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January 29, 2014

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SEE PAGE 52 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS


Thai Healthcare Sector OVERWEIGHT (New)



Ready for growth
Initiate at OVERWEIGHT. Top pick Bumrungrad, BUY Bangkok
Chain Hospital and HOLD Bangkok Dusit Medical Services and
Chularat Hospital Group.
Strong growth potential for the privately-owned hospitals
amid changing attitude towards healthcare. We forecast
patient traffic to post 7.5% pa 5-year CAGR.
Sector EBITDA and net profit could post 12.8% and 15.2%
CAGR underpinned by rising patient traffic, cost efficiency,
margin expansion and growth from complimentary
businesses.
Whats New
The current political turmoil will have a negative impact on the
hospital sector in 1H14, but the attractive long-term outlook is
intact. In 2014F, we forecast 15.2% sector earnings growth on the
back of 12.5% revenue growth. All four operators (capex
THB40.3bn) will continue with their aggressive expansion plans
over the next four years, and this will drive growth. Capacity will
be raised by 25.9% from current 8,543 beds equivalent.
Whats Our View
Politically-induced short negative sentiment could pose some
earnings difficulty for the Thai hospitals especially those that cater
to medical tourists. We believe this is temporary. Our bullish
medium term view is underpinned on: i) rising ROE, ii) increasing
patient traffic, iii) reasonable valuations and iv) healthy balance
sheets. Potential benefits from the AEC could add fillip to growth.
The high multiple accorded to the Thai hospital stocks relative to
regional peers can be justified by their high ROE at 20% (Peers =
14%), visible earnings growth at 15% (Peers 13%), low average cost
of capital of 9% (Peers 11%) and strong future growth outlook via
expansion. On the domestic market, their high valuation relative
to the market can be justified by scarcity premium and promising
long growth.
Analyst
Sittichai Duangrattanachaya
Sittichai.D@maybank-ke.co.th
(66) 2658 6300 ext 1393



















Thai Healthcare Services Stocks Valuation Highlights
Stock Rating Mkt cap Price TP U/D Side PER PER P/B (x) ROE Div yield
(USDm) (local) (local) (%) CY14E CY15E CY14E CY14E CY14E
BCH BUY 432 5.70 7.50 31.6 21.3 17.8 3.36 16.3 2.8
BGH HOLD 5,462 121.00 140.00 15.7 25.0 21.2 4.14 16.8 1.5
BH BUY 1,832 82.75 105.00 26.9 22.2 18.3 5.60 27.1 2.2
CHG HOLD 334 10.20 11.50 12.7 23.9 21.1 4.27 21.6 1.5
Source: Company data, MKE-ISR
Historical Chart: Healthcare Services



Stock performance


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1-mth 3-mth 6-mth 1-yrs YTD
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January 29, 2014 2

Thailand Healthcare Sector

Investment Thesis
We are OVERWEIGHT in Thai healthcare sector. We expect the sector to
deliver slower mid-teens growth as it adjusts to a higher asset base
following expansion, acquisitions and negative impacts from the current
political situation which has the potential to drag the Thai economy if the
instability is prolonged. However, we like the robust growth profile driven
by an aging Thai population, rising middle-class income, lack of public
hospital facilities, higher insurance coverage and growth potential from
neighbouring countries such as Myanmar, Cambodia.

Aggressive expansion plan
We expect almost all the four operators to continue with their aggressive
expansion plans in outpatient and inpatient capacity over the next five
years via campus expansions, greenfield/brownfield developments, and
M&A. Total investment could reach THB40.3bn, and this could support
higher demand growth. Capacity will be raised by 25.9% from the current
capacity of 8,543 beds.
Impressive earnings growth
The sector EBITDA and net profit could post 12.6% and 16.3% CAGR
(2013F2016F), respectively, on the back of 12.5% revenue growth. Rising
patient traffic, cost efficiency, margin expansion, and growth from
complimentary businesses are underpinning earnings growth.
Reasonable valuation
The sector valuation is rich relative to the local market. There is a scarcity
premium built in these multiples. We do think the price multiples can hold
at high level due to sustained higher ROE and robust earnings growth.
Currently, the sector is trading at 23.2x, in-line with the five years
average. The sector is relative cheap in terms of PER and EV/EBITDA,
which is discount to regional peers by 23% and 12% in 2014F, respectively.
Stock recommendation
For the above mentioned reasons, we are bullish on healthcare sector.
Hence, we initiate coverage on four stocks with an OVERWEIGHT rating.
We have BUYs on Bangkok Chain Hospital (target price: THB7.5) and
Bumrungrad Hospital (target price: THB105.0) and HOLDs on Bangkok Dusit
Medical Services (target price: THB140.0) and Chularat Hospital Group
(target price: THB11.5).
Downside risk
Both local domestic and international patient traffic are affected by the
current political turmoil and high household debt. Doctor and nurse
shortages, intensified competition and regulatory changes could affect the
sectors operation and business opportunities.
3 Numbers that Matter
Numbers of private hospital Total capacity in term of bed

Healthcare expenditures to GDP

>327 hospitals
Private hospitals account 24% of total
hospitals in Thailand, and 24 largest
private hospitals dominate the
market with a 75% combined market
share.
>30,880 beds
BGH has the largest market share in
terms of beds at 18%. BGHs market
share by revenue was at 41%.
Thailand has 2.2 hospitals bed per
1,000 population
>4% of GDP
Total healthcare expenditure was
THB425bn in 2012, contributing to
approximately 4.1% of GDP. We
expect this ratio is on the rising
trend.

January 29, 2014 3

Thailand Healthcare Sector

Industry Analysis
Moving to a better future
The economic outlook for most of the ASEAN region is positive with GDP
growth rates ranging between 5%-6% over the next five years, based on
IMFs forecast. Thailand, with GDP growth expected at 3-4% in 2014, is an
exception. The better economic outlook in Southeast Asia has led to
increased investment in the healthcare sector. Even in the global arena
total healthcare expenditure per capita has been rising despite anemic
economic growth. A countrys healthcare service is highly related to its
level of economic and infrastructure development, wealth and income of
people, government support, and regulation. Healthcare expenditure is
driven by many factors including changing lifestyles, aging populations,
and the outbreak of transferable diseases.

Chart 1: GDP per capita growth in the ASEAN 6 Chart 2: Healthcare service profile based on level of economy



Note: All GDP numbers are in constant price, All CAGRs pertain to
the period from 2006 to 2015
Source: International Monetary Funds, MKE-ISR
Source: Source: Ministry of Public Health and respective countries
government departments

Chart 3: Healthcare expenditure per capita in the ASEAN 6

Chart 4: Healthcare expenditure in the developed economies



Source: World Bank, MKE-ISR Source: World Bank, MKE-ISR


0
10,000
20,000
30,000
40,000
50,000
60,000
Singapore Brunei Malaysia Thailand Indonesia Vietnam
2000 2006 2012 2015F
CAGR 6.1%
CAGR 3.2%
CAGR 8.2%
CAGR 9.8%
CAGR 11.8%
CAGR 11.7%
USD
Economy Developing Newly Developed Advance
Countries
Malaysia, Indonesia, India, China,
Turkey, Thailand
Singapore, Hong Kong, Korea US, UK, Australia, Germany, Japan
Infrastructure
-Increasing number of public
hospitals, mainly in central/urban
areas -Growing number
of private clinic and private hospitals
-High number of public and private
clinics -
Privatisation of public healthcare
-Rapid growth in
the number of private hospitals
-Continued capacity building in
public hospitals and raising
standard -
Consolidation of the private
healthcare sector
Workforce
-Physicians or surgeons mainly
locally trained -Growing
number of nurse and technicians
trained in public hospitals
-Higher number of local and foreign
trained doctors -Movement
of doctors from public to private
sector
-Low rate of talent replacement
-Higher number of
specialists
Funding
-General reliance on taxation -
Developing funding structure for
poor -Small
insured population
-High relaince ontaxation -
Higher number of insured
population -
Governments implement cost-
containment strategies
-Very high relaince on taxation -
Majority insured population
Technology
-Basic medical, surgical and imaging
equipment
-Advanced equipment mainly in
private facilities -Higher
ICT integration
-Innovative equipment in both
public aqnd private facilities
Regulation
-Evolving, regulating the private
sector -Increasing
standards compliance guildelines
-Maturing -
Higher governance on private sector
-Matured
0
500
1,000
1,500
2,000
2,500
Singapore Brunei Malaysia Thailand Vietnam Indonesia
2007 2009 2011
CAGR 12.4%
CAGR 6.9%
CAGR 8.8%
CAGR 13.4%
CAGR 15.2%
CAGR 15.3%
USD
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
US UK Germany Japan
2007 2009 2011
CAGR 3.9%
CAGR 1.1%
CAGR 5.4%
CAGR 8.9%
USD

January 29, 2014 4

Thailand Healthcare Sector

The healthcare system in Thailand is reasonably well developed, but the
industry is still behind the standard of most developed countries. Spending
also lagged that of neighboring countries such as Singapore and Malaysia.
This is mainly attributed to the low proportion of healthcare investment by
the Thai government. For example in 2012, the Thai government spent
approximately THB6,060 (US$202) per capita on healthcare, whereas in
Singapore and Malaysia healthcare spending per capita was approximately
US$2,286, US$346, and US$696, respectively. Healthcare financing in
Thailand has a brief history starting only in 2002 when the universal
coverage for healthcare was introduced.
Chart 5: Socioeconomic Indicators, (2006, 2009 and 2012)

Source: Ministry of Public Health, Ministry of Labour, World Bank, NESDB, MKE-ISR

The Universal Health Care Program
The Universal Coverage Policy was introduced in April 2002. Social health
protection can be divided into three groups such as i) Civil Servant
Medical Benefit Scheme (CSMBS), schemes for public employees, ii) Social
Security Scheme (SSS), schemes for private employees and iii) Universal
Coverage Scheme (UCS), scheme for the rest of Thai. At present, Public
health protection schemes cover all Thai citizens, 7% of the population are
covered by the public employee benefit scheme, while the SSS covers 19%
of the population and the rest (75%) are in the UCS.
Chart 6: Characteristic of three main social health protection schemes

Source: Ministry of Public Health, Ministry of Finance, SSO, Complied by MKE-ISR
Indicators 2006 2009 2012
GDP (US$ billion) 207 264 366
GDP per Capita (US$) (current price) 3,296 4,151 5,678
Population (million):
0-14 years (%) 21.8 19.9 18.5
15-64 years (%) 64.9 65.5 65.8
65 years and above (%) 13.3 14.6 15.7
Birth Rate (per 1,000 people) 12.3 11.3 10.6
Infant Mortality Rate (per 1,000 births) 14.4 12.7 11.4
Crude Death Rate (per 1,000 population) 7.0 7.3 7.5
Total Fertility Rate (per female) 1.5 1.5 1.4
Life Expectancy - Female (Years) 71.5 72.2 72.7
Life Expectancy - Male (Years) 67.3 68.0 68.7
Total Employed (million) 37.3 37.7 38.8
Household Income Distribution:
Top 40 percentile
37.4% 38.6% 40.1%
Bottom 20 percentile
5.2% 5.1% 4.8%
Urbanisation Rate (%) 32.5 33.4 34.5
Scheme Type Financing sources
Social Security Scheme (SSS) Social
insurance,
compulsory
Private sector
employees,
excluding
dependants
19% Payroll tax
financed, tri-
partite
contribution 1.5%
of salary, equally
by employee and
government
Civil Servant Medical Benefit
Scheme (CSMBS)
Fringe benefit Government
employees plus
dependants
(parents,
spouse and up
to two children
age less than
20 years
7% General tax, non-
contribution
scheme, mainly
from government
budget
Universal Coverage Scheme
(UCS)
State welfare The rest of
population not
covered by SSS
and CSMBS
75% General tax,
mainly from
government
budget
Popolation coverage

January 29, 2014 5

Thailand Healthcare Sector

The UCS differs from the other public health protection schemes in several
aspects:
i) cover clinical prevention and health promotion
ii) the provider contracts model uses capitation for outpatients and
global budget plus Diagnosis Related Group (DRG) for inpatients,
iii) clients must be registered with a contracted provider within the
district health system in order to access the services.
According to the Social Security Office (SSO), by 2013,87 private hospitals,
154 public hospitals and 2,220 network hospitals provide services under the
SSS scheme while only 63 private hospitals joined the UCS.
The total market share of privately owned healthcare operations in SSS
was 62%. (See Appendix I: Characteristics of three health protection and
insurance schemes)
Chart 7: Expenditure of Thailands public health protection schemes

Source: Ministry of Public Health, Ministry of Finance, SSO, Complied by MKE-ISR
After the UCS was launched, the general government expenditure on
health increased from THB84.5bn (US$1.9bn) in 2001 to THB11.3bn
(US$2.7bn) in 2002 and it surged to reach THB305.6bn (US$10.2bn) in 2012.
This represents an 8% increase per year.
As the general government health expenditure was on the rise, spending
under SSS remained flat. Total healthcare expenditure in Thailand was
THB425bn, contributing to approximately 4.1% of GDP.
Our sensitivity analysis shows that for every 0.1% increase in healthcare
expenditure to GDP, total healthcare expenditure could increase by 2.4%.
We see a potential growth for Thai healthcare services as healthcare
expenditure to GDP is on the rising trend.
Chart 8: Health expenditure as % of GDP (current year price)

Source: Ministry of Public Health, World Bank, Complied by MKE-ISR

8.4%
8.7%
9.7%
9.7%
10.4%
9.6%
11.7%
10.2%
9.5%
9.5%
1.5% 1.5%
1.7%
1.8%
1.9% 2.2%
2.0% 2.0% 2.0%
1.8%
0%
2%
4%
6%
8%
10%
12%
14%
0
50,000
100,000
150,000
200,000
250,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
UCS CSMBS SSS % of Fiscal budget % of GDP
THBm
3.5%
3.6%
4.0%
4.2%
3.9%
4.1%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
2006 2007 2008 2009 2010 2011
Thailand Singapore Malaysia Arab world Asia Pacific

January 29, 2014 6

Thailand Healthcare Sector

Hospitals in Thailand
At the end of 1H13, there were 327 private hospitals and more than 1,050
public hospitals in Thailand. In terms of positioning and target group
hospitals may be categorized into four segments:
i) premium market such as Bumrungrad, Samitivej, Bangkok
Hospital and BNH,
ii) upper-mid tier market such as Phyathai, Piyavej, Vejthani,
Vibhavadi, Ramkamhaeng and Vichaiyut,
iii) mid-tier market such as Paolo, Kasemrad, and Chularat
iv) not-for-profit hospitals such as Siriraj, Ramathibodi, and King
Chulalongkorn Memorial.
The Bangkok Dusit Medical Services Hospital Group is the only private
hospital chain with a network of four hospital brands (Bangkok Hospital,
Paolo, Phaya-Thai, Samitivej)and a nationwide footprint while the others
are all single entity hospitals with different locations. (See Appendix II:
Positioning and competitive landscape of major private and public
hospitals in Thailand)
Chart 9: Market share by segment Revenue based Chart 10: Positioning of major private hospital in Thailand



