Bangkok Dusit Med Service

Bangkok Dusit Med Service Plc (BGH)
 
BGH plans to acquire overseas hospitals, which we believe will help it diversify business risks.
For this, it deserves some premium over its local peers. It also plans to add domestic hospitals
in districts where it does not have any presence. We view both moves positively. With a strong
balance sheet, we believe BGH can afford to add hospitals. Maintain OUTPERFORM and target price, still at 27x CY13 P/E (1 SD above its 5-year average). We believe overseas expansion can catalyse its share price further. It remains one of our top picks in the Thai market.

Aggressive expansion plans

BGH plans to add 3,000 beds to its existing 5,000 over the next three years, or 17% p.a. We believe it will focus more on neighbouring countries with less-developed healthcare markets. This would give BGH a first-mover advantage in those countries. Domestically, BGH plans to add three hospitals with almost 500 beds, largely in the north and northeast where BGH does not yet have any presence. This will allow it to cover the whole country. With a strong balance sheet, we believe BGH has the financial muscles to acquire hospitals plus manage its domestic expansion programme.

Management still buying shares

Despite its strong stock performance,Dr Prasert Prasartt0ng-Osoth,Group confidence in BGH’s
prospects.Since late Mar 12, he has bought 4m shares at an average cost of THB92.60/share. His
family and alliance now control about 24% of BGH, forming the largest group of shareholders.