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Bumrungrad Hospital
Tisco Securities has downgraded its recommendation on Bumrungrad Hospital shares from "buy" to "hold", with a 12-month target price of Bt42 apiece.
The hospital recently announced an agreement to acquire Asia Renal Care (ARC), the region's leading provider of dialysis and related services. Bumrungrad International, which is 31.5-per-cent owned by Bumrungrad Hospital, will make the acquisition, which will likely be completed in June at a cost of US$70 million (Bt2.44 billion). The deal will be paid for in cash.ARC operates in Taiwan, South Korea, the Philippines, Malaysia and Singapore. It also provides management services in Japan. For the Bumrungrad Hospital Group, the benefits of the deal include exposure to a high-margin business, access to an attractive source of patient referrals and establishment of a firmer foundation in Asia. However, the overall contribution to earnings from the deal is likely to be limited. The broker has revised upwards its net-profit forecasts for Bumrungrad Hospital by 0.14 per cent to Bt1.42 billion this year, 0.97 per cent to Bt1.76 billion next year and 1.05 per cent to Bt2.11 billion in 2009. It says the main downside risks are tough competition in both local and international markets, a worsening of political tensions in Bangkok - including acts of violence - and delays to Bumrungrad's hospital projects abroad.
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