Source: Respective Companies, Analysis by MKE-ISR Source: Respective Company, Analysis by MKE-ISR

In terms of beds, BGHs market share was about 18% in 2012 (total beds
30,880). The private hospital market size in Thailand was THB119.5bn
(US$3.98bn) in 2012 and BGHs market share by revenue was at 40.9%.
High end operator, BH, with a single sight had a market share by revenue
of 11.8% while the market share in terms of beds was at only 2%. BH
focuses on premium market, revenue intensity and handles high volume of
OPD.
Chart 11: Market share by number of licensed beds Chart 12: Market size based on private hospital revenue



Source: Respective Companies, Complied by MKE-ISR Source: Ministry of Public Health, SET, Analysis by MKE-ISR
Bumrungrad, 31%
Samitivej, 18%
BGH, 47%
BNH, 4%
Phayathai, 33%
Piyavej, 4%
Vejthani, 6%
Vibhavadi, 15%
Ramkamhaeng, 14%
CMR, 8%
Vichaiyut, 9%
Paolo, 15%
Bangkok Chain, 23%
Chularat, 9%
Thonburi, 16%
0
1
2
3
4
0% 10% 20% 30% 40% 50% 60%
M
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Market Share in term of revenue in each segment
Bumrungrad Hospital
Bagnkok Dusit Medical
Services
Samitivej Hospital
Phayathai Hospital
Vibhavadi Hospital
Ramkamhaeng Hospital
Chularat Hospital
Kasemrad Hospital
Paolo Memorial Hospital
BNH Hospital
1
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4
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Medical Sophitication / Patient Traffic
Secondary care services Quatemary care services Teriary care services
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Bumrungrad Intl'
Hospital
2%
Bangkok Chian
Hospital
5%
Bangkok Dusit
Medical Servises
18%
Chiangmai Mai
Ram Hospital
1%
Chularat
Hospital
Group
2%
Ramkamhaeng
Hospital
1%
Vibhavadi
Hospital
1%Krungdhon
Hospital
0%
Mahachai
Hospital
2%
Aikchol
1%
Nonthavej
Hospital
1%
Sikarin
1%
Srivichaivejvivat
2%
Others
63%
Chularat Hospital
Group, 1.6%
Aikchol, 1.1% Bangkok Chian
Hospital, 3.8%
Bangkok Dusit
Medical Servises,
40.9%
Bumrungrad Intl'
Hospital, 11.8%
Chiangmai Mai
Ram Hospital,
1 9%
Krungdhon
Hospital, 0.3%
Mahachai
Hospital, 1.4%
Wattana
Karnpaet,
0.2%
Nonthavej
Hospital, 1.5%
Ramkamhaeng
Hospital, 3.1%
Sikarin,
1.3%
Vibhavadi
Hospital, 3.4%
Srivichaivejvivat,
0.9%
Others, 27.0%

January 29, 2014 7

Thailand Healthcare Sector

Thailand Hospitals and the AEC
Healthcare services sector is one of the AECs four priority integration
sectors. There are two main aspects that we should watch in the
integration: increasing foreign ownership limit and mobility of medical
personnel.
The liberalization of the healthcare sector will affect private hospitals in
all ASEAN countries as the foreign ownership restrictions will be eased to
allow ownership of up to 70%. Currently, foreign ownership in private
hospitals in Thailand is about 15%.
Nonetheless, we expect that intra-ASEAN investors may not be interested
in becoming equity investors in Thai hospitals due to i) strict land
ownership laws, ii) strong competitive edge of the market leaders, iii)
shortage of experienced doctors, and iv) lack of market knowledge
including language barrier.
Among the listed private hospitals, BGH has the most extensive holdings in
other private hospitals such as RAM (38%), BH (24%), KDH (23%), BCH (2%),
and three hospital groups such as Phayathai, BNH, Paolo and Samitivej.
Chart 13: BGH holding structure (10% of shares or greater
in other private hospitals)
Chart 14: Maximum foreign shareholding in healthcare
services in ASEAN countries



Source: Bangkok Dusit Medical Services Source: Respective countries, MKE-ISR

Sectoral Five Force Analysis: Private Hospitals
Chart 15: Summary of Thailands healthcare services five force model

Source: Analysis by MKE-ISR

100% 100% 100% 100%
80%
67%
50% 49%
40%
30%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
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The foreign ownership limit for
investors in healthcare services will
be 70% in 2016.

January 29, 2014 8

Thailand Healthcare Sector

Low threat of new entrants
High capex is the first barrier to entry. For example, in Bangkok, a 200-bed
hospital typically costs between THB6,000-8,000m; in rural areas it could
cost about THB700-1,000m. The biggest variable is land cost assuming
availability. Suitable land sites are scarce especially in high traffic
provinces of Bangkok, Chiang Mai and Hua Hin. The start-up operation cost
is about THB20m. The next obstacle is the availability of qualified and
experienced doctors.
Threat of substitute products or services: High
Patients can choose to seek treatment in public hospitals or quasi-public
hospitals that can also provide a range of treatments. There is a growing
trend of opening after-hour clinics that share facilities and experienced
doctors with reputable quasi-public hospitals such as Siriraj, Ramathibodi,
King Chulalongkorn Memorial hospitals.
With the UCS now covering 75% of the population patients can choose to
seek treatment in public hospitals, which covers more than 95% of the
insured.
Bargaining power of buyers: Medium
In 2012, the growth in private hospitals is higher than public hospitals due
to more complex treatments being sought by patients and a growing
preference for better services. We expect this trend to continue over the
next five years as incomes rise and insurance coverage becomes more
prevalent. However, we observe that many organizations are starting to
offer a wide variety of health insurance packages and patients are focusing
on hospital facilities and special clinics rather than the well-known
doctors. For this reason, patients switch hospital choice at a low cost.
Bargaining power of suppliers: Low
Over the last decade, the pharmaceutical industry in Thailand has enjoyed
good growth due to the increase in demand. Overall, the competition
amongst local pharmaceutical manufacturers is becoming high involving
over 100 companies. Many private hospitals establish their own company to
purchase drugs and source medical equipment. Imports of medicinal and
pharmaceutical products have been posting a 15% p.a. CAGR during 2002-
2012 reaching US$2,887m.
Chart 16: Import and Export of medicinal and pharmaceutical products trend

Source: Ministry of Commerce, MKE-ISR

0
500
1,000
1,500
2,000
2,500
3,000
2
0
0
0
2
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1
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1
1
2
0
1
2
2
0
1
3

(
Y
T
D
)
Import (US$) Export (US$)

January 29, 2014 9

Thailand Healthcare Sector

Intense sector competition
Competition in the Thai private hospital market appears to be getting
intense as the market is now shared by more than 300 private hospitals.
However, the largest 24 private hospitals such as Bangkok Dusit Medical
Services, Bumrungrad Hospital, Vibhavadi Hospital, and Kasemrad Hospital
dominate the market with a 75% combined market share. Thus, though the
Herfindahl-Hirschman index has declined from 70 to 64, the sector is not
fragmented enough, in our view. However, the direction is towards higher
competition not less. We notice that public hospitals have also started to
expand medical services such as opening after-hours clinics. Increasing
investment to improve efficiency of service gives a competitive edge but
this approach is costly. For example, many private hospitals have set up
specialized tertiary centers to provide full medical services and to launch
new services with attractive pricing and promotions in order to compete.

Chart 17: Thai private hospital market becoming more highly competitive

Source: MKE-ISR
Supply and Demand
Supply side - hospital beds: Thailand has a relatively low total hospital
beds ratio: 2.2 beds per 1,000 populations (pax) in 2012. In comparison
with the global average, the desired bed ratio for an economy like
Thailands is estimated to be 2.9 beds per 1,000 pax. Based on the 4-year
expansion plan by the public and private hospitals growth in beds would
only be 5.1%. There could be a shortfall in the supply of hospital beds.
However, private hospitals will contribute more to the growth in beds,
averaging 9.4% while that of the public sector is at 3.4%. Thus despite the
aggressive expansion plan, private hospitals can maintain high occupancy
rates of 70% to 80%.
Chart 18: Hospital beds per 1,000 population ratio Chart 19: Hospital beds projection and shortfall analysis



Source: World Bank, Ministry of Public Health, MKE-ISR Note: Desired hospitals bed ratio is 2.9 bed per 1,000 population; the
World average in 2012
Source: Ministry of Public Health, Analysis by MKE-ISR



2010 Company BGH BH PYT SVH BCH CHG
Market Share 24% 15% 8% 9% 7% 2%
Herfindahl-Hirschman Index
2011 Company BGH BH PYT SVH BCH CHG
Market Share 25% 15% 8% 9% 6% 2%
Herfindahl-Hirschman Index
2012 Company BGH BH PYT SVH BCH CHG
Market Share 23% 14% 10% 9% 5% 2%
Herfindahl-Hirschman Index
Private hospital market share analysis
64
69
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Avg of Asia Pacific: 3.6 beds per 1,000 population
World Average: 2.9 beds per 1,000 population
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
2
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Public Hospital Licensed Beds Private Hospital Licensed Beds
Desired Beds Total Beds
Shortfall of beds by 16,500 beds in 2016F

January 29, 2014 10

Thailand Healthcare Sector

Table 1: There is spare capacity to accommodate surge in demand
Outpatient: Utilisation rate
2010 2011 2012 2013F 2014F 2015F 2016F
BGH 60% 64% 69% 72% 65% 70% 71%
BH 68% 71% 67% 55% 59% 65% 72%
BCH 74% 69% 71% 61% 61% 65% 67%
CHG 78% 75% 73% 71% 69% 69% 68%

Inpatient: Occupancy rate
2010 2011 2012 2013F 2014F 2015F 2016F
BGH 65% 66% 70% 70% 70% 71% 73%
BH 69% 72% 77% 73% 70% 72% 71%
BCH 78% 59% 61% 75% 78% 69% 69%
CHG 72% 72% 84% 77% 75% 73% 72%
Source: Company and MKE-ISR


January 29, 2014 11

Thailand Healthcare Sector

Supply side healthcare professionals: According to a report by the
Public Health Ministry and World Health Statistics, Thailand has 23,382
doctors working at public and private hospitals across the country. This
implies three doctors per 10,000 pax, lower than Singapore (19), Malaysia
(12), Vietnam (12), and Philippines (11). Moreover, a survey conducted by
the Medical Council discovered that the 18 medical schools in Thailand
could produce only 2,500-2,700 doctors per year. It takes about 6-8 years
for new doctors to become a fully registered and another 3-7 years to train
as a specialist. The shortage of doctors is a major hurdle for Thailand.
Based on developed markets ratio we estimate that more than 45,000
doctors are needed to provide quality healthcare. The issue of doctor
shortages may reduce slightly post the ASEAN Economic Community (AEC)
in 2015/2016.
Chart 20: Doctors per 1,000 population ratio Chart 21: Doctors projection and shortfall analysis



Source: World Bank, Ministry of Public Health, MKE-ISR Note: Desired doctors ratio is 1.2 doctors per 1,000 population;
Average of ASEAN region and key medical tourism countries such as
India, Turkey.
Source: Ministry of Public Health, Analysis by MKE-ISR
Demand side trending up
Aging population: The Thai society is also ageing. In 2012, 7.8% of its
population was aged over 65 years, the 2
nd
highest in South-East Asia. The
proportion of older people will increase to 8.5% in 2015 (5.9m) and 10% in
2020 (7.1m), translating into an 8-year CAGR of 3.5% pa. Demand for
healthcare services is expected to increase not only in frequency but also
in terms of duration of treatments and hospital stay.
Chart 22: Thai private hospital market becoming more highly competitive

Source: Ministry of Interior, National Statistical office, MKE-ISR
Medical Tourism: Singapore and Malaysia are destinations for medical
tourists from Asia while Thailand attracts patients from East Europe and
the Middle East. The patients financial capabilities, reputation of doctors
and connectivity to the country of treatment are key factors on the
decision of medical travelers seeking treatment overseas and this is gauged
by international accreditation.
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Avg of OECD: 2.9 doctors per 1,000 population
World Average: 1.4 doctors per 1,000 population
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F
Exisiting Doctors New Doctors Desired Doctors Total Doctors
Shortfall of doctors by 47,200 doctors in 2016F

0%
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4%
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20,000
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F
0-24 years 25-39 years
40-64 years 65 years and above
% of 65 years and above to population (RHS)
( )
>65 years 20 years CAGR of 3.2%

January 29, 2014 12

Thailand Healthcare Sector

Thailand is the key medical tourism destination market in Asia. Private
hospitals such as Bumrungrad Hospital, Bangkok Hospital, Vejthani Hospital
and Samitivej Hospital are the main beneficiaries of the increase in
international patients. The country is generally cost competitive. For
example, the average cost of treatment in Thailand is 19% lower than in
Singapore. The cost is higher than Malaysia and India by 8% and 15%,
respectively. However, the target market for those countries is different.
(See Appendix III: Medical tourism market positioning and targeting
market)
Chart 23: Number of international tourists arrival Chart 24: Major medical procedures with average total cost



Source: Tourism Authority of Thailand, MKE-ISR Source: Deloitte, MKE-ISR
Growing middle-class: Thailand has a growing middle to high income
population. Top 40 percentile of household income group has increased
from 31.1% in 2008 to 37.2% of the total population in 2012 while the
bottom 40 percentile of income group has decreased from 44.9% in 2008 to
32.4% in 2012. With growing affluence more customers switch to private
hospitals in seeing treatment.
Chart 25: % distribution of household income class

Source: National Statistical Office, MKE-ISR
Better affordability: Private health insurance in Thailand is the fastest
growing source of healthcare funding. Numbers of health insurance policies
and direct premiums have recorded double digit growth during 2007-2012
with a CAGR of 30.8% and 22.1%, respectively. Patients who have insurance
coverage are more likely to visit private hospitals rather than public
hospitals. As a result, the higher penetration rate and growth in health
insurance coverage is expected to increase demand for services of private
hospitals.

