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Bangkok Dusit Medical
Kim Eng Securities (Thailand) has upgraded its recommendation on Bangkok Dusit Medical Service (BGH) stock from "hold" to "buy" on weakness, with a fair value of Bt38 per share.
The broker remains positive on BGH due to its large network of private hospitals, improving economies of scale and widening customer base. Also, the number of foreign patients in Thailand has tended to increase, aided by the company's reputation for quality medical care and specialised treatment at relatively low prices. BGH recently launched new hospital projects in the United Arab Emirates and Cambodia.About 65 per cent of total revenue comes from Thai patients. As its fees are among the highest for private hospitals in Thailand, there is a risk of patients turning to hospitals that provide cheaper treatment because of the economic slowdown. As a result, the company's ability to raise medical fees in the future is likely to be limited in the short term. The broker believes the number of foreign patients visiting Thai hospitals will continue to increase over the next few years given the high standard of medical treatment and the relatively low cost of healthcare here. Another factor supporting the strong growth of the Thai health industry is that patients can spend their convalescence at health or spa centres in relaxing beach resorts in Phuket, Hua Hin and Krabi. The brokerage has revised upward its 2007 net earnings forecast by 7 per cent to Bt1.62 billion, rising 22 per cent year on year.
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