Introduction

Bangkok Chain Hospital Public Company Limited (BCH) has been under the financial spotlight as it continues to navigate the complexities of the healthcare market in Thailand. This in-depth analysis offers a comprehensive review of BCH’s financial performance, strategic decisions, and market positioning as of December 2024. The report, prepared by UOB Kay Hian Securities, provides key insights into BCH’s operational statistics, financial health, and future outlook, making it a crucial read for investors and stakeholders in the healthcare sector.

Company Overview

Bangkok Chain Hospital operates a group of mid-sized hospitals located in Bangkok and its suburban areas, primarily serving middle-income locals and patients registered under the government-sponsored social security scheme. With a focus on delivering quality healthcare services, BCH has carved a niche in the competitive healthcare market.

Financial Performance and Market Metrics

BCH’s stock is currently priced at Bt16.60, with a target price set at Bt20.00, indicating a potential upside of 20.5%. The company’s market capitalization stands at Bt41,396.2 million, with shares issued totaling 2,493.7 million. BCH is classified under the Health Care sector, with its stock ticker being BCH TB. The company has experienced a 52-week high and low of Bt23.80 and Bt14.80, respectively.

Despite the setbacks from the absence of Kuwait patients, BCH has shown resilience with a neutral tone from the recent 3Q24 analyst meeting. The organization has successfully managed to maintain growth, aided by a favorable conclusion regarding the AdjRW>2 rate for the upcoming year. However, a potential downside for this year’s earnings remains due to a possible reduction in the current AdjRW>2 rate.

AdjRW>2 Rate Developments

Significant progress has been made concerning the AdjRW>2 rate, with the Private Hospital Association (TPHA) and Social Security Office (SSO) agreeing on a fixed payment rate of Bt12,000 per head for 2025. Historically, the actual payment has hovered around Bt10,000 per head. This development is positive for BCH as it ensures more predictable revenue streams. The SSO is currently reviewing its treatment criteria to adjust the coverage, potentially removing high-cost treatments such as bariatric surgery. However, this change is not expected to impact BCH significantly, as bariatric surgeries constitute only a small portion of SSO revenue.

Impact of Co-Payment Insurance

The insurance landscape is also evolving, with companies planning to implement a co-payment scheme where patients cover approximately 20% of medical treatment costs. This move aims to curb insurance misuse. Despite these changes, BCH’s earnings are unlikely to be affected, given that the treatment pricing remains unchanged, and only a small fraction of traditional insurance holders will transition to co-payment insurance.

New Cancer Centre and Operational Efficiency

The establishment of the Kasemrad Ari Radiation Oncology center is set to significantly reduce BCH’s referral costs by Bt70m-80m annually. The center, which commenced operations in early September 2024, has shown promising growth and is expected to achieve full capacity by October. It primarily focuses on treating SSO patients, with potential plans to extend services to Universal Coverage Scheme patients, thereby opening up new revenue streams.

Future Outlook and Recommendations

Looking ahead, the return timeline for Kuwait patients remains uncertain, and while the AdjRW>2 rate for next year has been agreed upon, the rate for the second half of 2024 could still face reductions. Despite these challenges, BCH is poised for growth, particularly from international patients and SSO patients, as many of its hospitals are scheduled to reopen post-renovation. The report maintains a ‘BUY’ recommendation with a target price of Bt20.00, based on a 2025 EV/EBITDA multiple of 14.0x. The favorable AdjRW>2 rate conclusion and the anticipated increase in SSO patient numbers support this optimistic outlook.

Environmental, Social, and Governance (ESG) Commitments

BCH is dedicated to operating with environmental responsibility, addressing important social issues, and ensuring good governance practices. The company strives to minimize adverse environmental impacts, engage with communities, and uphold integrity and transparency in its business operations.