20140204-Maybank_KERPL-Bangkok_Dusit_Medical_Services_BGH_TB_Seasonality_to_drag_4Q13_net_profit_11页_506kb

Bangkok Dusit Medical Services (BGH TB) Summary

Core Content

Bangkok Dusit Medical Services (BGH TB) is a Thai healthcare company with a current share price of THB118.00 and a target price of THB140.00, implying a 19% increase. The company has a market capitalization of USD5.5B and an average daily trading volume of USD8M. The firm is currently rated as HOLD, and the valuation is based on a DCF model with a WACC of 9.5% and a terminal growth rate of 3%, resulting in a 4.8x PBV and 30.1x PER for 2014.

Key Financial Performance

4Q13 Forecast

• Net Profit: THB1,361m, down 12% QoQ and 3% YoY due to seasonality and higher operating costs.
• Hospital Revenue: THB12,468m, up 7% YoY but down 4% QoQ.
• EBITDA Margin: 20%, down 140bps YoY due to higher depreciation and interest expenses.
• Bed Utilization Rate: Expected to drop from 73% in 4Q12 to 66% in 4Q13.

2013 and 2014 Projections

• Hospital Revenue: Projected to rise by 9.9% for FY13, with an average utilization rate of 68%.
• Core Net Profit: Expected to increase by 5.5% to THB6,482m in FY13, compared to THB6,142m in 2012.
• 2014 Core Net Profit: Projected to be THB7,177m, representing a 10.7% YoY growth.
• Core EPS: Expected to be THB4.64 for FY14, with a growth rate of 10.7%.
• Net Dividend Yield: Projected to be 1.6% for FY14.

Key Financial Ratios

Key Takeaways from the Meeting

Revenue Growth Drivers

• Price Escalation: Expected to contribute significantly to revenue growth, with a 2–3% increase.
• Patient Traffic: Growth of 5–6% in January 2014, driven by provincial hospitals (e.g., Hat-Yai, Udon Thani, Chanthaburi).
• Volume Growth: Outpatient visits per day up 2% YoY, but average daily inpatient census down 4% YoY.

Operating Performance

• Hospital Revenue Growth: 7% YoY, but 4% QoQ.
• Gross Profit: THB5,510m, down 4% QoQ and 12% YoY.
• Operating Profit: THB1,683m, down 9% QoQ and 4% YoY.
• EBITDA: THB2,543m, down 5% QoQ and 1% YoY.
• Net Profit: THB1,361m, down 12% QoQ and 3% YoY.
• Margins: EBITDA margin dropped 1.4% YoY to 20%, while net profit margin dropped 1.2% YoY to 11%.

Expansion Plans

• New Hospitals (2014–2015): Opening 9 new hospitals, including 4 in 1H14, 2 in 2H14, and 3 in 2015.
• Total Beds: Expected to increase by 31% over the next three years.
• Total Investment: THB8B over the next three years.
• Capex/Revenue Ratio: Set at 8–11%, including 5–7% for maintenance and 2–3% for new investment.

Valuation and Peer Comparison

• Target Price: THB140.00, implying 4.8x PBV and 30.1x PER for 2014.
• Valuation Status: BGH is the most expensive among its Thai peers based on current multiples.
• Peer Valuation Table:

Research Offices

• Regional Offices: Information on key contacts in various regions such as Thailand, Singapore, Malaysia, Indonesia, Philippines, Vietnam, and Hong Kong/China.
• Contact Details: Include names, positions, and contact information for research heads and analysts in different sectors like Banking & Finance, Real Estate, Healthcare, and others.

Conclusion

Despite the negative impact of political turmoil and seasonality in 4Q13, BGH is expected to maintain growth in patient traffic and revenue from provincial hospitals. However, profit growth remains weak, and the company is still expensive compared to its peers. The HOLD rating is maintained due to lackluster profit growth and no clear signs of improving performance ratios. BGH's expansion plans aim to increase beds and revenue through new hospital openings, but the current valuation suggests caution.