On Thursday at 11:06 AM (Bangkok time), the share price of Bangkok Dusit Medical Services Public Company Limited (SET: BDMS) soared by 5.17% or THB 1.20 to THB 24.40, with a trading value of THB 1.44 billion.
Kasikorn Securities (KS) noted that BDMS reported a 4Q24 normal profit of 4.3 billion baht, exceeding both the analyst’s and the market’s expectations by 7%, primarily due to tax savings and a higher gross margin than anticipated. The normal profit figure grew by 2% QoQ and 10% YoY, marking a new record high. Additionally, BDMS announced a second-half dividend payout for 2024 of 0.40 baht per share, constituting a 74% payout ratio, with an ex-dividend date (XD) scheduled for March 12.
Total revenue for the quarter grew by 4% YoY, reflecting a slowdown compared to the first three quarters of 2024, due to a weak economic condition and a high revenue base in 4Q23. Revenue from international patients, especially from Qatar, China, and the United States, was the main contributor to revenue growth, accelerating in 4Q24.
Gross profit margin expanded QoQ but remained stable YoY, even though the bed occupancy rate declined in both QoQ and YoY, indicating increased disease complexity and efficient cost management. SG&A expenses increased slightly, but the SG&A-to-revenue ratio remained within normal ranges. The EBITDA margin stood at 24.9% in 4Q24, similar to 3Q24 and 4Q23.
For 1Q25, revenue is expected to improve QoQ and YoY. However, the launch of the Samitivej International Children’s Hospital in January 2025 may exert pressure on the margin.
The analyst maintained a ‘Buy’ recommendation for BDMS, setting a target price at 29.40 baht per share. The higher-than-expected 4Q24 profit should positively influence the stock price. Although revenue growth appears to slow, it reflects BDMS’s ability to manage costs to maintain a strong margin.
Moreover, BDMS is the only hospital network trading below -1SD and closer to the worst-case scenario value (23.1 baht). BDMS plans to hold an analyst meeting on March 11. Downside risks include a weakening economy, costs rising more than expected, and more intense competition than anticipated.
Asia Plus Securities stated that BDMS’s profit for 2024 amounted to 15,987 million baht, representing an 11% year-on-year increase. This growth was driven by a 5% increase in Thai patient volume and an 11% rise in foreign patients (Qatar 49% YoY, China 31% YoY, USA 25% YoY). Financial costs decreased by 21% YoY due to the redemption of mature debentures and partial repayment of financial institution loans, coupled with an effective tax rate of 18.7% under the BOI program.
The profit outlook for 1Q25 is supported by Thai patients, attributed to an increase in dengue fever cases YoY. However, there might be pressure from foreign patients as the full quarter aligns with Ramadan 2025, resulting in less patients travelling to Thailand for medical help. Still, the outlook for the entire year remains positive due to the expansion of the medical tourism customer base in key provinces, with potential selection as one of three hospitals by the Kuwaiti government to become a contract hospital, which would revive growth in Middle Eastern clients.
BDMS’s robust financial position, coupled with comprehensive business operations from disease prevention to post-treatment rehabilitation, along with the benefits from health tourism growth, suggest an attractive growth rate over the next 3-5 years. The analyst gives an ‘Outperform’ recommendation for the company, with a fair value at 36 baht based on DCF method, representing a 55% upside.
