Ah those Hospital stocks in Thailand.

PaulRen's picture
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Some cars are better then others for sure, but are they worth double or more the price?  Similar thinking should be attributed to Thai Hospital Stocks.

Hospital shares have been touted by the Thai broker community for some time, especially recently.  Post nice upward moves in the past, buy recommendations remain "all over the map".  I know these are defensive, i.e. resilient to the economy but are they worth their stretched valuation? I think perhaps not. 

Looking at some recently they disappoint despite being recommended, well,  "left and right".  Here I have not mentioned any nor chose one in my model port.,  because they are well, just so darn expensive.  All trade at very high p/e's to say the least..., just some examples Bangkok Dusit Medical a prominent one (BDMS 20.9) shows a trailing p/e of 38!  Chularat (CHG 2.70) is the adored highest growth story of the sector, trailing p/e of 52...its stock price lost 10% since the start of the year and is having a bad day today, flirting at its support.  EKH another darling (6.8) has more or less rolled over in the high 6's since late last year showing a trailing p/e of 55. Wow.  Bumrungrad (BH 184) a bellwether also shows a rolling top, with its trailing p/e of 37; anybody whose visited there lately seen how utterly congested it is...maxed out?  Overrated, I think so.  Now we know most Thai stocks have been boring of late, but to me Thai hospital listed shares look valuation stretched yet, one has to wonder why they keep being so adored?  Yes, they are great but the point is they seem too expensive to the value investor oriented.  Maybe I am missing something?  Perhaps some investors are awaiting another epidemic which will create investor excitement/sentiment over a health demise?

Other/different selections I like also may look expensive at first view, but here the point is that these are coming off a bad or transition year -and their normalized longer term earnings potential (p/e) appears to demand far less the stratospheric hospital p/e's, which are double and then some as compared to the average SET p/e, of just now 18.5

Best Regards,

Paul A. Renaud.