TRIS Rating Co., Ltd. has assigned a company rating of “A” to Bumrungrad Hospital PLC (BH) with “stable” outlook. The rating reflects BH’s leading position in Thailand’s private hospital market, the capabilities of the hospital’s physicians and management team, ability to attract medical staff, and a strong financial position. However, these strengths are partially offset by intense competition in both local and international healthcare markets, single premise limitation, and potential future debt-financed investments. The “stable” outlook reflects the expectation that BH will be able to maintain its leading position in Thailand’s private hospital market. With its strong brand and efficient operations, the company should continue to attract strong profile medical staff and premium patients. BH is also expected to maintain its debt to capitalization not to exceed 50% for an extended period.
TRIS Rating reported that BH operates a hospital in Bangkok under the name “Bumrungrad International Hospital”. The flagship hospital in Bangkok generates over 95% of the company’s total revenue. BH is a leading private healthcare provider in Thailand and Asian region with service capacities of 3,900 outpatients per day and 512 inpatient beds. Foreign patients account for approximately 60% of the total revenue. About 70% of total revenue is from self-pay patients.
BH is well managed by a competent and experienced professional and medical staff team. Its flagship hospital earns a very strong brand recognition and three decades of solid medical records. BH targets mostly premium local and foreign patients and competes with differentiation on services and quality. The company has a very strong revenue generating capacity per patient, a key factor in attracting and retaining talent medical staff and specialists.
The company’s competitive edge as a medical hub in Asia is underpinned by its first-mover advantage in the regional medical tourist segment, economies of scale, and strong referral networks overseas. In addition, BH enjoys Thailand’s developed infrastructure and welcoming atmosphere as a destination for foreign tourists. Medical costs in Thailand are also highly competitive compared with other advanced neighbouring countries.
TRIS Rating said, hospital industry in Asia, notwithstanding Thailand, is undergoing a consolidation transformation. Several hospitals merged to achieve size and scope. Smaller and stand-alone hospitals, such as BH, are facing rising challenges from strong capital-based hospitals with extensive networks and diverse geographies.
BH’s financial profile is strong. Revenue has grown respectably over the past few years. Rising revenue per patient helped offset slowdown in the number of patient visits during political unrests. Operating margins and cash flows should continue to remain stable in the medium term. Leverage level has risen in recent periods after BH built a new OPD clinic and upgraded its flagship Bangkok facilities, as well as acquired 24.99% of Bangkok Chain Hospital PLC’s (KH) shares. Debt to capitalization rose from 20.1% in 2010 to 44.5% at the end of June 2011. BH’s rating takes into account potential debt-financed investment projects in the future, said TRIS Rating. — End
Company Rating: A Rating Outlook: Stable
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