Thailand
Thailand: Lockdown favours healthcare stocks
Healthcare and medical equipment stocks are set to remain the biggest beneficiaries of Thailand’s ongoing lockdown, while airlines continue to slump, according to a brokerage.
At the end of last month the government extended restrictions for another 14 days, starting from yesterday, and surging Covid-19 cases prompted the SET Index to continue its decline.
Mongkol Puangpetra, executive vice-president of KTBST Securities, predicted the lockdown would continue throughout August.
“If the number of infections remains high, we expect the lockdown to be extended until the end of this month,” he said.
Equities picked to outperform include hospital stocks such as Bangkok Chain Hospital Plc (BCH) and medical equipment import stocks such as Saintmed Plc (SMD), Mr Mongkol said.
New rules are expected to help restaurants in department stores as they are now allowed to open for delivery, he said.
KTBST projects Asia Aviation Plc (AAV) to underperform during the lockdown as passenger numbers will recover more slowly than expected, while its subsidiary Thai AirAsia has extended its suspension of domestic routes by one month until Aug 31.
AAV faces huge pressure on its cash flow, which has led the company to temporarily stop paying salaries in August.
In addition, if the pandemic situation does not improve in September, flights may continue to be suspended.
“In the short term, we recommend avoiding investments in AAV to reduce risk,” Mr Mongkol said.
AAV is also in the process of restructuring.
The company is expected to obtain additional capital in September to add to its liquidity, which could be used to pay employees’ salaries, he said.
Sectors such as domestic tourism will recover more slowly, with the lockdown heavily affecting hotels focused on the local market, said Mr Mongkol.
Banks that provided loans to tourism-related and small and medium-sized enterprises are expected to suffer the most from the lockdown, said the brokerage.
Source: https://www.bangkokpost.com/business/2159687/lockdown-favours-healthcare-stocks