-10%
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U.S. Korea India Thailand Singapore Malaysia
8.1
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17.5
13.6
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33.2
19.8
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Bottom 20th percentile
(<36,000 Baht)
20th-40th percentile
(36,001-130,000 Baht)
60th-80th percentile
(180,000-600,000 Baht)
Top 20th percentile
(>600,000 Baht)
2008 2010 2012

January 29, 2014 13

Thailand Healthcare Sector

Chart 26: Private vs. Public hospital admission Chart 27: Increased coverage of health insurance



Source: Ministry of Public Health, MKE-ISR Source: Office of Insurance Commission, MKE-ISR
Changing lifestyles and burden of diseases: Thailand has been in an
epidemiologic transition in the past decade with a noticeable shift in
burden of diseases from infectious diseases to non-communicable chronic
diseases such as cancer, heart disease, diabetes and stroke. These changes
have been linked to the changes in stress levels induced by the changes in
the environment and lifestyle from eating, to work, and to exercise.
According to the National Health Statistics Office the morbidity rate of
heart diseases, diabetes and hypertension has increased significantly
posting CAGR of 8.1%, 7.8% and 12.6%, respectively in the last four years.
These are continuing trends and will drive demand for healthcare both in
terms traffic and complexity.
Chart 28: Morbidity rate of major causes Chart 29: Statistic of death by leading cause groups



Source: Ministry of Public Health, MKE-ISR Source: Ministry of Public Health, MKE-ISR


-15%
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15,000
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25,000
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35,000
40,000
2007 2008 2009 2010 2011
Public Hospital Admission Private Hospital Admission
Y-o-Y growth rate (Private) Y-o-Y growth rate (Public)
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2,000
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2007 2008 2009 2010 2011 2012
Number of health insurance policies (LHS) Direct premium from health insurance (m Baht)
Number of policies : 5-year CAGR of 30.8%
Direct premium : 5-year CAGR of 22.1%
619 688 750 793 845
124
131
134 133
143
587
650
676
736
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223
242
245
265
303
660
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188
205
217
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2006 2007 2008 2009 2010
Heart Diseases Cancer (Liver, Lung, Brest, Cervical)
Diabetes Mental amd behavioural disorders
Hypertention Cerebrovascular diseases
(per 100,000 population) Rate per 100,000 population 2006 2007 2008 2009 2010
Malignant neoplasm 83.1 84.9 87.6 88.3 91.2
Accident and poisonings 59.8 56.7 55.1 55.6 51.6
Disease of the heart 28.4 29.3 29.8 29.0 28.9
Hypertention and cerebrovascular disease 24.4 24.3 24.7 24.7 31.4
Pneumonia and other diseases of the lung 22.0 22.5 23.0 22.9 25.7
Nephritis, nephrotic syndrome and nephrosis 20.6 21.5 22.5 20.8 21.6
Disease of liver and pancrease 14.4 13.9 13.8 13.5 13.8
Tuberculosis 8.3 7.7 7.6 7.2 7.0
Diabetes mellitus 12.0 12.2 12.2 11.1 10.8
Human immunodeficieney virus (HIV) disease 10.5 8.8 7.4 6.4 5.7

January 29, 2014 14

Thailand Healthcare Sector

Risk Factors
Below are risk factors facing the sector:
Risk from economic volatility: Slowing Thai economy means lower
disposable income and could affect demand. Political instability could
discourage international patients and so could affect the hospital operators
that have high revenue bias on medical tourists e.g. BH and BGH. Our
analysis shows that it takes about three to six months after the ease of
political tensions for BH and BGHs operations to normalize.

The charts below show that BH is more sensitive to political instability and
that is intuitive because BH has the highest degree of exposure to medical
tourism. For example, in after the Sep-2006 coup detat its revenue growth
decelerated to 11% and EBITDA growth was only 4%, and reported net
profit contracted by 7%YoY in 4Q06. However, that year its profitability was
also affected by some base effect because in the 4Q05, BHs profitability
was boosted by the tax loss carry forward helping minimize tax burden.
However, the intensity of the impact on profitability is not as large as
indicated. In the three episodes of political instability, the drop in BHs
earnings was also exacerbated by other extraordinary items.

Chart 30: BH and BGH - Patient revenue and % Ch Chart 31: BH and BGH - Net profit and % Ch



Source: Company, MKE-ISR Source: Company, MKE-ISR

Table 2: BH and BGH sensitivity to political turmoil
BH Sensitive to Political Climate %Chg YoY

Sales EBITDA Net profit Recurring NP Remarks
Coup 4Q06 11% 4% -7% 11%
Tax loss carry forward of THB30m, one time
provision for China investment of THB20m
Yellow shirt rally 4Q08 3% 10% -60% 11%
Exclude onetime non-operating items - loss on
impairment of asset of THB370m and share of
profit CDE THB829)
Red shirt rally 2Q10 0% -10% -42% -20%
Higher SG&A on marketing expenses and higher
expenses on subsidiaries AGR


Share of loss of THB60m in BIH, 63m in AGR, loss
on sales of AGR 9m, exchange loss 63m


BGH Sensitive to Political Climate %Chg YoY
Sales EBITDA Net profit Recurring NP Remarks
Coup 4Q06
44% 43% 39%
39% Acquisition period
Yellow shirt rally 4Q08 6% -16% -39% -16% Impacts from acquisition
Red shirt rally 2Q10 3% 4% 8% 9%
Repair and maintenance in preparation for JCI,
FX loss
Source: Company data, MKET-ISR

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1
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BH - Patient revenue BGH - Patient revenue
BH - % Chg YoY Patient revenue BGH - % Chg YoY Patient revenue
THBm
Coup
Yellowshirt rally
Red shirt rally
-100%
-50%
0%
50%
100%
150%
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250%
300%
350%
400%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1
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BH - Net profit BGH - Net profit
BH - %Chg YoY Net profit BGH - %Chg YoY Net profit
Coup Yellowshirt rally
Red shirt rally
THBm

January 29, 2014 15

Thailand Healthcare Sector

Intensified competition in private healthcare sector: Private hospitals in
both Thailand and the region continue to develop and expand their
services; competition will intensify. Expanding hospital networks and
improving efficiency in operation to maintain a competitive advantage and
differentiate services are costly but necessary strategies.
Regulatory changes on managed care programs: Both private and public
hospitals are under the supervision of the Ministry of Public Health and
other related government agencies. Stricter regulation, especially relating
to SSS, NHSS, and CSMBS, could affect the healthcare sectors operation
and business opportunities.
Shortage of professional staff and executive brain drain: Given the
increasing importance of an international client base, hospital operators
also require multi-lingual professionals. Severe competition and higher
demands from both private and public hospitals have resulted in a shortage
of medical staff. Staffing cost is likely to rise.
Risk of lawsuit: The introduction of the Act on Court Proceedings for
Consumer Cases B.E. 2551 (2008) enables consumers and patients to file
lawsuits against healthcare service providers. The hospital business is
subject to litigation risk related to the provision of healthcare services by
hospital staff and physicians. Most operators have insurance coverage but
increasing consumer awareness and frequency of lawsuits could mean
rising premiums.


January 29, 2014 16

Thailand Healthcare Sector

Strategy & Expansion Plans
Over the past five years, the listed hospitals under our coverage have
invested about THB39.4b to expand their OPD and IPD capacity via existing
campus expansions, Greenfield projects, and mergers& acquisitions. The
numbers of beds have increased by 11.6% pa since 2007. Over the next five
years, we expect all operators to aggressively expand with total
investment potentially reaching THB40.3b. Capacity will rise by 25.9%
during the period from the current capacity of 8,543 beds.

Bangkok Chain Hospital (BCH)
The companys strategy is to strengthen its hospital network in the low to
mid-market and one way is via capacity expansion. The key strategies for
BCH are as follows:
i) pursue JCI accreditation
ii) increase portion of cash patients
iii) improve hospital and allied networks in low-mid market
iv) upgrade the two Navanakorn General Hospitals and rename
them to Karunvej Hospital to cater mainly to social security
patients
v) step up the marketing and promotional campaigns at the World
Medical Center (WMC)
vi) introduce new medical services at Chiangmai
vii) adding two new hospitals in Bangkok under the Kasemrad
brand one in Ramkamhaeng (224 beds) and another in
Rattanatibet (100 beds). Total investment of THB1,700m
viii) building one new hospital in Pattaya, Chonburi (240 beds)
under the World Medical Center; total investment could be
THB1,200m
ix) expand capacity at the Chaengwattana (WMC) with THB300-
400m investment.

The expansion plan at WMC and three Greenfield hospitals are awaiting
environment impact assessment (EIA) approval. The total capacity will
increase by 24.3% from 2,315 beds in 2013 to 2,879 beds in 2017. In the
next five years, BCH will reposition its hospital by using Kasemrad to
serve only cash patients and Karunvej to support social security
patients; targeted for these are the Kasemrad Hospital located in
Sukhapibal 3, Bangkok and the Kasemrad in Ramkamhaeng.

Chart 32: World Medical Centre Chart 33: Navanakorn General Hospital (Ayutthaya)



Source: Bangkok Chain Hospital Source: Bangkok Chain Hospital

Bangkok Dusit Medical Services (BGH)
The main strategies for BGH are
i) develop new products and technologies
ii) create clear market segmentation among its six hospital brands
iii) improve efficiency in personnel, alliance networks,
information technology and hospitality service standards


January 29, 2014 17

Thailand Healthcare Sector

iv) strengthen its procurement, referral and supplier relationships
in order to increase synergies and promote economies of scale
v) expand its capacity and network throughout Thailand,
especially in Northern and North-eastern regions.

For its expansion plan, there are nine new hospitals in the pipeline,
three of which will be located in the Eastern region, two in Bangkok
and one each in the South, North, Northeastern regions. Total capacity
will increase by 24.6% from 5,616 beds to 7,000 beds in 2015.

Chart 34: Bangkok Hospital Chiangmai project Chart 35: Soonthornphu Hospital (Rayong) project



Source: Bangkok Dusit Medical Services Source: Bangkok Dusit Medical Services

Bumrungrad Hospital (BH)
The companys strategy is to continue building on clinical expertise,
service capability, capacity expansion and offer superior quality with
differentiated products. The major strategies for BH are focusing on:
i) campus expansion which will add 18 ICU beds and 58 ward beds
and also relocate back office to other rented office space
ii) expand into a new market segment (upper-mid tier) by using
second brand
iii) start building 220 bed hospital in Petchaburi project in 1H14
(targeted completion in Dec-2016; total investment of THB6,000-
8,000m
iv) acquire more sites for future expansion
v) recruit more doctors in sub-specialties to support complex
treatments
vi) develop Bumrungrad network in both Thailand and overseas
vii) cost saving especially on the rental expense for staff housing as
well as offices by acquiring Boss Tower on Rama IV (for THB838m)
We expect total capacity will be increase from 545 beds in 2013 to 783
beds in 2016.

Chart 36: Targeted land site at Sukhumvit Soi1, Bangkok Chart 37: Petchburi project, Petchaburi Road



Source: Bumrungrad Hospital Source: Bumrungrad Hospital



January 29, 2014 18

Thailand Healthcare Sector

Chularat Hospital Group (CHG)
CHG will implement the following strategies in the next three years:
i) increase the portion of cash patients (Short-term 60%, long
term target at 70%)
ii) introduce pooling procurement and sharing of facilities among
group to reduce costs
iii) iii) pursue the HA (level III) at CH-9,11, and JCI standard, iv)
expand specialties centers to capture high complex treatment
market
iv) develop new technology and products
v) increase the capacity via expansion of existing three hospitals
and upgrade one hospital in Chonburi (Eastern of Thailand).
There are three main expansion projects at Chularat 3, 9 and
11 with total investment of THB950m
vi) one Greenfield project in the Prachinburi province close to
Rojana industrial park, the Sahaphat industrial estate and 304
industrial estate with investment of THB325m

We expect total capacity to increase from 365 beds to 626 beds over
the next four years. In addition, OPD capacity will double from 87
rooms to 174-184 rooms after all projects are completed.

Chart 38: Chularat 3 expansion project Chart 39: Chularat 9 expansion project



Source: Chularat Hospital Group Source: Chularat Hospital Group
Here are a summary of strategies and expansion plans for hospitals under
our coverage as follow:

Chart 40: Summary of strategy and expansion plan

Source: Respective companies, Analysis by MKE-ISR
BGH BH CHG BCH
Strategy
*Strengthen its hospital network *Campus
expansion and acquisition *Promote brand
positioning *Expansion in
complementary non-hospital investment
*Improve operation efficiency
*Development of hospital networks in
Thailand and international *Recuit
more doctors on subspecialties *Expand into
a new market segment *Campus
expansion and rearrange back office spaces
*Emhasis on cash patients
*Persuit the HA and JCI standard
*Opening speciality treatment center
*Increase operation effectivenss *Develop
new products
*Focusing on high income and international
patients *Pursuit JCI standard
*Increase portion of cash
patients *Improve hospital and allied network
*Develop advance technology
Expansion plan
*New 8 greenfield hospitals and Upgrade 1
hospital at Khon Kaen * Expansion of
exisitng hospital when UR above 75-80%
*Expand ancillary services
*Moved back office to leased office *New 1
greenfield hospital *Bought land
blank (soi1) for futher expansion plan
*Expand 3 existing hospitals (CH3,9,11) *New
1 greenfield hospital
*Upgrade 1 hospital at Chonburi
*Upgrade 2 hospital at Prathumthani and
Ayutthaya
*Increase utilisation rate and capacity at the
World Medical Centre *Three
greenfield hospitals at Pattaya, Bangkok (2)
Location
*Bangkok (2) , Phuket, Rayong, Khon Kaen
(Upgraded), Chiangmai, Chonburi (2), and
Cambodia (1)
*Bangkok on Petchaburi and Sukhumvit roads *Prachinburi (Greenfield), Samutorakarn (3),
Chonburi (Upgrade)
Prathumthani, Ayutthaya, Bangkok,
Chiangmai, Chonburi
Investment
THB25,000m in 5 years (2011-2015) THB10,000 in 5 year (2013-17) THB1,292m THB3,400-4,000m in 5 years
New capacity
*1,382 beds (1st phase 474 beds) *18 beds will be added in Mar14 * >
200-250 beds at Petchburi campus
*OPD 87-97 rooms, OR 1 room
*IPD 261 beds
*250-300 beds
Commission period
*3 hospitals in 1H14, 3 hospitals in 2H14 and 3
hospitals in 2015
*New hospital in 2017 (start construction in
1H14)
*CH-11 in 2014, CH-3 in 2015, CH-9 in 2016
and Prachinburi in 2017
*2 upgraded hospitals in early-2014
*Karunvej at Rattatibeth in 4Q14 *KH at
Ramkamhaeng in 2H16 *WMC at
Pattaya in 1H18

Current Expansion
Current
Expansion

January 29, 2014 19

Thailand Healthcare Sector

Investing in allied hospital businesses can be viable future strategy
The revenue from allied hospital businesses of stocks under coverage has
been growing continuously from THB2.2b in 2009 to THB3.9b in 2012, a
CAGR of 20% pa. The average gross profit and net profit margin was 27%
and 20% respectively, better than the direct hospital services.

Thus we think that investing more into allied businesses such as central
laboratories, IT services, medicine and pharmaceutical manufacturers and
distributors, imports/exports of medical equipment, and transport of
patients can be a lucrative addition to the revenue and profits.

