Bumrungrad Hospital

Bumrungrad Hospital Plc (BH)

- The recent drop in share price offers more attractive upside gain to our

-TP. We upgrade BH to Neutral from Sell with 2013 TP at Bt88/share.

Seasonally soft 2Q13 is an opportunity to accumulate ahead of anticipated
record core earnings in 3Q13
Upgrade to Neutral from SELL. QTD, BH’s share price has declined by 9% and
underperformed the market by 4%. The drop in share price provides 13% upside gain
to our TP and in response we upgrade BH to Neutral from Sell with an unchanged
2013 TP of Bt88/share. BH is trading at 29x 2013PE, in line with regional peers, but it
has healthy earnings growth with the strongest 2013 ROE of 26% vs. the 15% average
for regional peers.
Soft 2Q13F is opportunity to accumulate for stronger in 3Q13F. The healthcare
sector is in its usual second quarter quiet period, but then operations will return to
high gear, with patient volume - both domestic and international – rising in 3Q13,
domestic driven by flu season as Thailand enters the rainy season and international
largely from the Middle East after Ramadan (9 July–7 August 2013). With the revenue
contribution from international patients at 60% and from the Middle East at 20% of
that, we expect BH to deliver record core earnings in 3Q13 and this should be shortterm
positive sentiment to push its share price up.
Capacity expansion. At the existing campus, BH plans to open the five remaining
floors of its new BI Clinic building and this will increase its OPD capacity by 30% from
the current maximum of 4,500 visits/day in 2Q13-3Q13. It will add ~100 beds or 21%
additional capacity, beginning in June-July, to complete in 2014. The new campus, a
second hospital on Petchaburi Road, is under construction and will start operations in
2017. BH plans to set up this new hospital as a specialty institution for women and
children.