Bangkok Dusit Medical Services

Bangkok Dusit Medical Services (BGH)

What’s new? Bangkok Biznews reported that the Viddayakorn family sold its entire 13.7% (212m shares) stake in BGH to local and foreign investors yesterday in big-lot transactions at prices ranging Bt104-107.
Shareholding structure change: The Viddayakorn family was a founding shareholder of BGH, along with Dr Prasert Prasarttong-Osoth and his family and the Thongtang family. The divestment leaves BGH with two main shareholders—the Prasarttong-Osoth family (23% stake at end-March), the Thongtang family (14% stake). We assume that Dr Prasert Prasarttong-Osoth bought some of the shares sold by the Viddayakorn family.
Unlikely to impact core operation: The sale by a major shareholder shouldn’t have any impact on the company. BGH will continue acquiring existing hospitals (as suitably priced targets present themselves) and building new locations in order to sustain long-term earnings growth. We expect the firm to report double-digit YoY and QoQ revenue growth for 3Q12 high season.
But negative sentiment at discounted price: Although BGH’s fundamentals will remain strong, the deal will generate negative sentiment toward the stock in the short-term because of the big-lot transactions’ 2.3-5% discounts to yesterday’s closing price. 
Action: The deal last night will probably cap the share price in the short-term. However, we expect BGH to deliver sustained strong earnings growth in the months and years ahead. Our BUY rating stands unchanged with a YE13 target price of Bt126 (a 20% discount to DCF value).