Relative Valuation of Thonburi Healthcare Group Public Company Limited

Abstract

Thonburi Healthcare Group Public Company Limited (THG) is one of the top 10 companies based on market capitalization in healthcare sector of the Stock Exchange of Thailand, providing tertiary care services with the target of middle to upper-middle income consumers in Bangkok and other provincial cities in Thailand. The relative valuation of THG is based on two parts which are the relation to itself and peers valuation. For the relation to itself is detemined from 5 years historical data on 6 multiples consists of 1) Trailing P/E, 2) Forward P/E, 3) Trailing P/BV, 4) Forward P/BV, 5) Trailing EV/EBITDA, and 6) Forward EV/EBITDA, we found that THG current price is overvalued in ralation to itself in all multiples. For peer valuation to, we identified that forward EV/EBITDA is the most appropriate multiple to detemine target price because it's useful for the company with significant investments to exclude high depreciation and amortization effect while THG is the company with huge amount of investment and depreciation. Finally, the target price of THG in 2021 is 12.27 THB/share and in 2022 is 24.48 THB/share which is much lower than the current price (28 THB as of July 1, 2021. We concluded that the company is underperforming and our recommendation is to “sell” at the current price.