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Bumrungrad Hospital Plc (BH), Thailand’s most recognized hospital across the world and among expatriate community in the country, reported its 2nd quarter results that beat market expectations with 2nd half of the year likely to see patients picking up.
BH reported a 2nd quarter 2024 pre-ex net profit of 1.94 billion Baht, +11% year-on-year (YoY) but – 2% quarter-on-quarter (QoQ), slightly above analyst’s consensus estimate of 1.88 billion Baht. For the 1st half of 2024 ending June 2024, BH reported a net profit totaled 3.9 billion Baht, +17% YoY
Charti Phrawphraikul, analyst at Kiatnakin Phatra Securities said that he had estimated BH to report a net profit of 1.9 billion Baht during Q2 2024, but the earnings were at 1.94 billion which would make up 52% of his consensus full-year profit forecast.
Charti said that BH’s revenue growth decelerated by more than expected despite the shift of the Ramadan period more toward Q1 2024 compared to Q1 2023 (by 10 days) due to the continued absence of Kuwaiti patients and the low seasonality effect on domestic demand. However, margins improved by more than expected thanks to high operating leverage and strong cost control.
Tisco Securities’ analyst Pimchalalai Washirakom says that the revenue was weaker-than-expected at 6.67 billion Baht, growing 4% YoY but falling – 4%QoQ. Support came from non-Thai patient revenue growth of 5.3% YoY vs. Thai patient revenue growth of 2.1% YoY.
Charti of Phatra said that revenue from domestic patients only increased by 2% YoY, compared to 9% YoY during Q1 2024. H1 2024 revenue increased 6% YoY with revenue from international patients increasing by 6% YoY and revenue from domestic patients increasing by 5% YoY. As such, revenue contribution from international patients increased to 66% in Q2 2024, up from 65% in Q2 2023.
Margins Expanding
BH’s margins continued to expand against Phatra’s expectation of margins lowering from Q1 2024. While revenue grew by 4% YoY, cost of operations reduced by 1% YoY and 4% QoQ while administrative expenses only grew by 2% YoY and reduced by 1% QoQ.
As such, EBITDA margin expanded to 40.5%, up from 40.3% in Q1 2024 and 38% in Q2 2023. Pre-ex net margin followed a similar trend, having expanded to 30.7% in Q2 2024, up from 30.2% in Q1 2024 and 28.8% in Q2 2023.
As for H1 2024 earnings before interest, tax, depreciation and amortization (EBITDA) margin increased to 40.4%, up from 36.9% in H1 2023 while pre-ex net margin expanded to 30.5%, up from 27.5% in H1 2023.
Panjapon Taensricharoen, analyst at Bualuang Securities says that with the end of Ramadan, Middle East arrivals normally rebound in May-June due to pent-up demand following the Ramadan period which ran March 11 – April 10 this year.
Panjapon adds that given that, Bualuang expects BH to be the highest beneficiary from Middle East patients which drove BH’s overall healthcare gross margin in Q2 2024. Middle East patients consisted of 25-30% of BH’s top line (5% for BDMS) and they are generally high revenue intensity patients.
Panjapon says that the Ministry of Tourism & Sports reported that 186,000 Middle Eastern tourists entered Thailand in Q2 2024, up 37% YoY and 112% QoQ. Saudi Arabian arrivals to Thailand in Q2 2024 were 63,000 persons, a strong recovery of 50% YoY and 129% QoQ (34% of arrivals from the Middle East).
“We strongly recommend accumulating BH in anticipation of an impressive healthcare gross margin despite the low season in Q2 2024. Therefore, Q3-Q4 2024 we expect to see another all-time-high core earnings from economies-of scale which will be reflected in healthcare gross margin,” Panjapon says who has a 12-month target price of 310 Baht/share.
“Earnings momentum will rise YoY and QoQ starting in Q3 2024 till Q4 2024 and hover above the street’s expectations. The stock only trades at 25.5x for PER 2024, cheapest among high-end hospitals,” Panjapon says.