Bumrungrad Hospital Jumps 6% as Analysts Upgrade Rating to “BUY” on Strong Pent-Up Demand

Early Thursday trading saw a 6% increase in Bumrungrad Hospital Pcl. (SET: BH) shares after brokerage firms upgraded earnings outlook for the year 2023-25 on the back of the company’s strong second-quarter financial performance.

As of 11.51 A.M. Bangkok time, the share prices of BH rose THB14.0/share, or 5.62%, to THB263.00/share, with a trading value of THB977 million.

In 2Q23, BH reported a net profit of THB1,748 million, up 49.9% from THB1,166 million in 2Q22, net profit margin at 28.4%, compared to 23.5% in 2Q22. 

Total revenues in 2Q23 was THB6,147 million, a 24.1% increase from THB4,954 million in 2Q22. Compared with 2Q19, in order to gauge the performance of the current quarter to pre-covid levels, 2Q23 total revenues and net profit increased by 42.7% and 141.1%, respectively, from 2Q19. 

Following positive surprise in 2Q23 results, Krungsri Securities raised core earnings for 2023 by 14% to a new high of THB6.7 billion, by 15% to THB7.2 billion for 2024, and by 16% to THB7.6 billion for 2025. 

The brokerage firm predicts that the several billion Thai baht in pent-up demand from fly-in overseas patients will remain until at least the middle of 2024. Patients from the Middle East, who typically demand intensive treatment (high margins), would drive this trend. Krungsri increased gross margin by 150-170 basis points to 48.6%-49.0% for 2023-25, in addition to the average price rise of 6.6% implemented in July this year. 

BH will also expand its services to 10 new countries and number of referral offices to 83 (vs 55-60 pre-Covid) in 47 countries. Since China has loosened restrictions for outbound residents, Krungsri anticipated an increase in revenue from Chinese patients (checkup and vital life services, IVF), as well as an increase in patients from Myanmar as a result of the relaxation of visa/passport requirements.

The brokerage has upgraded a recommendation for BH shares to “BUY” from HOLD, with a target price of THB282.00.