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Bangkok Dusit Medical Services Pcl (SET:BDMS) is one of the largest private hospital operators in Thailand, with approximately 96.1 billion baht in assets as of September 2015. BDMS currently has 41 hospitals in Thailand and 2 hospitals in Cambodia, providing healthcare for domestic and overseas patients. As of February 2, 2015, Mr. Prasert Prasarttong-Osoth, M.D., the founder, President and CEO of BDMS, and his family own 22.75% of the company, worth about 76.12 billion baht. Mr. Prasarttong-Osoth is also the CEO of Bangkok Air Pcl (SET:BA) and the Chairman of ANB Laboratories Co. Ltd.
According to Becker’s Spine Review, the global medical tourism market is expected to grow at a compounded annual growth rate of 19.38% through 2019. Leading vendors in the market are Bangkok Dusit Medical Services, Bumrungrad Hospital and Kuala Lumpur–based KPJ Healthcare Berhad, which offer competitively priced packages for international medical tourists.
On November 13, 2015, the company reported third-quarter 2015 revenues of 16.203 billion baht, compared to 14.39 billion baht in the same quarter of 2014, an increase of 13% year-on-year. BDMS reported third-quarter 2015 net profits of 2.087 billion baht, or EPS of 0.13 baht per share, in line with the consensus estimate of 3 analysts, according to the Financial Times. During the same period the previous year, BDMS’s net profit was 1.927 billion baht, or 0.12 baht per share.
For 2014, BDMS reported a dividend of 0.23 baht per share, which represented a 15.0% decrease from 2013. The 20 analysts covering the company expect dividends of 0.35 baht per share for the upcoming fiscal year, representing a year-over-year increase of 53.48%. The next earnings announcement from Bangkok Dusit Medical Services, for the fourth-quarter 2015, is expected on February 25.
According to The Star’s report in early January, Malaysia-based IHH Healthcare Bhd, Asia’s largest hospital operator, is interested in acquiring an 11.5% stake in BDMS to gain a foothold in Thailand’s healthcare market. Currently, IHH’s main markets are Malaysia, Singapore and Turkey, which contributes to almost one-third of its business.
From our technical viewpoint, BDMS is retesting the 22 baht per share head resistance of the inverted full triangle chart pattern. If the breakout fails, the stock could pull back. There are supports at around 20 baht per share, or the trendline support of the ascending wedge, and at 19 baht per share, or the lower trendline support of the uptrend channel.
Healthcare stocks that pay dividends seem to be a good place to hide during market uncertainty. BDMS investors appear not to be concerned about the high P/E (TTM) multiple of 43.14, as the shares closed on Wednesday at 21.70 baht per share, up 16.04% in the past 12-months. The company’s outstanding shares are 15.49 billion, while 7.45 billion shares are free float for public trading. If the demand remains high, the P/E multiple and the share price will probably remain buoyant.
According to the Financial Times, the consensus amongst 24 polled investment analysts covering Bangkok Dusit Medical Services gave the company an Outperform rating, with the median 12-month price target of 22.60 baht per share.
Disclosure: No position and no recommendation. |
