BDMS scraps tender offer for Bumrungrad shares citing unfavourable conditions
Prasert Prasarttong-Osoth, the major shareholder of Bangkok Dusit Medical Services (BDMS), has cancelled the plan to make a tender offer for the shares of Bumrungrad Hospital (BH) due to unfavourable stock market conditions.
On Tuesday (June 23), BH closed at Bt116.50 per share, lower than BDMS' tender offer of Bt125 per share.
"If the stock market sinks further, we will not be able to buy all BH shares because foreign investors, such as from Singapore and China, also will be able to buy this share," he said.
"Meanwhile, after we made a tender offer for BH, the owner of this share had a problem with us, and so we decided to cancel the plan."
Parin Kitchatornpitak, an analyst at KGI Securities (Thailand), said that the BH share price dropped due to uncertainty that BDMS may cancel the tender offer plan.
"BDMS may not able to buy all BH shares because the Sophonpanich family, the major shareholder, has allowed Bangkok Bank to hold an additional 10 per cent of BH shares," he said.
"Meanwhile, the growth of BH in the short term may be limited because the number of patients who used medical services in the first half of this year would drop due to the Covid-19 outbreak," he said.
He added that if the pandemic situation continues, BH's net profit in 2020 and 2021 are expected to drop by 26.9 per cent and 24.5 per cent to Bt3.17 billion and Bt3.35 billion, respectively due to the decline in gross profit and the number of foreign patients.
"Seeing the economic situation, BH would not launch any investment plan for two to three years, while the company's net debt-to-equity ratio was very low," he said. "Therefore, we expect the company to increase dividends in 2020 and 2021 to 65 per cent from 62 per cent in 2019 and 51 per cent in 2018."
He added that the suitable price for a BH share in the long term would be Bt140 per share if one evaluated using the Discounted Cash Flow method.
