Krungsri Securities (KSS) has reiterated its positive outlook on Bangkok Dusit Medical Services Public Company Limited (SET: BDMS), highlighting the company as an attractive value play in Thailand’s healthcare sector in 2026.
According to KSS, BDMS’ operating leverage is set to drive EBITDA growth of 5% year-on-year, outpacing an expected 3% YoY increase in revenue for the year. This robust performance, combined with minimal capital expenditure (CAPEX) growth of just 1% year-on-year, is fueling an estimated 9% rise in free cash flow to THB 12,321 million, or around THB 0.78 per share.
KSS noted that BDMS’ limited capex increase this year—projected to remain within 8–10% of revenue and closely aligned with last year’s level of THB 10,416 million—reflects a focus on targeted expansion. Management has indicated that the primary investment will go toward expanding bed capacity at two hospitals: Bangkok Hospital Hua Hin (adding 52 beds) and Bangkok Hospital Surat Thani (adding 60 beds). This comprises a modest 1% increase over the company’s existing structural bed base of 9,300.
While the sector overall is seeing CAPEX rise—KSS expects total capex for its four hospital stocks under coverage to increase 27% YoY to THB 17,739 million as BH, BCH, and CHG expand existing and new facilities—BDMS stands out for its disciplined approach, with only a marginal 1% uptick.
Cost management remains a key priority for BDMS. Drug and medical supply costs consistently represent about 19% of revenue, according to KSS, with energy costs at 1.4%. BDMS has further optimized its operations by extending inventory holding periods for drugs and medical supplies to three months, up from the previous one to two months. Management has stated that, should input costs rise, selective price adjustments may be made, but preserving the company’s strong EBITDA margin—expected to remain at 24%—remains a focus.
With free cash flow trending upward, KSS believes BDMS has the capacity to deliver dividends exceeding its previous estimate of THB 0.75 per share for 2026, translating to a yield of 4%. Return on equity is forecast to rise to 15.7% in 2026, and up to 16.3% by 2028, driven by consistent earnings growth and an increasing dividend payout—anticipated to climb to THB 0.80 per share by 2028.
KSS maintains a Buy recommendation on BDMS, setting a 2026 target price of THB 27 per share (using discounted cash flow analysis at a 6.7% WACC). The brokerage cites BDMS’s broad nationwide hospital network, integrated medical services ecosystem, and strong ROE outlook as key competitive advantages, underpinning margin expansion and efficient service delivery.
In summary, BDMS remains KSS’ top sector pick for its strong financial outlook, prudent investment approach, and the potential for higher-than-expected dividends, positioning the company for continued outperformance in Thailand’s healthcare sector.
