FRIDAY, March 29, 2024
nationthailand

Ekachai Hospital targets high growth for 3 years after listing

Ekachai Hospital targets high growth for 3 years after listing

EKACHAI Hospital (EKH) expects to maintain double-digit revenue growth for the next three years, while keeping its ethical-treatment standards high, after floating its shares on the stock market by the end of this month, said hospital director Dr Amnaj Eu

Speaking at a roadshow at the Stock Exchange of Thailand yesterday, Amnaj said that thanks to the trust the hospital had gained from its patients over the past 10 years, he was confident EKH would continue to grow solidly. The 86-bed hospital’s revenue has grown by an average of 9.79 per cent annually during the last three years, from Bt363.85 million in 2013 to Bt438.61 million last year. It booked 21.56-per-cent growth in the first quarter of this year. Net profit increased from Bt30.64 million in 2013 to Bt32.21 million in 2014, and to Bt48.57 million last year. For the first quarter of 2016, net profit jumped to Bt17.67 million, from Bt6.88 million a year earlier.
Amnaj explained that EKH had to reduce its registered capital to write off accumulated losses in 2015 due to losses from providing services to patients covered under the government’s Social Security Fund, which it decided to quit in 2011.
EKH had incurred a loss in each of the years that it was part of the Social Security scheme because the hospital, which was founded by a group of medical personnel and prominent businesspeople in Samut Sakhon province, decided not to compromise its ethical standards to provide different treatments to Social Security patients, he said.
“Ethics is the big thing. We don’t use money [concerns] to set the rules and criteria in taking care of our patients. Doing business without taking advantage of others is more sustainable,” said Amnaj, an obstetrician by profession. The first quarter’s spectacular profit growth did not come from raising any service fees. EKH, in fact, has not increased its treatment rates for a few years.
“We still have room to increase our margin, since there are still price gaps as we’re selling [our services] at lower prices than other hospitals. But any price increase has to be justified,” said the hospital director.
Somphob Keerasuntonpong, president of Finansia Syrus Securities, financial adviser and lead arranger of EKH’s initial public offering, said the IPO price would be finalised next Wednesday, the same day that it would sign agreements to appoint underwriters and arrangers of the stocks.
Six brokerage houses suggest Bt4-Bt4.5 as target prices of the EKH stocks, reflecting a forward price-to-earnings ratio of about 40 times. The average P/E ratio of listed hospital companies is currently 43 times.
Funds raised from the IPO will be used to build a new children’s hospital building in the same area of the existing hospital, as well as for renovating the existing hospital and parking facilities, and for working capital. The 50-bed children’s hospital building will require an investment of Bt200 million and will be completed in early 2019.
EKH makes about half of its revenue from contractual clients that include life insurers, corporates and government agencies, and the other half from general patients.
By department, the emergency centre contributed 32.73 per cent of total revenue last year, followed by the paediatrics and obstetrics and gynaecology centres, which provided a combined 23.51-per-cent share, and the general-medicine clinic at 18.23 per cent.
EKH will float 166.8 million shares at Bt0.50 par value, accounting for 27.8 per cent of the total stocks after the IPO. Of the total amount, 10 million stocks will be allocated to directors, management and staff of the hospital.

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