Bumrungrad Hospital

Share price already reflects recovery HOLD

Bumrungrad Hospital Plc (BH)

- 4Q14 net profit grows 9.9%yoy

As high season had passed, BH's 4Q14 net profit dropped 10.3%qoq to B689m but

grew 9.9%yoy. Income from the healthcare business rose by 14.4%yoy. BH recognized

income from Ulaanbaatar Songdo Hospital (UBSD), Mongolia, for the third quarter, thus

increasing BH's income by 2%yoy. Income from BH's hospital business increased by

8.8%yoy because outpatient volume rose by 3.7%yoy (international outpatient volume

grew 8.2%yoy) and inpatient volume rose by 7.4%yoy (international inpatient volume

grew 12.7%yoy). Revenue intensity from inpatient slipped 0.3%yoy while revenue

intensity from outpatient rose 2.1%yoy. BH has increased its medical and service fee by

5% at the beginning of the year. However, UBDS's gross profit margin is lower than BH,

thus lowering BH's gross profit margin dropped from 44.3% in 4Q13 to 43.2% in 4Q14.

Moreover, administrative expense increased by 13.5%yoy. Overall, BH's FY2014 net

profit was B2,730m, growing 8.3%yoy (slightly lower than expected).

- Profit to revive as international patients return

International patient volume has revived since 4Q14, likely to grow significantly in 2015

starting from 1Q15; this would benefit BH since international patients make up 61% of

its revenue. BH is expected to raise its medical and service fee by 5% at the beginning

of this year as usual. Overall, we estimate BH's FY2015 net profit at B3,281m, growing

20%yoy.

- Share price already reflects recovery. Downgrade to HOLD

BH's share price has already risen and reflected a recovery in international patient

volume, having a limited upside from FY2015 fair value (DCF) of B152. We downgrade

our recommendation from BUY to HOLD.