Strategy
Strategy: Feedback From 2H26 Strategy & Healthcare Roadshow
Highlights
- Investors remain positive and are showing strong interest in Thailand’s data centre and AI supply chain story, as well as the recovery potential of domestic sectors, which could serve as a catalyst for the banking, finance, retail, and tourism sectors.
- Thailand’s healthcare sector outlook is improving as Middle East patients return ahead of the peak rainy season.
- We expect Thai equities to maintain a positive momentum in 2H26, driven mainly by favourable financial conditions that support market re-rating.
Analysis
- Roadshow recap: Thai equity strategy for 2H26 and healthcare sector update. We wrapped up our 2H26 strategy roadshow in Kuala Lumpur, Malaysia, engaging with fund managers and institutional clients. During the roadshow, we presented our 2H26 Thai equity market outlook alongside a comprehensive update on the healthcare sector, where we maintain a positive view on the Thai equity outlook in 2H26.
- Favourable financial conditions to drive a market re-rating. We expect the Thai market to maintain a positive momentum in 2H26, driven by favourable financial conditions which we believe would support market re-rating. We highlight three core investment themes: a) a new investment cycle driven by AI and data centres, b) recovery in domestic demand, and c) a negative real interest rate environment.
- Strong external momentum and FDI underpinned the economy in 1H26. The economy was resilient in 1H26 on the back of export growth of 18% in 4M26 and exceptionally strong FDI, with Thailand ranking among the four key countries in the global AI and semiconductor supply chain. Nearly 90% of BOI investment applications in 5M26 were for data centres, including an investment of over Bt100b by TikTok.
- Domestic sectors to take the baton in 2H26. We expect domestic sectors such as retail to recover and replace exports as the key growth driver. The El Niño drought should have a limited impact this year given still-high water levels in major dams, while farm income has turned positive for the first time in 13 months, which should support consumption.
- Compelling valuations. The Thai market is very cheap relative to domestic liquidity (M2). Excluding Delta Electronics, market PE fell to only 13.5x (vs the historical mean of 16x), while more than 60% of listed stocks are trading below book value.
- Healthcare: Improving outlook after Middle East tension; BH and PR9 are our top picks. The outlook is improving on the return of Middle East patients – flights have recovered to 105% of pre-war levels – while the 3Q rainy season is the sector’s high season. BH is the biggest beneficiary of the return of foreign patient flow (22-24% of revenue from Middle East patients, costs locked in, ~40% premium margin), while PR9 is a growth stock following BH’s strategy with a unique price position, with strength in specialised treatments such as diabetic wound and kidney diseases. Key headwinds: weak domestic consumption, rising drug and logistics costs (especially for BDMS) and competition for foreign patients.
Highlights
- Investors remain positive and are showing strong interest in Thailand’s data centre and AI supply chain story, as well as the recovery potential of domestic sectors, which could serve as a catalyst for the banking, finance, retail, and tourism sectors.
- Thailand’s healthcare sector outlook is improving as Middle East patients return ahead of the peak rainy season.
- We expect Thai equities to maintain a positive momentum in 2H26, driven mainly by favourable financial conditions that support market re-rating.
Analysis
- Roadshow recap: Thai equity strategy for 2H26 and healthcare sector update. We wrapped up our 2H26 strategy roadshow in Kuala Lumpur, Malaysia, engaging with fund managers and institutional clients. During the roadshow, we presented our 2H26 Thai equity market outlook alongside a comprehensive update on the healthcare sector, where we maintain a positive view on the Thai equity outlook in 2H26.
- Favourable financial conditions to drive a market re-rating. We expect the Thai market to maintain a positive momentum in 2H26, driven by favourable financial conditions which we believe would support market re-rating. We highlight three core investment themes: a) a new investment cycle driven by AI and data centres, b) recovery in domestic demand, and c) a negative real interest rate environment.
- Strong external momentum and FDI underpinned the economy in 1H26. The economy was resilient in 1H26 on the back of export growth of 18% in 4M26 and exceptionally strong FDI, with Thailand ranking among the four key countries in the global AI and semiconductor supply chain. Nearly 90% of BOI investment applications in 5M26 were for data centres, including an investment of over Bt100b by TikTok.
- Domestic sectors to take the baton in 2H26. We expect domestic sectors such as retail to recover and replace exports as the key growth driver. The El Niño drought should have a limited impact this year given still-high water levels in major dams, while farm income has turned positive for the first time in 13 months, which should support consumption.
- Compelling valuations. The Thai market is very cheap relative to domestic liquidity (M2). Excluding Delta Electronics, market PE fell to only 13.5x (vs the historical mean of 16x), while more than 60% of listed stocks are trading below book value.
- Healthcare: Improving outlook after Middle East tension; BH and PR9 are our top picks. The outlook is improving on the return of Middle East patients – flights have recovered to 105% of pre-war levels – while the 3Q rainy season is the sector’s high season. BH is the biggest beneficiary of the return of foreign patient flow (22-24% of revenue from Middle East patients, costs locked in, ~40% premium margin), while PR9 is a growth stock following BH’s strategy with a unique price position, with strength in specialised treatments such as diabetic wound and kidney diseases. Key headwinds: weak domestic consumption, rising drug and logistics costs (especially for BDMS) and competition for foreign patients.
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