BGH, BH and CHG have already taken initiative in this aspect and we
expect them to grow going forward. BGH has a 100% holding in A.N.B.
Laboratory which manufactures saline solutions and holds the highest
market share. BH wholly owns Vitalife which is engaged in the wellness and
anti-aging business. Thai Amdon is 100% owned by CHG. It is an
exporter/importer of medical instruments. BCH is the only operator under
our coverage that has no current plans to engage in allied businesses.

Chart 41: Non-hospital revenue trend Chart 42: Net profit of non-hospital business and GPM



Source: Respective companies, Complied by MKE-ISR Source: Respective companies, Complied by MKE-ISR


Chart 43: BGH: % of non hospital
business to core revenue
Chart 44: BH: % of non hospital
business to core revenue
Chart 45: CHG: % of non hospital
business to core revenue





Source: Companies, MKE-ISR




0
1,000
2,000
3,000
4,000
2009 2010 2011 2012
Natinoal Healthcare System Greenline Synergy
A.N.B laboratories Bangkok Premier Life Insurance Broker
Bio Molecular Laboratories Medicpharma
Sodexo Bangkok Helicopter Service
Royal Bangkok Healthcare Vitalife Corporation
Asia Global Research Thai Amdon
32%
31%
23%
27%
10%
15%
20%
25%
30%
35%
-300
-200
-100
0
100
200
300
400
500
2009 2010 2011 2012
Net profit (LHS) Gross Profit Margin (RHS)
2,120 2,373 2,894 3,661
9.7%
10.0%
8.2% 8.0%
0%
2%
4%
6%
8%
10%
12%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2009 2010 2011 2012
Sales from non hospital business Non hospital business (% of sales)
THBm
125 173 184 209
1.4%
1.8%
1.7%
1.6%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
0
50
100
150
200
250
2009 2010 2011 2012
Sales from non hospital business Non hospital business (% of sales)
THBm
2 2 4 12
0.3%
0.2%
0.3%
0.6%
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%
0
2
4
6
8
10
12
14
2009 2010 2011 2012
Sales from non hospital business Non hospital business (% of sales)
THBm

January 29, 2014 20

Thailand Healthcare Sector

Financial Analysis
Leverage
Thai hospitals have low financial leverage and interest burden compared to
private hospitals in many other countries. Net debt to EBITDA for Thai
listed hospital stands at 1.3x (confined in BCH and BGH) vs. the 3.7x
average of global private hospitals. In addition, net debt to equity for Thai
listed hospital is 0.3x, compared with 3.0x for listed global hospitals.

BCH has the highest leverage within our healthcare service coverage but
even then its net debt/EBITDA is2.6x, lower than the average of global
peers at 3.7x. Nonetheless its leverage relative to other local hospital
players could cap its ability to invest and compete.

The sound financial position of the operators will allow them to execute
the significant capacity expansion in the pipeline. We are confident that it
will be able to repay its debt obligations and be ready for new investment
given its interest coverage of 10.9x.

Chart 46: Net debt to EBITDA Chart 47: Net debt to Equity



Source: Respective companies, Complied by MKE-ISR Source: Respective companies, Complied by MKE-ISR

Healthy revenue outlook
We expect stocks under coverage to report revenue growth of about 13%
on a YoY basis in 2014F to THB79b. Within the healthcare sector, BH is
expected to report the highest revenue growth of 15%, thanks to traffic
growth of 8% and price hikes (7%). CHG will show the lowest revenue
growth of 9%YoY to THB2,389m because of slowest patient traffic growth.
Chart 48: IPD and OPD revenue and traffic growth Chart 49: Patient revenue trend



Source: MKE-ISR Source: MKE-ISR




-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
F
o
r
t
i
s

(
I
N
)
R
y
m
a
n

(
N
Z
)
T
e
n
e
t

H
C

(
U
S
)
H
C
A

(
U
S
)
M
e
d
i
c
l
i
n
i
c

(
S
J
)
G
e
r
e
r
a
l
e

(
F
P
)
U
n
i
v
e
r
s
a
l

(
U
S
)
B
C
H
R
h
o
e
n

(
G
R
)
B
G
H
R
a
m
s
a
y

(
A
U
)
I
H
H

(
M
K
)
A
p
o
l
l
o

(
I
N
)
L
i
f
e

H
C

(
S
J
)
P
h
o
e
n
i
x

(
H
K
)
B
H
C
H
G
R
a
f
f
l
e
s

(
S
P
)
Average of global hospitals: 3.7x
Average of Thai hospitals: 1.3x
-1.0
0.0
1.0
2.0
3.0
4.0
T
e
n
e
t

H
C

(
U
S
)
G
e
r
e
r
a
l
e

(
F
P
)
U
n
i
v
e
r
s
a
l

(
U
S
)
M
e
d
i
c
l
i
n
i
c

(
S
J
)
B
C
H
R
a
m
s
a
y

(
A
U
)
F
o
r
t
i
s

(
I
N
)
R
h
o
e
n

(
G
R
)
B
G
H
L
i
f
e

H
C

(
S
J
)
A
p
o
l
l
o

(
I
N
)
R
y
m
a
n

(
N
Z
)
P
h
o
e
n
i
x

(
H
K
)
I
H
H

(
M
K
)
B
H
C
H
G
R
a
f
f
l
e
s

(
S
P
)
Average of global hospitals: 3.0x
Average of Thai hospitals: 0.3x
33,877
37,438
42,466
48,040
55,714
29,959
32,707
36,919
41,822
47,049
0
20,000
40,000
60,000
80,000
100,000
120,000
0%
2%
4%
6%
8%
10%
12%
2012 2013F 2014F 2015F 2016F
IPD revenue (RHS) OPD revenue (RHS)
IPD traffic growth (LHS) OPD traffic growth (LHS)
0%
5%
10%
15%
20%
25%
30%
35%
0
20,000
40,000
60,000
80,000
100,000
120,000
2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F
BGH CHG BH BCH Patient revenue growth (%Chg YoY)

January 29, 2014 21

Thailand Healthcare Sector

Source: MKE-ISR
Medical tourism is also an increasingly important revenue driver for the
Thai listed hospitals. Thailands tourism campaign features healthcare as
one of the marketing angles giving the listed hospitals promotional
subsidy. International medical tourists have a strong positive correlation
to BHs and BGHs revenues. Thus, during a period when international
tourism is disrupted, like we are experiencing in the current uncertain
political climate, the revenues of BH and BGH have downside potential.

Revenues of CHG and BCH have no correlation to international tourism.

Chart 51: Going in-line with international tourists arrival Chart 52: Revenue contribution by nationality



Source: MKE-ISR Source: Bumrungrad, Bangkok Dusit Medical Services, MKE-ISR

Charts50-51 above show that BH is more sensitive to political instability
and that is intuitive because BH has the highest degree of exposure to
medical tourism. For example, in after the Sep-2006 coup detat its
revenue growth decelerated to 11% and EBITDA growth was only 4%, and
reported net profit contracted by 7%YoY in 4Q06.

However, that year its profitability was also affected by some base effect
because in the 4Q05, BHs profitability was boosted by the tax loss carry
forward helping minimize tax burden. However, the intensity of the
impact on profitability is not as large as indicated. In the three episodes of
political instability, the drop in BHs earnings was also exacerbated by
other extraordinary items.

Table 3: BH sensitivity to adverse political developments

Source: Company data, MKET-ISR estimates
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2007 2008 2009 2010 2011 2012 9M13
%Chg YoY - International tourists arrival
%Chg YoY - BH International patients revenue
%Chg YoY - BGH International patients revenue
53%
54%
55%
54%
55%
57%
59%
61%
62%
61%
60%
61%
26%
33%
35%
36% 36% 36%
26%
28%
32%
26% 26%
28%
0%
10%
20%
30%
40%
50%
60%
70%
2005 2006 2007 2008 2009 2010 2011 2012 1Q13 2Q13 3Q13 9M13
BH - % of International patients revenue
BGH - % of International patients revenue
BH Sensitivity to Political Climate Remarks
Sales EBITDA Net profit Recurring NP
Coup 4Q06 11% 4% -7% 11% tax loss carry forward of THB30m (4Q05), one time provision for China investment of THB20m
Yellow shirt rally 4Q08 3% 10% -60% 11% one time non-operating items: asset impairment of THB370m
Red shirt rally 2Q10 0% -10% -42% -20% Higher SG&A on marketing expenses and expnses on subsidiary AGR
THB60m share in the loss of BIH, THB63m in AGR; loss on sale of AGR investments (THB9m) &
FX loss of THB63m
%Chg YoY
Chart 50: Patient revenue per bed

4.2 4.2 4.8 4.3 4.6 4.3 4.4
10.2
8.8
10.3 10.3
11.2 11.9 12.6
20.5 23.0
26.8 28.0
29.2
32.3
37.7
3.7
4.2
5.5
6.0
6.0
6.1
6.2
0
10
20
30
40
50
60
70
2010 2011 2012 2013F 2014F 2015F 2016F
BCH BGH BH CHG
THBm per Bed

January 29, 2014 22

Thailand Healthcare Sector


Our sensitivity analysis based on series shows that for every 1% change in
foreign tourism, BHs earnings will change by 2.2% as more than 60% of
revenue comes from foreign patients. In the case of BGH the change is
smaller: for every 1ppts in foreign tourism, earnings will change by 0.8%.

Chart 53: Sensitivity analysis of earnings to international patients volume

Source: MKE-ISR


-10% -5% -1% Base case 3%
BGH -7% -3% -1% 0% 2%
BH -19% -11% -2% 0% 6%
BCH
CHG
Sensitivity of earnings to changes in foreign patients
None - Foreign patients account less than 1% of its revenue
None - There is no exposure to foreign patients

January 29, 2014 23

Thailand Healthcare Sector

Earnings growth drivers
Traffic and price is the key earnings driver for the sector. Slowdown in
international tourism has the tendency to drag revenues if it could not be
offset by higher local traffic. As mentioned earlier BH and BGH are the
most susceptible.

Our sensitivity analysis shows that for every 1% change in patient traffic
and price, the sectors earnings will change by 2.3% and 2.1% respectively.
BGH is the most sensitive to price changes and revenue intensity while CHG
is the least sensitive.

Chart 54: Sensitivity analysis to changes in prices Chart 55: Sensitivity analysis of earnings to changes in
traffics



Source: MKE-ISR Source: MKE-ISR

The flat operating profit margin outlook for 2014 is temporary, in our view,
and the improvement going forward will be driven by cost control programs
and improving cost efficiency in both COGS and SG&A. The aim is to bring
back the SG&A to sales ratio to 18.5% from 19.1% currently.

Income from associates dealing with allied services should also help drive
profits. On an aggregated basis we estimate equity income to account for
7% of the estimated sector earnings growth.

Chart 56: SG&A to core revenue (%) Chart 57: Source of earnings growth (THBm)



Source: Respective companies, MKE-ISR Source: MKE-ISR
Healthy Margin
We track the operating performance of healthcare services companies by
looking at their EBITDA margin. Average EBITDA margins for Thai private
hospitals over the past five years were higher than those of hospitals in the
neighboring countries regardless of asset size.

The average EBITDA margin for Thai hospitals was 24.5% and this compares
favorably with the peers average at 16.3%. We think the reasons are:
i) lower cost of personnel
ii) lower research and development expenses
iii) different patients mix and business model among countries
iv) higher revenue from medicine
v) government incentives that depended on government policy
-5% -1% Base case +1% +5%
-5% -18% -10% -8% -6% 2%
-1% -12% -4% -2% 0% 8%
Base Case -10% -2% 0% 2% 10%
+1% -8% 0% 2% 4% 12%
+5% -2% 6% 8% 10% 18%
Changes in Inpatient bill size
C
h
a
n
g
e
s

i
n

O
u
t
p
a
t
i
e
n
t
s

b
i
l
l

s
i
z
e
-5% -1% Base case +1% +5%
-5% -18% -12% -10% -8% -2%
-1% -10% -4% -2% 0% 6%
Base Case -8% -2% 0% 2% 8%
+1% -6% 0% 2% 4% 10%
+5% 2% 8% 10% 12% 18%
Changes in Outpatients traffic
C
h
a
n
g
e
s

i
n

I
n
p
a
t
i
e
n
t
s

t
r
a
f
f
i
c
19.5%
19.2%
17.9%
19.4%
18.7%
18.8%
19.3%
19.2% 19.1%
8%
10%
12%
14%
16%
18%
20%
22%
24%
2007 2008 2009 2010 2011 2012 2013F 2014F 2015F
BCH BGH BH CHG Total
9,917
11,018
1,185
158
9 24
8,500
9,000
9,500
10,000
10,500
11,000
11,500
Net profit
2013F
Sales growth Margin
Expansion
SG&A
reduction
Income from
associates
Net profit
2014F

January 29, 2014 24

Thailand Healthcare Sector

BCH offers the highest EBITDA margin of 31% followed by CHG (28%), BH
(27%). The lowest EBITDA is in BGH, 23%.
Chart 58: EBITDA margin comparison among peers Chart 59: EBITDA margin trends



Source: Respective companies, MKE-ISR Source: MKE-ISR

Chart 60: EBITDA per hospital bed Chart 61: Net profit per hospital bed



Source: Respective companies, MKE-ISR Source: Respective companies, MKE-ISR
Our sensitivity analysis shows that for every 1ppt drop in gross margin,
hospital sector earnings would drop by 6% in 2014F.
BCH and BGH are more sensitive to change in margin due to higher
operating and financial leverage than BH and CHG; recall that BH and CHG
are in net cash positions. Both also have lower fixed costs.
Chart 62: Net profit sensitivity to changes in GPM and SG&A to sales

Source: MKE-ISR
Profitability
The healthcare service market in Thailand has displayed robust growth in
terms of both revenue and earnings since 2002. We project a slowdown in
growth due to higher start-up costs and depreciation expenses. However,
as the aggressive capacity expansion is worked out by way of traffic and
price driven rise of asset turnover, earnings growth could accelerate. This
will not take long. Our 3-yr earnings CAGR is 15.2%.


