Bumrungrad Hospital: Investing in Asian Healthcare For the Long Term

Bumrungrad Hospital Public Co Ltd (SET: BH) is a leading healthcare provider both within, and outside of, Thailand. The company operates and manages a private hospital in Bangkok (Bumrungrad International Hospital, its flagship property) that includes 580 licensed beds and capacity for over 5,500 outpatients per day.

Outside its home country, the company also manages Bumrungrad Clinic Yangon in Myanmar and Ulaanbaatar Songdo Hospital in Mongolia.

A premier facility in the heart of Bangkok

The company’s crown jewel, Bumrungrad International Hospital (BIH), accounts for approximately 95% of reported revenues, across 47 clinics/centres, 272 examination rooms, and 580 beds.

The healthcare facility’s reputation is second-to-none, having been the first hospital in Asia to receive the US standard accreditation from the Joint Commission International (JCI) – considered the gold standard in healthcare and patient safety.

BIH was also the first hospital in Thailand to receive accreditations from the College of American Pathologists, and the first in Asia to receive Det Norske Veritas in Managing Infection Risk.

International patients the majority of top line

Both high-quality facilities and price competitiveness are the key factors for BIH. Revenues are slightly tilted to outpatients, which accounted for 53% of sales in 2018. But international patients drive topline figure, accounting for 66% in 2018.

With 51 offices in 28 countries, including four in China, Bumrungrad’s international referral offices arrange appointments and travel for overseas patients. Bumrungrad treated over 629,000 international medical episodes from over 190 countries in 2018.

Bumrungrad Hospital breakdown of patient revenue by geography

Source: Bumrungrad Hospital Investor Presentation

International patients will remain the influential earnings catalysts for BIH, with the trend evident during the second-quarter results as revenues from non-Thais grew 4%.

Middle East patient revenues, which account for a fifth of patients, rose 6% over the same reported period. The numbers are particularly encouraging given the political backdrop in both the Middle East and Thailand during the first half of the year, as well as the stronger Thai baht.

Trending higher in the future

While Bumrungrad trades at a premium to its sector peers, valuations have fallen as the company reversed price hikes as a marketing strategy to help patient traffic. But with almost 70% of patients self-paying, and new investments like the Bangkrajao Vitallife Wellness Project opening in April 2020, earnings catalysts are evident.

Bumrungrad supports a steady EBITDA margin of 30%, while the new Thai government’s push for infrastructure projects should continue to draw more visitors into the country, particularly intraregional travellers. This should help boost the fortunes of Bumrungrad in the long term as it will be a prime beneficiary of medical tourism in the region.

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