Notable Transactions

Buy(s) THB  573.4mn

  • BDMS – The daughter (?) has decided to take turns with her father in placing the bid under BDMS’s share price
  • NPP – The MD buys a decent stake in this company that seems to be on an upward trend

Sell(s) THB 51.2 mn

  • N/a

  1. The BDMS insider buying sure puzzles me too. My insider contact tells me that in the past 6-9 months there has been difficulties: merging new regional hospitals into the main management control systems, medical staff shortages and patient numbers not measuring up to forecasts.. The new cosmetic surgery at the PIH is still operating at way below capacity. and it cannot be a dividend play. Whatever, it is off my radar for 2017.

      • thanks for sharing your view, Jay. SP is off because they have stumbled. The PEG is forecast to come down to 1.5 at the end of fiscal 2018, esp. with a tiny yield. That’s too far ahead for me to tie up my funds. (30% in cash) . Market sentiment will change, as always, proving your SP forecast right. Good luck!

        • Very astute observation Don, I thought 22 baht was grossly overvalued, at 19 baht it is only slightly overvalued. I think hospital stocks have had their run and future growth and share price appreciation will be very limited to say the least.

        • Love this, keep it up. Here’s a quick comment
          Bullish – Dominant market leader, yes short term issues in streamlining operations internally, but the long term story remains with an aging society, medical tourism, more thai’s being insured. Plus imagine what will happen when BDMS spin’s off its hospitals to a REIT?
          Bearish – crazy valuation, limited growth, more countries jumping on the medical tourism bandwagon, social security usage picking up therefore reducing profitability.

  2. Thanks, Zavi. In addition, I think that hospital stocks were the flavour of the month, so to speak…for too long.
    I do like laggards with good fundamentals. I have been buying SCB, INLINK,. I have traded AOT (lo risk) between 39-45 and I am trading AU (hi risk) between 8.75 and anytime it hits 9.00 +
    I can’t decide whether to get back into the chicken exporter stocks. The strong baht vv EU and US is a worry, for many food exporters. would not touch the tourist/hospitality industry, other than AOT, due to Chinese tourism growth and, in the long term, AOT will start developing some of their land stock..IMO, this is one of the best stocks, looking outwards for 5+ years.
    are there any views out there about infrastructure related stocks, incl. BTS ?
    Thanks for the activity!! I wish there were a more active forum elsewhere.
    Time to say this year’s ”thank you” to Khun Pon, for sharing so many of your thoughts. How does one do DD on your fund?

    • Pleasure.
      SCB – incredibly worried about the quality of the management team.
      ILINK – ok.
      AOT – will dominate forever
      AU – dangerous valuations
      Chicken names – peak cycle has been reached. Would pref to stay far away
      Infra – BTS, BEM, contractors and materials are your plays. Needless to say ITD is a PoS.

      We’re fairly transparent as we think every fund should be, via our website,

      • Thanks, Pon.
        i’m overweight in SCB, so may be time to reevaluate: yield versus potential for cap loss. have a very odd experience last week, has me seriously questioning their branch audit controls. I have taken my first look at the RVC Fund. where can I obtain details, eg What is the entry level for investment; does it trade on TSE ? Tks.
        everyone driving in Phuket will second that opinion about ITD.

        • Agree with Pon about AOT, nobody will ever get into a position to challenge them, definitely worth a look anytime there’s a selloff.

          BDMS is so far ahead of any domestic competitors. No other hospital group can drop 2-3bn on a brand new 200-bed hospital annually and shrug it off while keeping it’s D/E under 1. If you look at the numbers for Q2, they showed growth margins decreased, but still growing well above the sector average. BDMS has a revenue greater than every other listed hospital play combined, you’re crazy to be bearish on this one long-term. Government just announced fewer subsidies for the domestic social security programme, a nice revenue boost for the whole sector especially the smaller groups: CHG LPH CMR TNH etc. Short-term sure, you could say a drop in middle-east tourism, slower domestic growth and fewer prime locations for new projects are an issue, but as Pon said, the future is bright for this one. And oh yes, bring on the REIT!

          I had another good look at BEM just before the annual meeting in April and it doesn’t have the balance sheet nor the income to compete for mass transit lines after the bill for the Orange line hits. Pre-orange it
          ‘s already showing weakness, lower margins even after the merger, and a high D/E. I brought it up at the AGM and was met with smiles and the usual “don’t worry we can easily compete for 30bn projects with 1.5-2bn annual revenue and a D/E nearing 2, oh and we’re definitely not raising capital anytime soon”… yeah ok we’ll see! Happily going to watch BTS soar around Q3/Q4 this year once Green line extensions begin running and see BEM get sold off hard, even by those funds that dove in at 3-4 baht/share. On the other hand if they get their heads out their arses and bundle the blue and purple lines into an IF… 10 baht is more than possible!

          • thanks for heads up on BEM and AU (will be exiting soon). Pon, you and just about all the houses identify the potential for all of the infrastructure spending. My concern is, why is the Suprement Court got a bee in its bonnet over Sor Por Kor land. ??
            Its creating a lot of uncertainty for the whole slew of EEC developments; also Oil & Gas, Wind farms (ironic, for the fact that wind farming brings in better and more staple yields than traditional crops, allows for rotational crop farming and saves the land and water table from being destablized by oil palm farming). What a cluster-frak.

          • Well I can imagine that there were 1 or 2 scrupulous deals that did have an negative impact on farmers. And as a result of this the ministry will have to check each project to ensure things were done properly. Or you can take the most negative viewpoint and say – corruption. Probably somewhere in the middle.

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