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Bumrungrad Hospital Public Company Ltd. (SET:BH), 24% stake owned by Bangkok Dusit Medical Services Public Company Ltd. (SET:BDMS) and 14.65% stake owned by Bangkok Insurance Public Company Ltd. (SET:BKI), as of March 15, 2016, is Thailand's second largest healthcare provider by market capitalization, 126.84 billion baht as of August 17, after BDMS, 343.90 billion baht.
The company currently has 580 licensed beds and capacity for over 5,500 outpatients per day and provides outpatient and inpatient healthcare services, including medical services, heart center, dental center, allergy center, and other related services. It also provides emergency care, full equipped operation theaters and an international patient service center.
Bumrungrad Hospital said on July 28 that its second-quarter 2016 revenues were 4.41 billion baht, missing the 4.81 billion baht estimate of one analyst, as reported by the Financial Times. The company posted second-quarter 2016 fully diluted earnings of 0.99 baht per share, compared to 0.98 baht per share during the same period last year. Revenues for the full year 2015 were 17.66 billion baht, up 12.99% on a year-on-year basis. The full year revenue estimate by 18 analysts was 17.78 billion baht.
Bumrungrad Hospital reported a dividend of 2.35 baht a share in 2015, which was a 20.51% increase from 2014. The 20 analysts covering the company expect dividends of 2.61 baht a share for the upcoming fiscal year, representing an increase of 11.15%.
In their income statements, Bumrungrad Hospital blamed the falling volume of inpatient and outpatient businesses for international patients, mostly from the Middle East and Mongolian markets, on 12 additional days of Ramadan and weak oil prices in the second-quarter 2016, compared to the same period last year.
Technically, shares of Bumrungrad Hospital continue to dig deeper into bear territory after falling 33.46% from its September all-time high of 260 baht per share. The stock is now bumping into a 5-year trendline support of the ascending channel chart pattern. Downside risks significantly increase if the trendline support can’t hold. The next support levels are at the 160 and 165 baht per share levels, if BH shares continue to pull back.
Weak oil prices and the strong baht against the U.S. dollar could have negative impacts on the number of Middle Eastern and other international patients who come to Thailand for medical treatments. In fact, the daily chart of the USD/THB exchange rate, which has tumbled 5.48% since it hit a 52-week high of 36.67 baht in early October 2015, shows a strong correlation with the BH daily chart.
The medical tourism sector, where Thailand, Singapore and Malaysia are currently considered to be major players, has become increasingly competitive. According to Asia One, treatment costs in Thailand are about half the rate in Singapore, but are more expensive than in Malaysia, the Philippines and India. Although growth in the sector remains solid, investors may want to pay close attention to the profit margins and pricing pressures of the health and medical providers.
According to the Financial Times, the consensus amongst 21 polled investment analysts covering BH gave the company a HOLD rating, with the median 12-month price target of 190 baht per share, as of August 12.
Disclosure: No position in BH and no recommendation. |
