BCH - Healthy growth in 3Q led by WMC (TP Bt21.0, OUTPERFORM)
(18/10/2018 - 09:10)
กลุ่มอุตสาหกรรม การแพทย์
หุ้น BCH
มูลค่าพื้นฐาน 21.00
คำแนะนำ BUY
  • Expect profit to hit new high of Bt340m in 3Q18F (+13% yoy, 36% qoq) led by strong performance at WMC
  • Earnings should remain strong in FY19F led by IVF Center at WMC and opening of KH Ram (to replace KRV Sukhapibal 3)
  • OUTPERFORM, DCF-based TP of Bt21/sh (8.1% WACC, 3% LTG) implies 22x FY19F EV/EBITDA

 

Improving WMC operation, revenue to hit new high in 3Q18F

We expect cash patient revenue to grow by 12% yoy. Revenue from WMC should grow to Bt260m (+64% yoy, +2% qoq) led by Middle East patients who mostly seek treatment for diabetic foot and heart problems. Thus, WMC should remain profitable (Bt17m) in the quarter. We expect SS revenue to inch up 2% yoy. Although its SS member base should decline slightly yoy, BCH would receive actual payment for chronic disease (RW<2) treatments amounting to c.47% of the total annual budget. Hence, BCH will book extra SS revenue as actual receipt is higher than accrued amount. EBITDA margin should be relatively flat yoy. Overall, 3Q18F profit should grow 13% yoy to Bt340m. BCH might book c.Bt20m provision for SS operation in the quarter following temporary reduction in reimbursement rate for high-intensity cases (booked Bt20m in 2Q18F); we have not included this in our forecast.

 

IVF Center should lift WMC’s topline by more than 10%

We expect slower earnings growth in 4Q18 due to smaller extra SS revenue and should resume healthy in FY19. Key drivers include IVF Center at WMC which is scheduled to open by 1Q19; we estimate that would lift WMC’s revenue by 13% based on 400 cycles (1,000 cycles capacity) at Bt300k medical fee per cycle. We forecast WMC will book Bt58m net profit in FY19F (vs Bt16m in FY18F). Another driver would be KH Ram which will open on 22 October and replace KRV Sukhapibal 3 (located across from KH Ram) which will halt operations on the same day. We expect cash patients to grow and SS member base to increase to 70-80k member (from 50k) at KH Ram driven by better facilities.

 

Potential upside from stronger-than-expected margin at WMC

BCH is currently trading at demanding 38x FY19F PE vs regional peers’ average of 30x. It deserves premium valuation due to strong earnings growth as WMC operations continue to improve. There is upside risk from higher-than-expected EBITDA margin at WMC; we assumed 22-28% margins for FY19-21F but tertiary hospitals can potentially register 30-35%.