4% upgrade to FY18 profit forecast on healthier-than-expected outlook

The overall outlook looks healthier than previously thought for BDMS this year, aided by (i) rising local patient volumes thanks partly to a continued outbreak of rotavirus infections from late last year and flu epidemic, and increasing international patient numbers, (ii) new insurance client groups through cooperation with health insurance companies, and (iii) expectations that EBITDA margins at one to two out of six new hospitals (BPR, RPH, SCT, SRH, DBK and BSR) will turn positive. In addition, the delay in the launch of Wellness Square OPD services at BDMS Wellness Clinic to 3QFY18 from early FY18 should also take some cost pressure off the bottom-line while finance costs are set to drop by between Bt200mn-Bt300mn from last year.

Following changes in some of our assumptions to reflect the above brighter than expected outlook, we bump up our FY18 net profit forecast for BDMS by 4% to Bt8,683mn from a previous estimate of Bt8,387mn but the new profit target still implies a drop of 15.0% y-y, reflecting a huge gain of Bt2.2bn from the divestment of BH in FY17. Stripping out ex-item, FY18 core profit is however expected to be 8.3% higher than the level seen in FY17. The new forecast is based on expectations that full-year revenue from hospital operations will rise 7.8% y-y to Bt74,501mn, which has been revised upwards from our previous estimate of Bt73,516mn.