Periodic/Sector reports
Healthcare: Looking Forward To A Strong 2H26
OVERWEIGHT (Upgraded)
Analyst
Analyst
Nonpawit Vathanadachakul
Highlights
- We are seeing strong recovery from Middle East patient arrivals for all operators, returning to normal levels in Jun 26.
- Most of the operators are able to cope well with the cost pressure by stocking up on medical supplies.
- We forecast a stronger upside for the sector in 2H26, on the high season of Middle East patient arrivals in 3Q26 and lower cost pressure. Upgrade to OVERWEIGHT; our sector picks are BH and PR9.
Analysis
- Return of Middle East patients as the war situation stabilises. After war broke out in the Middle East in early-Mar 26, the Strait of Hormuz was closed, disrupting the travel routes of patients from the region. Healthcare operators’ Middle East patient revenue still grew yoy in 1Q26 due to long staying patients who were not able to return home, but dropped in Apr 26 as new patients could not travel to Thailand for treatment. In May 26, all operators saw a significant recovery as the ceasefire kicked in and their Middle East patient numbers returned to close to normal levels in Jun 26. The rebound was strongly supported by air connectivity improvements as Middle East airlines rapidly ramped up operations. Hence, we see this as a very promising buildup to the high season for Middle East patient arrivals in 3Q26.
- Several operators coping with cost pressure well. While the US-Iran conflict has pushed up fuel and operating costs, several players appear well prepared. Management of Bumrungrad Hospital (BH) and Bangkok Chain Hospital (BCH) see no risk of drug shortages, as the hospital has secured most of the orders for this year’s medical supply requirements since early-26. This helps lock in procurement costs and reduce exposure to fluctuations in medical supply prices. As a result, we remain confident in BH’s and BCH’s ability to manage costs effectively throughout the year.
- Meanwhile, PR9 has secured their supplies up to Jun 26, which will mitigate the impact from rising supply costs. Moreover, PR9 will offset the impact from rising costs from 3Q26 onwards as they will increase the treatment price. We expect that BDMS will be affected the most as its operation scale is large. It is unlikely that BDMS will be able to fully lock in the medical supply for the whole year and hence will need to preserve their inventory instead. We should see the cost pressure take effect in the upcoming quarters as well.
Highlights
- We are seeing strong recovery from Middle East patient arrivals for all operators, returning to normal levels in Jun 26.
- Most of the operators are able to cope well with the cost pressure by stocking up on medical supplies.
- We forecast a stronger upside for the sector in 2H26, on the high season of Middle East patient arrivals in 3Q26 and lower cost pressure. Upgrade to OVERWEIGHT; our sector picks are BH and PR9.
Analysis
- Return of Middle East patients as the war situation stabilises. After war broke out in the Middle East in early-Mar 26, the Strait of Hormuz was closed, disrupting the travel routes of patients from the region. Healthcare operators’ Middle East patient revenue still grew yoy in 1Q26 due to long staying patients who were not able to return home, but dropped in Apr 26 as new patients could not travel to Thailand for treatment. In May 26, all operators saw a significant recovery as the ceasefire kicked in and their Middle East patient numbers returned to close to normal levels in Jun 26. The rebound was strongly supported by air connectivity improvements as Middle East airlines rapidly ramped up operations. Hence, we see this as a very promising buildup to the high season for Middle East patient arrivals in 3Q26.
- Several operators coping with cost pressure well. While the US-Iran conflict has pushed up fuel and operating costs, several players appear well prepared. Management of Bumrungrad Hospital (BH) and Bangkok Chain Hospital (BCH) see no risk of drug shortages, as the hospital has secured most of the orders for this year’s medical supply requirements since early-26. This helps lock in procurement costs and reduce exposure to fluctuations in medical supply prices. As a result, we remain confident in BH’s and BCH’s ability to manage costs effectively throughout the year.
- Meanwhile, PR9 has secured their supplies up to Jun 26, which will mitigate the impact from rising supply costs. Moreover, PR9 will offset the impact from rising costs from 3Q26 onwards as they will increase the treatment price. We expect that BDMS will be affected the most as its operation scale is large. It is unlikely that BDMS will be able to fully lock in the medical supply for the whole year and hence will need to preserve their inventory instead. We should see the cost pressure take effect in the upcoming quarters as well.
OVERWEIGHT (Upgraded)
Analyst
Analyst
Nonpawit Vathanadachakul
IMPORTANT NOTICE - DISCLOSURES AND DISCLAIMERS
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