BGH
BH
BCH
CHG
VIBHA
RAM
IHH (MK)
KPJ (MK)
Raffles (SP)
Ramsay (AU)
Virtus (AU) Greencross (AU)
Apollo (IN)
Fortis (IN)
Siloan (IJ)
Rhoen Klinikum (GR)
Gererale de Sante SA (FP)
Mediclinic (SJ)
Universal Health Servcies (US)
Tenet Healthcare (US)
Health Management
Associates (US)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
5% 10% 15% 20% 25% 30%
A
s
s
e
t
s

(
U
S
$
)
EBITDA Margin (%)
Thai private hospital's EBITDA margin is
higher than other contries.
24.3% 24.3% 24.2%
24.6%
25.3% 25.4%
24.5%
24.9% 24.9%
10%
14%
18%
22%
26%
30%
34%
38%
2007 2008 2009 2010 2011 2012 2013F 2014F 2015F
BCH BGH BH CHG Total
1.3 1.4 1.7
1.2 1.4 1.4 1.5
2.4 2.2
2.5
2.4
2.6 2.8 2.9
5.0
5.7
6.7 7.7
8.1
9.1
10.6
0.8
1.0
1.6
1.6
1.7
1.7
1.8
0
2
4
6
8
10
12
14
16
18
2010 2011 2012 2013F 2014F 2015F 2016F
BCH BGH BH CHG
THBm per Bed

January 29, 2014 25

Thailand Healthcare Sector

Chart 63: Operating profit and EBIT margin Chart 64: Net profit and Net profit margin



Source: MKE-ISR Source: MKE-ISR

Source: MKE-ISR
Dividend and yield: Low
The average payout ratio for the sector since 2005 is 45%. This does not
bring in good yield about 2.1% on average. This is because the sector is
still on capacity expansion mode demanding high capex as well as R&D
related costs. We expect that payout and yield could start rising post 2015.

Chart 66: Dividend policy and payout ratio Chart 67: Healthcare sector dividend yield compared with SET



Source: Respective companies, MKE-ISR Source: SET, MKE-ISR





2,487 2,831 2,738
3,390
5,930
7,803 7,899
8,893
10,301
57
77 121
164
237
428 480
543
613
1,633
1,664 1,680
1,828
2,126
2,547
3,142
3,470
4,187
793
1,023 1,142
1,147
1,125
1,352
984
1,151
1,322
12%
13%
14%
15%
16%
17%
18%
19%
20%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2007 2008 2009 2010 2011 2012 2013F 2014F 2015F
BGH CHG BH BCH EBIT margin (RHS)
1,244
1,662 1,725
2,295
3,907
6,142
6,482
7,177
8,462
49
67 111
119
171
335
405
461
521
1,946 1,160 1,193
1,219
1,543
1,809
2,447
2,711
3,290
474
605
674
639
673
910
583
668
797
6%
7%
8%
9%
10%
11%
12%
13%
14%
15%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2007 2008 2009 2010 2011 2012 2013F 2014F 2015F
BGH CHG BH BCH Net profit margin (RHS)
Company Dividend policy
2010 2011 2012
Bangkok Chain Hospital Not less than 40% of the net profits each year 37% 33% 59%
Bangkok Dusit Medical Services Minimum 50% of company's net profit 49% 43% 37%
Bumrungrad Hospital
When the Company has net profit which can be contributed to
shareholders, the preferred shareholders will receive dividends before the
ordinary shareholders (with additonal conditions) 50% 52% 50%
Chularat Hospital Group
Not less than 50% of net profit based on the Companys consolidated
financial statement after the deduction of reserves n.a. n.a. 58%
Dividend payout ratio










0
1
2
3
4
5
6
7
Q
1
/
2
0
0
6
Q
2
/
2
0
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6
Q
3
/
2
0
0
6
Q
4
/
2
0
0
6
Q
1
/
2
0
0
7
Q
2
/
2
0
0
7
Q
3
/
2
0
0
7
Q
4
/
2
0
0
7
Q
1
/
2
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8
Q
2
/
2
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8
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3
/
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8
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4
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BGH BH BCH SETHELTH Index SET Index
Chart 65: Earnings outlook for hospital stocks under our coverage


January 29, 2014 26

Thailand Healthcare Sector

Valuation and Recommendation
We initiate coverage on Thailands healthcare services sector with
OVERWEIGHT and Bumrungrad Hospital (BH) as our top pick. Bangkok Chain
Hospital (BCH) is also a BUY while Bangkok Dusit Medical Services (BGH)
and Chularat Hospital Group (CHG) are HOLDs due to high valuation
multiples and flatter 2014 earnings growth outlook.
We value these companies based on discounted cash flow (DCF) to capture
the longer-term cashflow outlook following a high capex period. We are
bullish on the sectors long-term growth outlook.
Chart 68: Fair value and stock recommendation summary

Source: MKE-ISR
The SETHELTH fell 26.6% from its peak in May due to the weak domestic
economic data, weaker-than-expected earnings growth in 2H13, and
political rally in Bangkok that could hinder revenue growth derived from
international patients. The sector is now trading at an average of 22.7x
PER, 4.2x P/BV and 14.1x EV/EBITDA for 2014F. The sector PER and PBV
ratios are approaching the historical five-year average of 21x and 4x.
The sector valuation is rich relative to the local market. These multiples
can continue due to i) sustained high ROCE and ROE in the next five years
at 20.1% (vs. markets 13.8%, regional peers 13.8%), ii) visible robust
earnings growth at a 15.2% three-year CAGR (vs. markets 12.1%, regional
peers 13.1%), iii) low average dividend payout ratio of 45% (vs. markets
55%, regional peers 51%), iv) low average cost of capital of 8.5% (vs.
markets 11.2%, regional peers 10.4%), and v) potential M&A and market
consolidation.
Chart 69: ROE and PBV comparison Chart 70: EV/EBITDA and PER chart



Source: MKE-ISR Source: SET, MKE-ISR












Rating Target % % ROE Valuation WACC Terminal
price Upside yield EPS (THB) BVPS (THB) (%) Method growth 2014F PE 2014F PB
BGH HOLD 140.0 19% 2% 4.7 29.3 17.0% DCF 10% 3% 29.7 4.8
BH BUY 105.0 27% 2% 3.5 14.5 26.2% DCF 8% 3% 29.7 7.3
BCH BUY 7.5 32% 3% 0.3 1.7 16.9% DCF 9% 3% 26.8 4.4
CHG HOLD 11.5 15% 2% 0.4 3.0 21.5% DCF 8% 3% 27.4 3.8
2014F Implied
BGH
BH
BCH
CHG
Average
IHH
Apollo
Raffles
Ryman
Ramsay
Mediclinic
SET
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
0% 5% 10% 15% 20% 25% 30%
P
B
V

(
x
)
ROE (%)
BGH
BH
BCH
CHG
Average
SET
IHH
Apollo
Raffles
Ryman
Ramsay
Mediclinic
0
10
20
30
40
50
60
5 10 15 20 25
P
E
R

(
x
)
EV/EBITDA (x)

January 29, 2014 27

Thailand Healthcare Sector

Chart 71: Forward PER Chart 72: PBV chart



Source: Bloomberg, MKE-ISR Source: Bloomberg, MKE-ISR

Regional comparison

Thai hospitals stocks are relatively cheap, in terms of PER, PBV, and
EV/EBITDA, compared to the region. Thai hospitals are attractive for their
higher profit growth, high ROE and better EBITDA margin. Long-term
growth opportunities also appear to be stronger. Thus, Thai hospitals
should trade at a premium to its regional peers.

The normalized net profit for Thai hospitals will reach 12.5% in 2014 and
accelerate to 17.5% in 2015. This compares favorably to the regional peers
average 12.2%growth in 2014 and 13.7% in 2015.

The current political uncertainty in Thailand will have a negative impact
on the number of international tourists and by extension international
patients. As mentioned above, BH and BGH the key companies in the
sector are vulnerable to the pullback. We believe this is temporary.
Nonetheless it could cap share price performance and cause these
companies to lag behind regional peers in share price performance.

At this level, though, we think these stocks are attractive for long-term
investors having multiples pulled back to the five-year average.

Chart 73: Peer comparison

Source: Bloomberg, MKE-ISR
2013F 2014F 2015F 2013F 2014F 2015F 2013F 2014F 2015F 2013F 2014F 2013F 2014F 2015F
Bangkok Chain Hospital 22.2 19.6 17.3 3.5 3.3 3.2 11.9 11.9 10.7 3.3 3.1 15.8 17.8 19.2
Bangkok Dusit Medical Services 29.1 25.8 21.3 4.5 4.1 3.7 19.3 17.1 14.6 1.5 1.7 16.4 17.0 18.8
Bumrungrad Hospital 26.6 23.3 20.7 6.8 5.9 5.3 16.0 14.0 12.3 2.0 2.2 27.2 27.6 27.9
Chularat Hospital Group 25.4 23.9 20.2 4.2 4.0 3.7 16.3 14.4 12.5 1.9 2.4 22.8 17.9 18.8
Average Thai Hospital 25.8 23.2 19.9 4.7 4.3 4.0 15.9 14.4 12.5 2.2 2.4 20.6 20.1 21.2
Ramsay Health Care 33.0 27.9 24.3 6.1 5.6 5.0 16.2 14.1 12.6 1.5 1.9 18.7 20.4 21.2
Virtus Health 23.4 21.1 19.1 3.2 3.0 2.8 14.8 13.0 12.1 n.a. 2.9 21.3 14.6 15.1
Greencross 43.6 36.1 26.2 n.a. 2.6 2.5 23.9 8.2 5.0 1.2 1.4 10.9 8.7 9.6
Ryman Healthcare 36.4 30.8 26.8 5.6 4.7 4.2 26.8 24.6 22.5 1.2 1.5 17.1 16.0 16.1
Raffles Medical Group 25.1 23.4 20.5 3.9 3.5 3.1 18.3 16.6 14.5 1.5 1.6 17.1 15.8 16.6
Apollo Hospitals Enterprise 41.1 36.8 30.2 4.6 4.3 3.9 21.2 18.9 15.6 0.5 0.7 11.9 12.2 13.6
IHH Healthcare 48.1 37.5 30.5 1.7 1.6 1.6 23.2 19.4 17.0 0.1 0.2 3.5 4.5 5.3
KPJ Healthcare 31.6 25.8 23.6 3.1 2.9 2.7 18.1 15.0 13.1 1.6 1.9 10.0 10.6 11.3
Generale de Sante SA 21.9 22.6 23.0 2.0 2.1 2.2 6.9 6.9 6.9 6.9 6.9 9.2 9.2 9.5
Rhoen Klinikum AG 29.3 24.3 20.4 1.6 1.7 1.6 11.9 12.6 11.5 1.5 1.8 6.6 8.1 9.9
Universal Health Services 18.5 16.3 14.7 2.8 2.3 2.0 9.5 8.9 8.3 0.2 0.2 14.9 14.3 14.6
Tenet Healthcare 27.1 17.7 12.7 5.2 4.5 3.3 8.0 5.4 4.9 0.0 0.0 21.9 29.6 32.5
Mediclinic International 26.2 19.5 16.9 3.3 2.9 2.6 15.9 13.3 12.2 1.3 1.8 13.9 16.1 16.8
Average Global peers 31.2 26.1 22.2 3.6 3.2 2.9 16.5 13.6 12.0 1.5 1.8 13.6 13.9 14.8
Premium/(Discount) to global peers -17.2% -11.4% -10.6% 32.3% 33.7% 37.8% -3.8% 5.5% 4.4% 0.7 0.6 6.9 6.2 6.4
Average Regional peers 35.3 29.9 25.1 4.0 3.5 3.2 20.3 16.2 14.0 1.1 1.5 13.8 12.8 13.6
Premium/(Discount) to regional peers -26.8% -22.6% -21.0% 17.9% 21.6% 23.7% -21.8% -11.5% -10.7% 1.1 0.9 6.7 7.2 7.6
PER PBV EV/EBITDA Dividend yield ROE

January 29, 2014 28

Thailand Healthcare Sector

Appendix I: Characteristics of three health protection and insurance schemes

Source: Ministry of Public Health, Ministry of Finance, Social Security Office, MKE-ISR
Appendix III: Medical tourism market positioning and targeting market

Source: Mckinsey, Frost & Sullivan, MKE-ISR


Scheme Type Financing sources Benefits package Purchasing relation Access to service
Per capita
expenditure
2012
Social Security Scheme (SSS) Social
insurance,
compulsory
Private sector
employees,
excluding
dependants
19% Payroll tax
financed, tri-
partite
contribution 1.5%
of salary, equally
by employee and
government
Comprehensive:
outpatient, inpatient,
accident and
emergency, high-cost
care, with vary minimal
exclusion list; exclude
prevention and health
promotion
Contract model:
inclusive capitation
for outpatient and
inpatient services
Registered
public and
private
competing
contractors
2,562
Civil Servant Medical Benefit
Scheme (CSMBS)
Fringe benefit Government
employees plus
dependants
(parents,
spouse and up
to two children
age less than
20 years
7% General tax, non-
contribution
scheme, mainly
from government
budget
Comprehensive: slightly
higher than SSS and UCS
Reimbursement
model: fee from
service, direct
disbursement to
public providers for
outpateints;
conventional
diagnosis related
group (DRG) to
inpatients
Free choice of
public providers,
no registration
required
14,056
Universal Coverage Scheme
(UCS)
State welfare The rest of
population not
covered by SSS
and CSMBS
75% General tax, mainly
from government
budget
Comprehensive: similar
to SSS including
prevention and health
promotion for the whole
population
Contract model:
capitation for
outpatients and
global badget plus
DRG for inpatients
Registered
contractor
provider,
notably within
the district

2,217
Popolation coverage

January 29, 2014 29

Thailand Healthcare Sector


Appendix II: Positioning and competitive landscape of major private and public hospitals in Thailand

Source: MKE-ISR
Hospital Name Location Listed
No. of
hospital
JCI accrediation Specialist Areas No. of Specialists Target Customers
Key Value
Proposition
Total No. of beds Positioning
Bumrungrad Intl' Hospital Central Yes 1 Yes
Spine surgery, Cardiology,
Cardiothoracic surgery,
Neurosurgery
1,064
Medical traveller,
Expatriates, High
income population
High-end medical
services catering to
affluent population
554 Premium
Bangkok Chian Hospital Central Yes 6 No
Heart surgery, Cath lab, Lasik,
Urology
867
Low-medium
income
population, Social
welfare
Multi-specialties,
focusing on suburb
1,693 Low to medium
Bangkok General Hospital Whole Yes 14 Yes
Cardiology, Oncology, Spine
surgery, Rehabilitation and
physiotheraphy
>1,000
Medical traveller,
All income level
High-end healthcare
provider with a
nationwide referral
network
5,458 Medium to premium
Chiangmai Mai Ram Hospital North Yes 2 Yes
Gastroenterology, Hepatology,
Cardiology
171
Medium-high
income population
from the north
zone
Medium-high end
medical services
220 Medium
Chularat Hospital Group Central Yes 3 No
Hand surgery, Neonatal nursing,
Cardiology, Orthopedic
348
Corporate
customer, mainly
the industrial
workers
Multi-specialities
with a priovincial
referral network
544 Low to medium
Ramkamhaeng Hospital Central Yes 1 Yes
Cardiology, Disc replacement,
Diabetic foot disease
410
Corporate
customer, Medium
income
population,
Metropolitan
Medium-high end
medical services
486 Medium
Vibhavadi Hospital Central Yes 3 Yes
Cadiology, Fertility services,
Plastic surgery, Obstetrics and
Gynaecology
280
Medical traveller,
medium income
population
Medium-high end
medical services
350 Medium
King Chulalongkorn Memorial Hospital Central No 1 No
Cardiology, Neurodegenerative
disorders, Gastroenterology,
Nephrology
541
Low income
population,
Patients with
complicated
disease
Non-profit hospital
with competitve
pricing and multi-
specialties
1,439 Low to medium
Ramathibodi Hospital Central No 1 No
Orthopedic, Cancer treatment,
Gastroenterology, Dermatology
518
Low income
population,
Patients with
complicated
disease
Non-profit hospital
with competitve
pricing and multi-
specialties
1,378 Low to medium
Siriraj Hospital Central No 2 Yes
Cardiology, Orthopasdic, General
surgery, Rehabilitation and
physiotheraphy
851
Low income
population,
Patients with
complicated
disease
Non-profit hospital
with competitve
pricing and multi-
specialties
2,265 Low to medium
Hospital Network




