Bumrungrad Hospital

Bumrungrad Hospital Plc (BH) 

 

- 1Q15 profit grows most among peers 

BH's 1Q15 net profit was B974.1m, leaping 52.6%yoy. Total revenue jumped by 21.6%yoy to B4.37bn. International patient volume (especially from Indochina, e.g. Yemen, Ethiopia, Bangladesh, and Myanmar) increased significantly from the weak base in 1Q14 (due to the political unrest). Outpatient volume rose by 7.6%yoy (international outpatient volume climbed 27.8%yoy), and inpatient volume grew by 5.2%yoy (international outpatient volume jumped 20.2%yoy). BH raised its service fee by 5.7% (which is usual in the beginning of the year), while cost of service did not increase immediately (depends on the inflation rate). Consequently, 1Q15 gross profit margin made a record high of 46.4% and 1Q15 net profit grew most significantly among peers. 

- Profit growth to slow down from strong base 

Although profit growth in 2Q15-4Q15 is not likely to be as significant as in 1Q15 compared with strong international outpatient volume base from 2Q14 on and increasing cost of service due to higher inflation rate, BH's profit is expected to grow by at least 15%yoy for the remainder of the year after 1Q15 profit made up almost 30% of our forecast. We revise up FY2015-2016 earnings forecast by 8.4%p.a, estimating BH's net profit to leap by 30.3% to B3,557m in 2015 and advance by 13.2% in 2016. The construction of the new 22-storey building (excluding four basement parking floors) on New Petchaburi Road will start in 4Q15, probably complete in the next two years and a half to three years; this will promote BH's earnings growth in the next five to ten years. 

- Best growth among peers. BUY 

BH's profit is expected to rebound best in 2015. Under the new forecast, FY2015 fair value of B195 implies 16.1% upside. We upgrade our recommendation from HOLD to BUY.