BDMS Climbs 2%, Analyst Recomm. “BUY” with TP of ฿26 on Its Strong 2Q21 Profit Outlook

The share price of Bangkok Dusit Medical Services Public Company Limited (BDMS) rose ฿0.50/share or 2.16% to ฿23.60/share as of 16:09 local time in Thailand, with a trading value of 1,809 million baht.

Krungsri Securities (KSS) has given a “BUY” recommendation on BDMS with a target price of 26.00 baht per share as the group’s flexible business structure will help them to capture a slice of the domestic Covid services market, which would lift 2Q21F profit by 269% yoy and 26% qoq. In 2H21, they could also see a return of international patients who seek high-intensity (and high-margin) treatments, if borders reopen as planned. Hence, they will meet KSS FY21F profit. BDMS is a laggard, it has risen only 7% QTD vs BCH (+50%) and CHG (+29%).

KSS estimates BDMS to book 1.7 billion bath profit in the quarter, jumping 269% yoy and 26% qoq. Revenue from Covid services has surged 350% qoq to 3.2 billion baht, or 18% of group revenue vs <5% in 1Q21. KSS estimates BDMS conducted 340,000 Covid tests in 2Q (+150% qoq). BDMS has increased the number of cohort wards to offer 1,700 beds in 2Q vs 680 in 1Q, and utilization had reached 70-80%.

Recently, some hospitals have temporarily halted Covid screening services to asymptomatic cases because their cohort wards are full. BDMS 2Q21F profit would take 6M21 earnings to  3 billion baht, or 37% of KSS full year forecast. BDMS will release results on 10 August.

BDMS expects the latest outbreak to be contained in 3Q. Krungsri Research estimates daily new cases will drop below 100 by mid-August based on 250,000-270,000 doses of vaccine dispensed daily. The country reopening will unlock pent-up demand from foreign patients for high-intensity treatments. BDMS will be a prime beneficiary of this. This would support FY21F earnings.

BDMS has a strong balance sheet with 4.3 billion baht net cash at end-March, but they are cautious of CAPEX spending.  KSS anticipates 6-7 billion baht annual CAPEX for maintenance. This suggests limited debt default risk and dividend would be sustainable at 0.55 baht per share (2.4%yield).