Health Care Service

Health Care Service

 

- MERS outbreak threatening Thailand 

After the recent outbreak of MERS in the Middle East and South Korea, costing hundreds of lives, a first case of MERS virus in Thailand was reported on June 18. The patient was a 75-year-old man from Oman who had admitted at BH for treatment before being transferred to 

Bamrasnaradura Infectious Diseases Institute; his condition is still stable. At the same time, BH is quarantining 58 of its stuff who had been in contact with the patient. Although the hospital has a good precaution standard and it is believed that the virus from the patient would not spread to others, Thailand is still one of the countries at risk of MERS after the outbreak in South Korea.   

- Past pandemic experience and share price confirm adverse effect 

According to statistics, the outbreaks of SARS in 2003, avian flu in 2004, and 2009 flu pandemic in 2009 adversely affected BH and BDMS as follows: 

1. 2003 SARS – SET Index dropped for five consecutive days totaling 

2.71%, while BDMS fell 9% during the same period. At that time, BH was with a suspension sign (SP) for the company was making a business rehabilitation plan.  

2. 2004 H5N1 avian flu – The outbreak of H5N1 avian flu started in 

South Korea, Japan, and Vietnam in December 2003. The first suspected case of H5N1 was reported in Thailand on January 14, 2004, resulting in SET Index falling by 16% from January 14 to February 2, 2004. Healthcare stocks plunged the most, led by 11% of BH and 8% of BDMS. 

3. 2009 H1N1 flu – SET Index plunged by 9.25% from June 12 to June 

18, 2009. BH dropped 6.36%, while BDMS weakened only 4.3%, outperforming the market. 

- Avoid BH and BDMS in short term. Wait to accumulate on weakness 

In the short term, BH will get the most adverse impact from the situation for 65% of its revenue comes from international patients, while BDMS will be less affected for it has nationwide coverage and only 31% of its revenue comes from international patients. Short-term investors should avoid BH and BDMS for now, but long-term investors can wait to accumulate these stocks when the prices decrease below the worst-case estimate, -20% for BH and -10% for BDMS (six-month impacts), which would make fair value of BH lower from B195 to B145 and BDMS from B21 to B18.70.