January 29, 2014

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SEE PAGE 52 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS



Bangkok Chain Hospital (BCH TB)




Earnings to take off
Initiate at BUY and 12M TP of THB7.5, based on DCF with
9.5% WACC and 3% terminal growth. Our TP implies 2014F
28.0x PER, 4.4x PBV, and 1.1x PEG.
Largest player in low to mid-range segment with eight
hospitals and one clinic under management. Main strategies
are capacity expansion and rebalancing marketing strategy.
Expect EBITDA to grow 17.7% annually in 2013-2016F and
net profit to surge by 21.2% p.a. over next three years
(sector averages 15.2% earnings growth p.a.). ROE will rise to
18.0% in 2015F from 15.3% in 2013.
Whats New
BCH is rebalancing its strategy for its three hospital brands to have
clearer market segmentation. BCH plans to open three hospitals
during 2014-18F and this will increase the total capacity by 24.3%.
In addition, we expect better occupancy rate and outpatient
traffic at the newly-opened The World Medical Center(WMC)
resulting in lower net loss in 2014F. Thus, we expect strong
earnings growth in 2014F-2015F. Key risk is BCHs high leverage
(0.6x net D/E) in a rising interest-rate scenario: current coupon is
4%.
Whats Our View
We like BCHs multiple earnings growth drivers: increasing
inpatient and outpatient traffic, operational improvement at WMC,
and margin expansion. BCH has the highest number of growth
drivers in the Thai hospital space. Clearer market segmentation of
the three brands could help attract more patients. Patient traffic
is forecast to jump by 6.2% p.a., a faster pace than the 5.5%
growth in capacity. This will underpin growth and lead to ahigh
18.0% ROE accretion from 15.3% vs a cost of equity (CoE) of 12%.
Initiate coverage with BUY.

Key Data

Share Price Performance


Maybankvs Market



Sittichai Duangrattanachaya
(662) 658 6300 ext 1393
Sittichai.D@maybank-ke.co.th
Share Price: THB5.70 MCap (USD): 432M Thailand
Target Price: THB7.50(+32%) ADTV (USD): 0.5M Health Care
(New)
BUY
52w high/low (THB)
Free float (%)
Issued shares (m)
Market capitalization
Major shareholders:
-HARNPHANICH CHALERM 26%
-HARNPHANICH SOMPORN 6%
-Norges Bank 5%
10.88/5.65
2,494
57.3
THB14.2B
1,000
1,200
1,400
1,600
1,800
2,000
2,200
5.0
6.0
7.0
8.0
9.0
10.0
11.0
Jan-12 Jun-12 Nov-12 Apr-13 Sep-13
Bangkok Chain Hospital (L)
Stock Exchange of Thai Index (R)
1 Mth 3 Mth 12 Mth
Absolute(%) (5.8) (13.0) (26.9)
Relative to country (%) (3.8) (0.8) (15.4)
Positive Neutral Negative
Market Recs 6 4 2
Maybank Consensus % +/-
Target Price (THB) 7.50 6.90 8.7
2013 PATMI(THBm) 583 624 (6.5)
2014 PATMI(THBm) 668 731 (8.5)
Source: FactSet; Maybank
FYE Dec (THB m) FY11A FY12A FY13E FY14E FY15E
Revenue 3,902.6 4,465.6 4,754.4 5,216.3 5,803.9
EBITDA 1,348.3 1,589.7 1,367.3 1,625.6 1,877.1
Core net profit 673.0 910.3 583.4 668.4 796.6
Core EPS (THB) 0.34 0.46 0.23 0.27 0.32
Core EPS growth (%) (12.2) 35.3 (48.7) 14.6 19.2
Net DPS (THB) 0.20 0.18 0.14 0.16 0.19
Core P/E (x) 16.9 12.5 24.4 21.3 17.8
P/BV (x) 3.5 3.1 3.6 3.4 3.1
Net dividend yield (%) 3.5 3.2 2.5 2.8 3.4
ROAE (%) 18.5 23.8 13.8 14.8 16.4
ROAA (%) 12.2 14.4 7.2 7.2 8.2
EV/EBITDA (x) 8.7 10.1 12.0 10.5 9.2
Net debt/equity (%) 13.5 32.9 45.8 58.3 55.0

January 29, 2014 31

Bangkok Chain Hospital

Company background
BCH was incorporated in 1984 and currently operates a total of seven
hospitals - five in Bangkok (Prachacheun, Bang Kae, Rattanathibet,
Sukaphiban and Chaengwattana) and two in the provinces (Saraburi, Chiang
Rai). In 2013 it opened its seventh hospital, the WMC in Bangkok, catering
to the premium end of the market. Its three brands now offer services
atall price segments, lately adding premium via WMC. BCH accepts both
cash patients and those under the Social Security Schemes (SSS) and
Universal Coverage Scheme (UCS). BCH has formed alliances with more
than 50 hospitals nationwide to promote referrals especially among
patients under SSS and UCS. The Kasemrad Hospital in Prachacheun,
Bangkok is the supra contractor. BCH listed on the Thai Stock Exchange in
Nov 2004. It is controlled by the Harnphanich family headed by
Dr.Chalerm Harnphanich, a practicing gynaecologist.
Location
The opening of WMC, which has 324 beds and 86 examination rooms, in
1H13 in the Chaengwattana, Bangkok brings BCH into the high-end segment
targeting both local and international patients. The other hospitals, four
under the name Kasemrad Hospital and two under Karunvej Hospital,
will cater to the low to mid-segment of the market and the social security
patients, which is the largest group in Thailand (about 15m subscribers).

Figure 1: Bangkok Chain Hospitals locations

Source: Bangkok Chain Hospital
Shareholding structure
BCH is 50% owned by the Harnphanich family. Dr.Chalerm Harnphanich,
BCHs chairman and CEO, holds 32.6% of BCH, BGH holds 2%, and the
remaining shares are held by small individual shareholders.
Khun Anant Assawavokin, founder of the Land & Houses group, owned
28.7% of BCH and sold a 25% stake to Bumrungrad Hospital (BH) in 2011. In
Jul2012, BH in turn sold its entire 25% stake on the market. Recently,
Bangkok Dusit Medical Services (BGH) acquired 3% of BCH. As the largest
remaining hospital operator in Thailand with strong growth potential, BCH
will always be an acquisition target. However, we expect the Harnphanich
family to remain the largest shareholder.

Figure 2: Bangkok Chain Hospital shareholder structure

Source: Bangkok Chain Hospital

January 29, 2014 32

Bangkok Chain Hospital

Snapshots of Bangkok Chain Hospital

Figure 1: Inpatient and outpatient revenue (THBm) Figure 2: Proportion of inpatient and outpatient



Source: Company, MKE-ISR Source: Company, MKE-ISR

Figure 3: Profitability margin trends Figure 4: Net profit (THBm) and net margin (%)



Source: Company, MKE-ISR Source: Company, MKE-ISR

Figure 5: Patient revenue per hospital bed(THBm) Figure 6: EBITDA and net profit per hospital bed(THBm)



Source: Company, MKE-ISR Source: Company, MKE-ISR

Figure 7: Outpatient department utilization rate Figure 8: Inpatient departmentutilization rate



Source: Company, MKE-ISR Source: Company, MKE-ISR
0%
2%
4%
6%
8%
10%
12%
14%
16%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2011 2012 2013F 2014F 2015F 2016F
Inpatient revenue Outpatient revenue
IPD growth OPD growth
50.0% 50.1% 50.5% 50.0% 49.8% 49.8%
50.0% 49.9% 49.5% 50.0% 50.2% 50.2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013F 2014F 2015F 2016F
IPD OPD
10%
15%
20%
25%
30%
35%
40%
45%
2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F
Gross margin EBIT margin EBITDA margin
0%
5%
10%
15%
20%
25%
0
200
400
600
800
1,000
1,200
2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F
Net profit Net profit margin
THBm
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F
%
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F
EBITDA per hospital bed Net profit per hospital bed
74%
69%
71%
61% 61%
65%
67%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2010 2011 2012 2013F 2014F 2015F 2016F
78%
59%
61%
75%
78%
69% 69%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2010 2011 2012 2013F 2014F 2015F 2016F

January 29, 2014 33

Bangkok Chain Hospital






FYE 31 Dec (THB m) FY11A FY12A FY13E FY14E FY15E
Key Metrics
P/E (reported) (x) 16.9 12.5 24.4 21.3 17.8
Core P/E (x) 16.9 12.5 24.4 21.3 17.8
P/BV (x) 3.5 3.1 3.6 3.4 3.1
P/NTA (x) 3.5 3.1 3.6 3.4 3.1
Net dividend yield (%) 3.5 3.2 2.5 2.8 3.4
FCF yield (%) 1.3 nm nm nm 2.9
EV/EBITDA (x) 8.7 10.1 12.0 10.5 9.2
EV/EBIT (x) 10.4 11.9 16.7 14.9 13.0
Income Statement
Revenue 3,902.6 4,465.6 4,754.4 5,216.3 5,803.9
Gross profit 1,435.0 1,749.4 1,495.1 1,690.5 1,911.4
EBITDA 1,348.3 1,589.7 1,367.3 1,625.6 1,877.1
Depreciation (223.4) (237.6) (382.9) (474.2) (555.3)
Amortisation 0.0 0.0 0.0 0.0 0.0
EBIT 1,124.9 1,352.1 984.5 1,151.4 1,321.9
Net interest income /(exp) (13.5) (6.3) (95.4) (148.0) (149.9)
Associates & JV 0.0 0.0 0.0 0.0 0.0
Exceptionals 0.0 0.0 0.0 0.0 0.0
Other pretax income 0.0 0.0 0.0 0.0 0.0
Pretax profit 1,111.4 1,345.8 889.1 1,003.4 1,172.0
Income tax (329.6) (307.6) (177.8) (200.7) (234.4)
Minorities (108.9) (127.9) (127.9) (134.3) (141.0)
Reported net profit 673.0 910.3 583.4 668.4 796.6
Core net profit 673.0 910.3 583.4 668.4 796.6
Balance Sheet
Cash & Short Term Investments 705.2 878.6 1,817.4 1,167.6 1,087.3
Property, Plant & Equip (net) 3,999.8 4,975.8 5,893.0 6,768.8 7,213.5
Intangible assets 0.0 0.0 0.0 0.0 0.0
Investment in Associates & JVs 36.4 37.3 37.3 37.3 37.3
Other assets 815.0 1,226.3 1,348.4 1,466.7 1,604.3
Total assets 5,556.4 7,118.1 9,096.1 9,440.5 9,942.4
ST interest bearing debt 1,122.7 682.1 682.1 682.1 682.1
LT interest bearing debt 19.0 1,392.6 2,952.6 2,952.6 2,952.6
Other liabilities 813.6 979.5 1,072.4 1,148.1 1,254.5
Total Liabilities 1,955.3 3,054.2 4,707.1 4,782.8 4,889.1
Shareholders Equity 3,224.1 3,640.3 3,964.2 4,232.7 4,628.3
Minority Interest 377.0 423.6 423.6 423.6 423.6
Total shareholders equity 3,601.1 4,063.9 4,387.7 4,656.2 5,051.8
Cash Flow
Pretax profit 1,111.4 1,345.8 889.1 1,003.4 1,172.0
Depreciation & amortisation 223.4 237.6 382.9 474.2 555.3
Adj net interest (income)/exp (36.4) (59.5) (157.0) (199.9) (199.9)
Change in working capital 160.6 (260.9) (29.2) (42.6) (31.2)
Cash taxes paid (333.6) (309.5) (206.4) (245.1) (279.4)
Other operating cash flow (289.0) 20.4 (498.7) 0.0 0.0
Cash flow from operations 849.9 980.2 475.9 1,138.0 1,366.7
Capex (701.3) (1,160.5) (1,238.4) (1,298.1) (950.0)
Free cash flow 148.7 (180.3) (762.4) (160.1) 416.7
Dividends paid (573.6) (498.8) (259.3) (399.8) (401.0)
Equity raised / (purchased) 332.5 0.0 498.8 0.0 0.0
Change in Debt 70.3 933.0 1,560.0 0.0 0.0
OTH investing/financing cash flow (282.3) (80.4) (99.3) (89.9) (96.0)
Effect of exch rate changes na na na na na
Net cash flow (304.4) 173.5 937.7 (649.8) (80.3)

January 29, 2014 34

Bangkok Chain Hospital













FYE 31 Dec (THB m) FY11A FY12A FY13E FY14E FY15E
Key Ratios
Growth ratios (%)
Revenue growth (10.7) 14.4 6.5 9.7 11.3
EBITDA growth (1.5) 17.9 (14.0) 18.9 15.5
EBIT growth (2.0) 20.2 (27.2) 17.0 14.8
Pretax growth (1.5) 21.1 (33.9) 12.9 16.8
Reported net profit growth 5.3 35.3 (35.9) 14.6 19.2
Core net profit growth 5.3 35.3 (35.9) 14.6 19.2
Profitability ratios (%)
EBITDA margin 34.5 35.6 28.8 31.2 32.3
EBIT margin 28.8 30.3 20.7 22.1 22.8
Pretax profit margin 28.5 30.1 18.7 19.2 20.2
Payout ratio 59.3 39.4 60.0 60.0 60.0
DuPont analysis
Net profit margin (%) 17.2 nm 12.3 12.8 13.7
Revenue/Assets (x) 0.7 0.6 0.5 0.6 0.6
Assets/Equity (x) 1.7 2.0 2.3 2.2 2.1
ROAE (%) 18.5 23.8 13.8 14.8 16.4
ROAA (%) 12.2 14.4 7.2 7.2 8.2
Liquidity & Efficiency
Cash conversion cycle 20.4 18.9 34.3 34.9 35.8
Days receivable outstanding 46.1 49.2 64.4 65.6 65.8
Days inventory outstanding 20.0 18.3 16.9 17.4 17.0
Days payables outstanding 45.7 48.6 47.0 48.1 46.9
Dividend cover (x) 1.7 2.5 1.7 1.7 1.7
Current ratio (x) 0.7 1.2 1.8 1.4 1.3
Leverage & Expense Analysis
Asset/Liability (x) 2.8 2.3 1.9 2.0 2.0
Net debt/equity (%) 13.5 32.9 45.8 58.3 55.0
Net interest cover (x) 83.3 nm 10.3 7.8 8.8
Debt/EBITDA (x) 0.8 1.3 2.7 2.2 1.9
Capex/revenue (%) 18.0 26.0 26.0 24.9 16.4
Net debt/ (net cash) 436.4 1,196.0 1,817.2 2,467.0 2,547.3




