Krungsri Securities (KSS) has released its latest outlook for Bangkok Chain Hospital Public Company Limited (SET: BCH), projecting a net profit of THB 254 million for the fourth quarter of fiscal year 2025 (4Q25F). This figure marks a 9% year-on-year (YoY) increase but a 27% decrease quarter-on-quarter (QoQ), falling short of initial forecasts.
The lower-than-expected earnings are primarily attributed to two factors. First, BCH faces a Social Security Office (SSO) penalty for Relative Weight greater than 2 (RW>2) violation spanning fiscal years 2019-2023, which has resulted in a one-time charge of approximately THB 53 million. Second, a two-week service suspension at Kasemrad Aranyaprathet Hospital led to a decline in revenue that outpaced reductions in costs and expenses.
Despite these setbacks, annual profit growth is supported by a resilient medical service sector. Medical service revenue is projected to rise by 8% YoY (but will slip by 2% QoQ), with cash patient income increasing by 3% YoY (and 2% QoQ), and social security revenue advancing by 12% YoY (though dropping 8% QoQ). Additionally, SG&A expenses are expected to decline by 3% YOY but rise 2% QoQ, owing to the restructuring efforts at Kasemrad Vientiane Hospital.
On a quarterly basis, net profit contraction is attributed to higher costs (+5% YoY and +2% QoQ), which are growing faster than revenue, pushing down gross margin to 25% QoQ.
For the full year 2025, KSS estimates BCH will deliver a net profit of THB 1,310 million, up 2% YoY, translating to earnings per share (EPS) of THB 0.53—7% below the initial target. However, a stronger-than-expected dividend is on the horizon. With significant retained earnings exceeding THB 9,000 million, cash reserves of approximately THB 1,380 million (or THB 0.53 per share), and a robust net cash position, BCH is expected to pay a dividend of THB 0.45-0.50 per share (yielding 4-5%) for FY25, outpacing both FY24 and current forecasts.
Looking ahead to 2026, KSS projects a rebound in performance. Net profit in FY26 is expected to reach THB 1,535 million (+10% YoY), bolstered by a 6% YoY recovery in revenue and improved margins. The latter will be driven by enhanced treatment capabilities, facilitating increased treatment intensity and reducing the need for patient referrals.
Citing these prospects, KSS maintains a “Buy” recommendation on BCH with a target price of THB 15.80, based on the discounted cash flow (DCF) model, a weighted average cost of capital (WACC) of 7.2%, and a long-term growth assumption of 3%. Analysts point to three positive drivers: a stronger-than-expected FY25 dividend, anticipated FY26 net profit growth exceeding the sector average (+6% YoY), and additional catalysts from the return of Kuwaiti welfare patients and higher medical service fees in the social security segment.
Currently, BCH is trading at an FY26F price-to-earnings ratio (PE) of 16x, which KSS notes is below its -1 standard deviation.
