Bumrungrad remains a healthy prospect

Eight out of nine brokers in the Securities Analysts Association (SAA) updated their review on BH stock  last month and gave it a "buy" rating.

But the ninth broker made a "reduce-investment" recommendation for the stock.

Their targets for the stock vary between Bt32 and Bt47.83.

BH is an upmarket hospital operator with 554 inpatient beds and 3,500 outpatient beds.

It also has a wellness centre that specialises in the application of preventive medicine to manage the ageing process. It has made its presence felt abroad, including Taiwan and South Korea.

The company said its first quarter net profit amounted to Bt314 million, up 7 per cent year-on-year. But that was down 56 per cent quarter-on-quarter.

Asia Plus Securities has recommended a buy on the stock with fair value at Bt46.28.

BH's first quarter normalised profit surged 15 per cent year-on-year to Bt337 million, though the number of its patients grew at a flat rate, the broker said.

The improved normalised profit was attributable to a 5-per-cent rise on average in medicines and services.

Its gross margin for the quarter was raised from 38.9 per cent in the corresponding period last year to 39.5 per cent.

The inauguration of its new 7-storey building could also help drive its earnings growth, the broker said.

From the start of its operations last month, BH's outpatient capacity would rise by 28.5 per cent from 3,500 to 4,500 a day.

Outpatients at BH averages 3,000, accounting for 85 per cent of its customers.

The broker said renal care hospitals in South Korea and Taiwan, which began operating last March, would drive earnings growth in the second quarter.

"Therefore, we believe BH would be able to deliver normalised profit growth exceeding 10 per cent," it said.

The broker predicted BH's normalised profit this year would grow 12.9 per cent year-on-year to Bt1.26 billion.

KGI Securities (Thailand) was also positive, giving it a target price of Bt46.

It expects the share price to consolidate this quarter due to softer earnings.

Healthcare providers usually have lower revenues this quarter because of a drop in patients caused by the many public holidays this period.

It said a retreat in the share price offers an opportunity to accumulate the stock. Earnings should recover in the third quarter, a peak season for healthcare providers.

Some demand will comes from overseas patients such as those from the United Arab Emirates.

BH should also benefit from its increased outpatient capacity, it said.

"We expect demand to im-prove as consumer confidence and the economy recover," the broker said.

 IT said BH should post a net profit of Bt1.19 billion this year and Bt1.35 billion next year.

Like Asia Plus and KGI, Kiatnakin Securities is positive about BH, giving it a target price of Bt42.30.

BH's medical charge is competitive compared with similar hospitals overseas, it said. It expects BH to draw more foreign customers and raise its fees at the same time.

The firm has a strong financial position, it said, with a debt-to-equity ratio below 1.

"We expect it to pay a dividend of Bt0,85 per share, representing a 2.4-per-cent yield (based on dividend pay-out ratio of 61 per cent)," it said.

Kiatnakin said BH should have a compound annual growth rate averaging 10 per cent between now and 2010.

The broker estimated BH's profit this year would rise 8 per cent to Bt1.21 billion from last year.