Introduction

In the ever-evolving landscape of healthcare, Bumrungrad Hospital stands out as a premium hospital operator in Thailand, known for its high-quality services and international patient base. This report by Maybank Securities provides a comprehensive analysis of Bumrungrad Hospital, highlighting its financial performance, strategic initiatives, and future prospects.

Bumrungrad Hospital: A Deep Dive

Current Performance and Market Position

Bumrungrad Hospital (BH TB) is a leading private hospital in Thailand, operating in the premium segment with 580 licensed beds. Known for its strong brand recognition, particularly among international patients, BH focuses on high-intensity treatments. The hospital has not expanded its facilities in the past decade, yet it has managed consistent growth through price adjustments, achieving a compound annual growth rate (CAGR) of approximately 7% from 2013 to 2023.

In 2023, international patients contributed to 67% of Bumrungrad’s revenue, a figure that has rebounded to pre-COVID-19 levels, albeit 37% higher. The hospital is planning to further extend its reach with a new 212-bed facility in Phuket, scheduled to open in late 2026 or 2027.

Financial Metrics and Challenges

Bumrungrad Hospital’s financial performance in the third quarter of 2024 was underwhelming, with a net profit of THB1.96 billion, flat year-over-year and slightly up quarter-over-quarter by 1%. Revenue declined by 5% YoY, primarily due to a 7% drop in international patient revenue. This was largely impacted by geopolitical issues and policy changes in the Middle East, notably a 67% decline from Kuwait and a 37% decline from the UAE.

Despite these setbacks, Bumrungrad has managed to maintain an impressive net profit margin of 30% and an average return on equity (ROE) of 28% for FY24-26E, the highest among its peers in the healthcare sector. The hospital’s strong pricing power and efficient cost management are key contributors to this performance.

Future Prospects and Strategic Initiatives

Looking ahead, Bumrungrad Hospital is forecasted to achieve a 4% net profit CAGR for FY25-26, driven by a projected 4% revenue growth. This growth is expected to stem from a 2-3% increase in pricing and a 1-2% increase in treatment intensity. The hospital is also enhancing its client engagement efforts and facilitating travel arrangements to mitigate current challenges with international patients.

In addition, the upcoming hospital in Phuket is expected to be a significant growth driver. With a focus on wellness services and minimal overlap with the Bangkok facility, this expansion is poised to capture the lucrative medical tourism market in Phuket. Although initial costs may pressure profits, the project’s net present value (NPV) is expected to add approximately THB12 per share to Bumrungrad’s valuation.

Valuation and Recommendation

Maybank Securities maintains a “Buy” recommendation for Bumrungrad Hospital, with a revised target price of THB250. The current valuation, with a price-to-earnings (P/E) ratio of 21x for FY25E, is deemed attractive for long-term investors. Bumrungrad’s robust capabilities in treating complex diseases, high pricing power, and substantial foreign patient base position it favorably against market risks.

However, potential downside risks include slower-than-expected recovery of international patients, increased competition in medical tourism, and possible regulatory changes affecting pricing. Despite these challenges, Bumrungrad Hospital’s strategic initiatives and financial resilience make it a compelling investment opportunity in the healthcare sector.