Listed providers likely to see H2 pickup in line with economy

       Health-care stocks are likely to perform better in the second half after a slow first half marked by the erosion of consumer spending and a slowdown in medical tourism, say local brokerages.
       "[Consumers] may start to make purchasing decisions after delaying them since late last year when they were all panicked [about the economy]," said Kasem Prunratanamal, an analyst with CIMB Securities.
       Concern about H1N1 influenza is also benefiting hospitals as consumers are focusing more on preventive health care.
       However, Mr Kasem said that if H1N1 continues to curb travel, it could lead to significant reductions in revenue for some hospitals, particularly Bumrungrad Hospital (BH) and Bangkok Dusit Medical Services (BGH), which together treated around one million foreigners last year.
       BGH reported a 28% year-on-year decline in first-half net profit to 746.16 million baht, attributing it to the drop in foreign patients. BH gained a modest 5% to 627 million, saying it benefited from effective cost controls.
       Mr Kasem said industry performance would start improving in the third quarter and get better still in the fourth quarter,the high season for tourism and the health industry in general. This assumes no further negative factors, be it politics or a worsening of the flu situation.
       "While the industry's revenue is likely to improve for all operators, gross margin performance would depend on how each hospital can control cost," he said.
       Lalida Ngamviriyapongm of Finansia Syrus Securities said BH was in a better position in terms of cost management because it operates only one hospital,and should perform better than BGH.
       BGH, which operates 19 hospitals,has only recently started centralising activities to control costs with not much impact on margins yet, Miss Lalida said.
       An analyst from KGI Securities, however, believes BGH can outperform because it has been more aggressive in launching promotional package to draw volume in the first half.
       Analysts also forecast that defensive health-care stocks would gain more popularity among investors when the SET index moves below 600 points, resulting in a shift from highly active energy or banking shares to those with more stable returns or to secure options as bonds.
       "The index may move lower than 600 points soon, reflecting the slower-thanexpected pace of global economic recovery," Mr Kasem said.