January 29, 2014

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Bangkok Dusit Medical Services (BGH TB)




Sometimes big just means big
Initiate HOLD and 12M TP of THB140.0, based on DCF with
9.5%WACC and 3%terminal growth. Our TP-implied 2014
multiples are 4.8x PBV and 30.1x PER.
High referral growth potential with 30 hospitals in Thailand and
two in Cambodia (4,500 total beds).Its six brands cover all
market segments. Also have investments in laboratory, medicine
distribution and saline solution manufacturing businesses.
Forecast 3-yr EBITDA and net profit CAGR of 14.3% and 14.4% on
13.3% p.a. growth in patient revenues. ROE will rise to 17.7% in
2015F from 16.6% in 2013F.
Whats New
BGH is the largest private hospital operator in Thailand by revenue
and beds. If it completes its expansion plan, the number of beds
could grow by 24.6% in 2016F (combined for Thailand and
overseas). BGH will also expand its non-hospital business units to
neighbouring countries and drive revenue growth to 18% p.a.
during 2012-2016F. The three-year earnings CAGR is projected at
14.4%, based on a 23.1%EBITDA margin. The key earnings catalysts
are patient traffic growth (assumed at 5%), higher revenue on
deepening intensity and solid contribution from the non-hospital
businesses.
Whats Our View
In 2014, BGHs performance will be dampened by the expanding
asset base and flattening margins. However, we are bullish on its
medium-term outlook given its nationwide hospital network,
diverse patient mix, strong 15.7%earnings growth annually,
potential M&A in the North and North-eastern regions as well as
exposure to complimentary businesses: laboratories, services and
pharmaceutical products. We initiate coverage with HOLD due to
decelerating three-year earnings growth of 14.4%p.a. vs. the 41%
p.a. during 2011-2013; lower asset returns on an adjusted base.
Key risks to the business: 1) continued under-utilization of hospital
assets and 2) shrinking EBITDA margin.

Key Data

Share Price Performance


Maybankvs Market



Sittichai Duangrattanachaya
(662) 658 6300 ext 1393
Sittichai.D@maybank-ke.co.th
Share Price: THB117.00 MCap (USD): 5.5B Thailand
Target Price: THB140.00(+20%) ADTV (USD): 8M Health Care
(New)
HOLD
52w high/low (THB)
Free float (%)
Issued shares (m)
Market capitalization
Major shareholders:
-PRASATTHONGOSOJ PRASERT 19%
-THONGTANG WICHAI 10%
-Bangkok Airways Co. Ltd. 7%
175.00/108.50
1,549
27.6
THB181.2B
1,000
1,200
1,400
1,600
1,800
2,000
2,200
60
80
100
120
140
160
180
Jan-12 Jun-12 Nov-12 Apr-13 Sep-13
Bangkok Dusit Medical Services (L)
Stock Exchange of Thai Index (R)
1 Mth 3 Mth 12 Mth
Absolute(%) (0.4) (14.3) (10.7)
Relative to country (%) 1.7 (1.9) 3.8
Positive Neutral Negative
Market Recs 14 6 0
Maybank Consensus % +/-
Target Price (THB) 140.00 155.50 (10.0)
2013 PATMI(THBm) 6,482 6,288 3.1
2014 PATMI(THBm) 7,177 7,017 2.3
Source: FactSet; Maybank
FYE Dec (THB m) FY11A FY12A FY13E FY14E FY15E
Revenue 35,224.5 44,307.3 48,676.5 54,525.0 64,175.9
EBITDA 8,637.1 10,753.7 11,251.9 12,726.2 14,844.6
Core net profit 3,907.0 6,141.9 6,481.7 7,177.3 8,462.3
Core EPS (THB) 2.53 3.97 4.19 4.64 5.48
Core EPS growth (%) 37.3 57.2 5.5 10.7 17.9
Net DPS (THB) 1.10 1.80 1.68 1.86 2.19
Core P/E (x) 46.3 29.4 27.9 25.2 21.4
P/BV (x) 5.7 4.9 4.5 4.0 3.6
Net dividend yield (%) 0.9 1.5 1.4 1.6 1.9
ROAE (%) 15.7 17.1 16.0 16.0 16.8
ROAA (%) 8.6 9.7 9.2 9.4 10.2
EV/EBITDA (x) 16.3 17.9 17.7 15.5 13.1
Net debt/equity (%) 38.3 43.3 40.8 30.6 21.4

January 29, 2014 36

Bangkok Dusit Medical Services

Company background
BGH was established in February 1972 by a group of 40 medical
practitioners and pharmacists. The shareholding is now more concentrated
among a few families. BGH manages 30 hospitals in Thailand and two
overseas with a total of 4,421 active beds, and has businesses in various
healthcare-related industries. It also invests in other private hospitals
through subsidiaries such as Samitivej Hospital, BNH Hospitals and the
Phayathai Group of Hospitals. BGH listed on the Stock Exchange of
Thailand in Oct 1991.

Location
BGH is Thailands largest hospital operator with 13 hospitals in Bangkok
and 17 in the provinces. It also has two hospitals in Cambodia. Currently,
12 hospitals under BGH management have received an international
standard from Joint Commission International (JCI).

BGH grows mainly via acquisitions, increasing the number of beds to 4,421
in 2013 from 2,081 in 2008.In Thailand, BGH has already received a permit
to increase its capacity to 5,616 beds. There are now 11 distinct hospital
networks under the BGH banner. Putting these entities into one marketing
and management platform is one way to enhance BGHs returns.

Figure 1: Major acquisitions in the last 10 years

Source: Bangkok Dusit Medical Services, MKE-ISR

Figure 2: BGHs hospital locations

Source: Bangkok Dusit Medical Services


(in million)
Hospit al Year Met hod Tot al value Number of bed Cost per bed
Samitivej 2004 Share swap and cash 8,715 825 10.6
BNH 2005 Cash 592 144 4.5
Paolo Memorial 2010 Share swap and cash 5,553 657 8.5
Phayathai 2010 Share swap and cash 4,273 990 4.5
Udon Pattana 2012 Cash 600 350 1.7
Vachprasit 2012 Cash 600 120 5.0
Ratanavej 2013 Cash 577 158 3.7

January 29, 2014 37

Bangkok Dusit Medical Services

Other investments
BGH invested in Ramkamhaeng Hospital and Bumrungrad Hospital and owns
38.2% and 23.9%. In 9M13, Ramkamhaeng Hospital and Bumrungrad
Hospital contributed about 97% of BGHs equity income from associated
companies. Both hospitals are dividend-paying and together accounted for
89% of BGHs dividend income during the period. The Medic Pharma (not
listed), a pharmaceutical product manufacturer, paid about THB44m in
dividends, accounting for 10% of BGHs dividend income during the same
period.

Shareholder structure
BGHs shareholder structure has simplified over the years and has become
concentrated among fewer families. The Prasarttong-Osoth family owns
29.2%, with 21.6% directly via Bangkok Airways and 7.6% via Bangkok
Airways Holding. Mr.Wichai Thongtang and his family hold 15% from a share
swap between Prasit Patana (owner of Phaya Thai and Paolo hospitals) and
BGH in 2011. We expect the Thongtang and Prasarttong-Osoth families to
maintain their stakes.

Figure 3: Bangkok Dusit Medical Services shareholder structure

Source: Bangkok Dusit Medical Services


Prasert
Prasarttong-
Osoth and
family
22%
Wichai
Thongtang and
family
15%
Bangkok
Airways and
Bangkok
Airways
Holding
8%
Viriyah
Insurance
6%
Bangkok Bank
2%
Small
individual
shareholders
47%
Prasarttong-Osoth family hold 29.2%

January 29, 2014 38

Bangkok Dusit Medical Services

Snapshots of Bangkok Dusit Medical Services

Figure 1: Inpatient and outpatient revenue (THBm) Figure 2: Proportion of inpatient and outpatient



Source: Company, MKE-ISR Source: Company, MKE-ISR

Figure 3: Profitability margin trends Figure 4: Net profit (THBm)and net margin (%)



Source: Company, MKE-ISR Source: Company, MKE-ISR

Figure 5: Patient revenue per hospital bed (THBm) Figure 6: EBITDA and net profit per hospital bed (THBm)



Source: Company, MKE-ISR Source: Company, MKE-ISR
Figure 7: Outpatient department utilization rate Figure 8: Inpatient department utilization rate



Source: Company, MKE-ISR Source: Company, MKE-ISR
0%
5%
10%
15%
20%
25%
30%
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
2011 2012 2013F 2014F 2015F 2016F
Inpatient revenue Outpatient revenue
IPD growth OPD growth
54.0% 55.0% 55.8% 56.1% 56.1% 57.2%
46.0% 45.0% 44.2% 43.9% 43.9% 42.8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013F 2014F 2015F 2016F
IPD OPD
5%
10%
15%
20%
25%
30%
35%
40%
2008 2009 2010 2011 2012
2013F 2014F 2015F 2016F
Gross margin EBIT margin EBITDA margin
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0
2,000
4,000
6,000
8,000
10,000
12,000
2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F
Net profit Net profit margin
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F
EBITDA per hospital bed Net profit per hospital bed
60%
64%
69%
72%
65%
70%
71%
54%
56%
58%
60%
62%
64%
66%
68%
70%
72%
74%
2010 2011 2012 2013F 2014F 2015F 2016F
65%
66%
70%
70%
70%
71%
73%
60%
62%
64%
66%
68%
70%
72%
74%
2010 2011 2012 2013F 2014F 2015F 2016F

January 29, 2014 39

Bangkok Dusit Medical Services






FYE 31 Dec (THB m) FY11A FY12A FY13E FY14E FY15E
Key Metrics
P/E (reported) (x) 41.2 22.8 27.9 25.2 21.4
Core P/E (x) 46.3 29.4 27.9 25.2 21.4
P/BV (x) 5.7 4.9 4.5 4.0 3.6
P/NTA (x) 5.7 4.9 4.5 4.0 3.6
Net dividend yield (%) 0.9 1.5 1.4 1.6 1.9
FCF yield (%) nm 2.6 1.1 2.8 3.0
EV/EBITDA (x) 16.3 17.9 17.7 15.5 13.1
EV/EBIT (x) 23.7 24.7 25.2 22.1 18.8
Income Statement
Revenue 35,224.5 44,307.3 48,676.5 54,525.0 64,175.9
Gross profit 11,549.0 15,068.5 16,117.7 18,194.6 21,396.2
EBITDA 8,637.1 10,753.7 11,251.9 12,726.2 14,844.6
Depreciation (2,707.5) (2,950.6) (3,352.8) (3,833.5) (4,543.7)
Amortisation 0.0 0.0 0.0 0.0 0.0
EBIT 5,929.6 7,803.1 7,899.1 8,892.7 10,300.9
Net interest income /(exp) (707.4) (792.9) (935.7) (992.8) (966.9)
Associates & JV 381.6 967.7 1,071.7 1,172.3 1,325.9
Exceptionals 479.0 1,795.0 0.0 0.0 0.0
Other pretax income 0.0 0.0 0.0 0.0 0.0
Pretax profit 6,082.9 9,772.9 8,035.1 9,072.2 10,659.9
Income tax (1,456.3) (1,520.7) (1,253.4) (1,580.0) (1,866.8)
Minorities (240.6) (315.3) (300.0) (315.0) (330.8)
Reported net profit 4,386.0 7,936.9 6,481.7 7,177.3 8,462.3
Core net profit 3,907.0 6,141.9 6,481.7 7,177.3 8,462.3
Balance Sheet
Cash & Short Term Investments 4,340.1 3,857.3 3,274.8 6,025.8 8,958.6
Property, Plant & Equip (net) 29,430.1 33,151.9 38,383.2 41,334.0 45,680.5
Intangible assets 0.0 0.0 0.0 0.0 0.0
Investment in Associates & JVs 7,865.0 13,359.9 13,359.9 13,359.9 13,359.9
Other assets 17,156.7 18,091.8 18,194.3 18,313.3 18,518.7
Total assets 58,791.9 68,461.0 73,212.2 79,032.9 86,517.6
ST interest bearing debt 1,194.1 4,207.3 4,207.3 4,207.3 4,207.3
LT interest bearing debt 15,412.4 15,622.2 15,622.2 15,622.2 15,622.2
Other liabilities 8,768.2 10,244.4 10,995.7 11,916.9 13,479.5
Total Liabilities 25,374.7 30,074.0 30,825.3 31,746.5 33,309.1
Shareholders Equity 31,995.2 36,853.3 40,553.2 45,137.8 50,729.2
Minority Interest 1,422.0 1,533.6 1,833.6 2,148.6 2,479.4
Total shareholders equity 33,417.2 38,387.0 42,386.8 47,286.4 53,208.6
Cash Flow
Pretax profit 6,082.9 9,772.9 8,035.1 9,072.2 10,659.9
Depreciation & amortisation 2,707.5 2,950.6 3,352.8 3,833.5 4,543.7
Adj net interest (income)/exp (788.6) (897.7) (1,040.4) (1,097.6) (1,071.7)
Change in working capital (367.2) 89.1 648.8 802.2 1,357.1
Cash taxes paid (1,678.0) (1,767.1) (1,541.6) (1,884.2) (2,168.6)
Other operating cash flow (7,720.5) 3,147.4 1,071.7 1,172.3 1,325.9
Cash flow from operations (1,917.1) 11,325.4 10,390.4 11,719.0 14,287.2
Capex (13,198.3) (6,567.7) (8,479.4) (6,679.5) (8,785.4)
Free cash flow (15,115.4) 4,757.7 1,911.0 5,039.5 5,501.8
Dividends paid 0.0 (1,700.0) (2,781.8) (2,592.7) (2,870.9)
Equity raised / (purchased) 13,333.2 0.0 0.0 0.0 0.0
Change in Debt 5,930.3 3,223.0 0.0 0.0 0.0
OTH investing/financing cash flow (4,037.0) (6,763.5) 288.2 304.2 301.8
Effect of exch rate changes na na na na na
Net cash flow 111.1 (482.8) (582.6) 2,751.0 2,932.8

