Recently, I've noticed many people asking how to choose hospital stocks this year, especially which ones are worth paying attention to during this wave of adjustments. I've also been looking at this sector and feel that some things might be undervalued.

Honestly, the interesting thing about hospital stocks is that they are defensive. No matter how the economy is, people still need medical care, so the cash flow of these companies is relatively stable. As long as they are managed properly, they can generally ensure good dividends, which is quite attractive to investors seeking stable income.

I’ve looked around, and hospital stocks roughly fall into two approaches. One is the international route, like BDMS, BH, mainly benefiting from foreign patients, especially in medical tourism. BDMS has the largest market cap and is also expanding in Southeast Asia, but these stocks depend on the international economic situation. BH has a particularly high proportion of foreign patients, with good ROE, but their volatility may follow the international market.

The other approach is rooted locally, like VIBHA, CHG, PR9. They mainly serve the Thai domestic and insurance markets, which are relatively more stable. Although their growth rate might not be as fast, their solid fundamentals are a plus. BCH and RAM each have their own characteristics; one focuses on local and insurance, while the other excels in specialized medical services.

Looking at the numbers, BDMS and BH have market caps far ahead, but their P/E ratios are also not low. If you want a relatively cheap entry point, you can look at those with smaller market caps but decent ROE. But here’s a reminder: P/E and ROE are just references; you also need to consider the hospital’s expansion plans and market positioning. Some hospitals are building new branches or opening new departments, which might dilute profits in the short term, but could present bigger opportunities in the long run.

Personally, I think the key to choosing hospital stocks is understanding their customer base. Are they targeting foreigners or locals? Are they focusing on high-end or mass-market segments? This determines their future growth potential and risks. For example, those mainly serving foreign patients should pay attention to the economic conditions of those countries. Local-focused hospitals are more affected by domestic economic and insurance policies.

If I had to choose, I would lean toward those with clear expansion plans, relatively stable ROE, and valuations that aren’t too high. For long-term holding in hospital stocks, good dividends plus stable growth can accumulate significant wealth. Of course, the premise is that you do your homework and truly understand what the hospital is doing.