new 2022E target price of Bt35.50, from Bt29.00, derived from 30.0xPE, which is -1SD of SET Healthcare sector’s during 2017-2019, represented the pre-covid figures.• RJH 1Q21 net profit was Bt107m (+29%YoY, -26%QoQ). Excluding extra gain from Social security revenue adjustment at Bt25m, RJH recurring profit was Bt87m (+5%YoY, -16%QoQ).• The earnings accounted for 24% of our full year forecast.• Covid-19 diagnostic revenue of Bt46m (+12%QoQ) helped offsetting Covid-19 impact to patients’ traffic.• We revised up 2021-22E earning by 24% and 8%, respectively.
 
We like RJH for it is one of the cheapest hospital stock in the sector. Meanwhile, its performance during Covid situation is one of the most resilient.

RJH: Resilient Performance Amidst Covid Situation

<p><strong>We maintain BUY rating with a new 2021E target price of Bt29.00, from Bt32.00, derived from 28.3xPE, which is -1SD of SET Healthcare sector’s 3-year trading average.</strong></p><div>•RJH reported 3Q20 recurring profit at Bt106m (+18%YoY, +63%QoQ). While the patient's traffic was still weak, the Covid-19 diagnostic service helped to boost its performance.</div><div>
<br>
</div><div>•We revised down our 2020-22 net profit forecasts by 7%, 20%, and 22%, respectively, mainly reflected patient traffic trend which should be affected by the more hygienic behavior in the population.</div><div>
<br>
</div><div>•RJH announced an interim dividend of Bt0.15/share, XD on 20-Nov-20.</div><div>
<br>
</div><p><strong>We like RJH for it is one of the cheapest hospital stock in the sector. Meanwhile, it has an expansion plan of two hospitals in the pipeline, which would top up its services capacity by more than 60% in the next two years.</strong></p>

We maintain BUY rating with a new 2021E target price of Bt29.00, from Bt32.00, derived from 28.3xPE, which is -1SD of SET Healthcare sector’s 3-year trading average.•RJH reported 3Q20 recurring profit at Bt106m (+18%YoY, +63%QoQ). While the patient's traffic was still weak, the Covid-19 diagnostic service helped to boost its performance.
 
•We revised down our 2020-22 net profit forecasts by 7%, 20%, and 22%, respectively, mainly reflected patient traffic trend which should be affected by the more hygienic behavior in the population.
 
•RJH announced an interim dividend of Bt0.15/share, XD on 20-Nov-20.
 
We like RJH for it is one of the cheapest hospital stock in the sector. Meanwhile, it has an expansion plan of two hospitals in the pipeline, which would top up its services capacity by more than 60% in the next two years.

Record High Revenue Thanks to Covid-19 Diagnostics

Thailand

Rajthanee Hospital Public Company Limited provides general medical and surgical hospital services.

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Rajthanee Hospital (RJH TB)

RJH: Building Back Better 22-23E Through Resilient Core Operation

Yesterday’s analyst meeting came out with a neutral tone. We expect YoY growth in 4Q21 earnings, backed by robust margin upon recovery of cash...

Pi Securities PCL, Thailand