January 29, 2014 40

Bangkok Dusit Medical Services







FYE 31 Dec (THB m) FY11A FY12A FY13E FY14E FY15E
Key Ratios
Growth ratios (%)
Revenue growth 49.8 25.8 9.9 12.0 17.7
EBITDA growth 55.9 24.5 4.6 13.1 16.6
EBIT growth 74.9 31.6 1.2 12.6 15.8
Pretax growth 92.5 60.7 (17.8) 12.9 17.5
Reported net profit growth 91.1 81.0 (18.3) 10.7 17.9
Core net profit growth 70.2 57.2 5.5 10.7 17.9
Profitability ratios (%)
EBITDA margin 24.5 24.3 23.1 23.3 23.1
EBIT margin 16.8 17.6 16.2 16.3 16.1
Pretax profit margin 17.3 22.1 16.5 16.6 16.6
Payout ratio 38.8 35.0 40.0 40.0 40.0
DuPont analysis
Net profit margin (%) 12.5 17.9 13.3 13.2 13.2
Revenue/Assets (x) 0.6 0.6 0.7 0.7 0.7
Assets/Equity (x) 1.8 1.9 1.8 1.8 1.7
ROAE (%) 15.7 17.1 16.0 16.0 16.8
ROAA (%) 8.6 9.7 9.2 9.4 10.2
Liquidity & Efficiency
Cash conversion cycle nm nm nm nm nm
Days receivable outstanding 27.2 31.1 31.7 28.3 24.0
Days inventory outstanding 10.9 11.2 9.1 9.1 8.8
Days payables outstanding 40.6 43.1 42.2 42.0 40.9
Dividend cover (x) 2.6 2.9 2.5 2.5 2.5
Current ratio (x) 1.2 0.8 0.7 0.9 1.0
Leverage & Expense Analysis
Asset/Liability (x) 2.3 2.3 2.4 2.5 2.6
Net debt/equity (%) 38.3 43.3 40.8 30.6 21.4
Net interest cover (x) 8.4 9.8 8.4 9.0 10.7
Debt/EBITDA (x) 1.9 1.8 1.8 1.6 1.3
Capex/revenue (%) 37.5 14.8 17.4 12.3 13.7
Net debt/ (net cash) 12,266.4 15,972.2 16,554.8 13,803.8 10,871.0




January 29, 2014

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Bumrungrad Hospital (BH TB)
Share Price: THB83.25 MCap (USD): 1.9B Thailand
BUY

Target Price: THB105.00(+26%) ADTV (USD): 1M Health Care
(New)


Slow earnings growth just temporary
Initiate BH at BUY with DCF-based TP of THB105 (WACC of 8.5%
and terminal growth of 3%). Our TP implies 7.1x FY14F PBV and
28.2x PER. BHs high ROE of 27.1% justifies the high valuation.
BH is the most recognized hospital operator in Thailand in the
premium segment of the market. Its only hospital, located in
the heart of Bangkok, focuses on intensive, quality care
services adopting the best international practices. Four key
strategies are implemented currently: expansion of the existing
hospital, building a new one on Petchaburi Road Bangkok,
create a second brand to tap the mid segment of the market
and increase revenue intensity.
BHs earnings growth in FY14F will be lacklustre,+10.7%YoY,but
this is expected to accelerate starting FY15F giving a three-year
CAGR of 16.0% pa. The underlying patient revenue growth is
15.5% and EBITDA margin would be 26.5%, on average. BHs ROE
ranges 26%-28% in FY14F-2015F, the highest among its Thai and
even the regional peers.
Whats New
BH is the best-known private hospital in Thailand especially among
the high-end clients and medical tourists. The planned expansion
will increase its capacity to 783 beds in 2016, up 43.7%, via
investment on a brownfield or M&A. BH will seek to diversify into
the mid-market using a second brand. With the expansion, the
three-year earnings CAGR could reach 16% pa. Thanks to its low
leverage, BH has room to accommodate the planned expansion.
Whats Our View
The political headwinds affecting sentiment among medical
tourists is a short-term event, in our view, and its impact on BH
could be offset by higher traffic flow from the local patients. We
like the medium-term outlook for BH because of robust earnings
growth, brand expansion, high ROE, potential M&A and solid
financial standing. We initiate BH with a BUY and a DCF-based
target price ofTHB105. Of the private hospitals we cover in our
universe, BH has the tendency to stand out as the next potential
aggressive acquirer going forward replacing BGH.

Key Data

Share Price Performance


Maybankvs Market



Sittichai Duangrattanachaya
(662) 658 6300 ext 1393
Sittichai.D@maybank-ke.co.th
52w high/low (THB)
Free float (%)
Issued shares (m)
Market capitalization
Major shareholders:
-Bangkok Dusit Medical Services 24%
-Bangkok Insurance 15%
-Sinnsuptawee Asset Management 9%
93.25/72.25
729
69.6
THB60.7B
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
2,000
2,100
40
45
50
55
60
65
70
75
80
85
90
95
Jan-12 Jun-12 Nov-12 Apr-13 Sep-13
Bumrungrad Hospital (L)
Stock Exchange of Thai Index (R)
1 Mth 3 Mth 12 Mth
Absolute(%) (5.1) (4.9) 8.5
Relative to country (%) (3.1) 8.9 26.1
Positive Neutral Negative
Market Recs 16 3 1
Maybank Consensus % +/-
Target Price (THB) 105.00 105.00 0.0
2013 PATMI(THBm) 2,447 2,428 0.8
2014 PATMI(THBm) 2,711 2,797 (3.1)
Source: FactSet; Maybank
FYE Dec (THB m) FY11A FY12A FY13E FY14E FY15E
Revenue 11,135.6 12,982.5 14,265.5 16,268.4 18,932.2
EBITDA 2,773.4 3,256.1 3,925.5 4,498.6 5,353.8
Core net profit 1,542.6 1,808.8 2,447.3 2,711.2 3,290.5
Core FDEPS (THB) 2.12 2.48 2.83 3.13 3.80
Core FDEPS growth(%) 26.5 17.3 13.8 10.8 21.4
Net DPS (THB) 1.10 1.80 1.68 1.86 2.26
Core FD P/E (x) 39.3 33.5 29.5 26.6 21.9
P/BV (x) 9.0 7.2 6.5 5.6 4.8
Net dividend yield (%) 1.3 2.2 2.0 2.2 2.7
ROAE (%) 24.1 23.9 27.7 27.0 28.0
ROAA (%) 13.6 12.3 14.9 15.2 16.5
EV/EBITDA (x) 13.5 16.2 15.6 13.4 11.0
Net debt/equity (%) 54.9 net cash 4.8 net cash net cash

January 29, 2014 42

Bumrungrad Hospital

Company background
BH started its operation in 1980. It operates only one hospital in the
central business district of Bangkok City with a current capacity of 487
beds and can process 4,500 or so outpatients per day with its pool of 1,064
doctors. BH is highly reputable, the first to qualify for international
accreditation thus making it the destination of choice for the high-end
clients. BH was listed on the Stock exchange of Thailand in Dec 1989.

Location
BHs hospital is highly accessible to the well-heeled local customers as well
as international patients. Its marketing strength is way above its Thai peers
with 20 international offices in 15 countries.
Figure 1: Bumrungrad Hospitals location Figure 2: New hospital project on Petchaburi Road



Source: Bumrungrad Hospital Source: Bumrungrad Hospital

The new hospital on Petchaburi Road in Bangkok will cater predominantly
to women and childrens healthcare needs. The total investment is THB7b.
The hospital will have 220 beds. Construction will start in 1H14 and is set
for completion in Dec-2016.

Shareholder structure
BH is 23.9% owned by the Bangkok Dusit Medical Services. Bangkok
Insurance (BKI) and Bangkok Life Assurance (BLA) hold 14.7% and 1.7%. Its
major and strategic shareholder is the Sophonpanich family of the Bangkok
Bank Group. The Prasarttong-Osoth and the Sophonpanich families each
hold (direct & indirect) 7.0% and 6.7%. The Sophonpanich family maintains
the largest portion of ownership via its family holding and through Bangkok
Insurance.

Figure 3: Bumrungrad Hospital shareholder structure

Source: Bumrungrad Hospital
Bangkok Dusit
Medical Services
(BGH)
24%
Bangkok
Insurance
15%
Sinnsuptawee
Asset
Management
9%
Wattana
Sophonpanich
3%
Bangkok Life
Assurance
2%
Chai
Sophonpanich
1%
Chalee
Sophonpanich
1%
Chatree
Sophonpanich
1%
Small individual
shareholders
45%
Prasarttong-Osoth family hold indirect 6.99%
Sohonpanich family hold indirect 6.70%

January 29, 2014 43

Bumrungrad Hospital

Snapshots of Bumrungrad Hospital
Figure 1: Inpatient and outpatient revenue (THBm) Figure 2: Proportion of inpatient and outpatient



Source: Company, MKE-ISR Source: Company, MKE-ISR

Figure 3: Profitability margin trends Figure 4: Net profit (THBm) and net margin (%)



Source: Company, MKE-ISR Source: Company, MKE-ISR

Figure 5: Patient revenue per hospital bed (THBm) Figure 6: EBITDA and net profit per hospital bed (THBm)



Source: Company, MKE-ISR Source: Company, MKE-ISR
Figure 7: Outpatient department utilization rate Figure 8: Inpatient department utilization rate



Source: Company, MKE-ISR Source: Company, MKE-ISR
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2011 2012 2013F 2014F 2015F 2016F
Inpatient revenue Outpatient revenue IPD growth OPD growth
49.6% 48.6% 47.4% 47.4% 47.3% 47.3%
50.4% 51.4% 52.6% 52.6% 52.7% 52.7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013F 2014F 2015F 2016F
IPD OPD
10%
15%
20%
25%
30%
35%
40%
2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F
Gross margin EBIT margin EBITDA margin
0%
5%
10%
15%
20%
25%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F
Net profit Net profit margin
THBm
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F
0.0
2.0
4.0
6.0
8.0
10.0
12.0
2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F
EBITDA per hospital bed Net profit per hospital bed
68%
71%
67%
55%
59%
65%
72%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2010 2011 2012 2013F 2014F 2015F 2016F
69%
72%
77%
73%
70%
72%
71%
64%
66%
68%
70%
72%
74%
76%
78%
2010 2011 2012 2013F 2014F 2015F 2016F

January 29, 2014 44

Bumrungrad Hospital






FYE 31 Dec (THB m) FY11A FY12A FY13E FY14E FY15E
Key Metrics
P/E (reported) (x) 38.2 22.7 24.8 22.4 18.4
Core P/E (x) 39.3 33.5 24.8 22.4 18.4
Core FD P/E (x) 39.3 33.5 29.5 26.6 21.9
P/BV (x) 9.0 7.2 6.5 5.6 4.8
P/NTA (x) 15.8 12.7 11.5 9.9 8.4
Net dividend yield (%) 1.3 2.2 2.0 2.2 2.7
FCF yield (%) 1.3 2.2 nm 3.6 4.2
EV/EBITDA (x) 13.5 16.2 15.6 13.4 11.0
EV/EBIT (x) 17.7 20.7 19.4 17.3 14.0
Income Statement
Revenue 11,135.6 12,982.5 14,265.5 16,268.4 18,932.2
Gross profit 3,889.1 4,750.4 5,421.7 6,031.9 7,087.5
EBITDA 2,773.4 3,256.1 3,925.5 4,498.6 5,353.8
Depreciation (647.8) (709.1) (783.8) (1,028.6) (1,166.9)
Amortisation 0.0 0.0 0.0 0.0 0.0
EBIT 2,125.6 2,547.0 3,141.7 3,470.0 4,186.9
Net interest income /(exp) (159.6) (142.4) (82.5) (81.0) (73.8)
Associates & JV 82.7 93.3 0.0 0.0 0.0
Exceptionals 45.2 859.3 0.0 0.0 0.0
Other pretax income 0.0 0.0 0.0 0.0 0.0
Pretax profit 2,093.9 3,357.3 3,059.2 3,389.0 4,113.1
Income tax (506.1) (689.8) (611.8) (677.8) (822.6)
Minorities 0.0 0.7 0.0 0.0 0.0
Reported net profit 1,587.8 2,668.2 2,447.3 2,711.2 3,290.5
Core net profit 1,542.6 1,808.8 2,447.3 2,711.2 3,290.5
Balance Sheet
Cash & Short Term Investments 1,260.7 6,034.1 4,514.4 5,538.1 6,779.1
Property, Plant & Equip (net) 6,241.6 7,683.0 10,151.8 10,740.2 11,622.3
Intangible assets 0.0 0.0 0.0 0.0 0.0
Investment in Associates & JVs 4,253.2 239.4 239.4 239.4 239.4
Other assets 1,717.1 1,905.2 2,063.6 2,271.2 2,518.5
Total assets 13,472.5 15,861.8 16,969.2 18,788.9 21,159.3
ST interest bearing debt 0.0 0.0 0.0 0.0 0.0
LT interest bearing debt 4,954.9 4,960.5 4,960.5 4,960.5 4,960.5
Other liabilities 1,783.7 2,513.8 2,729.3 3,061.4 3,497.0
Total Liabilities 6,738.7 7,474.2 7,689.8 8,021.9 8,457.5
Shareholders Equity 6,731.7 8,387.5 9,279.4 10,767.0 12,701.8
Minority Interest 2.1 0.0 0.0 0.0 0.0
Total shareholders equity 6,733.9 8,387.5 9,279.4 10,767.0 12,701.8
Cash Flow
Pretax profit 2,093.9 3,357.3 3,059.2 3,389.0 4,113.1
Depreciation & amortisation 647.8 709.1 783.8 1,028.6 1,166.9
Adj net interest (income)/exp (162.1) (152.8) (146.8) (184.8) (159.2)
Change in working capital (262.4) 439.6 57.1 124.6 188.2
Cash taxes paid (558.5) (747.3) (659.2) (719.0) (865.5)
Other operating cash flow 79.1 692.6 0.0 0.0 0.0
Cash flow from operations 1,869.6 3,488.2 3,176.6 3,719.4 4,517.3
Capex (1,102.2) (2,140.1) (3,188.4) (1,513.2) (1,963.7)
Free cash flow 767.4 1,348.1 (11.7) 2,206.2 2,553.7
Dividends paid (693.5) (912.5) (1,311.1) (1,223.7) (1,355.6)
Equity raised / (purchased) 0.0 0.0 0.0 0.0 0.0
Change in Debt 3,424.9 5.5 0.0 0.0 0.0
OTH investing/financing cash flow (2,865.6) 4,332.3 (196.9) 41.2 42.9
Effect of exch rate changes na na na na na
Net cash flow 633.3 4,773.4 (1,519.8) 1,023.7 1,241.0

January 29, 2014 45

Bumrungrad Hospital








FYE 31 Dec (THB m) FY11A FY12A FY13E FY14E FY15E
Key Ratios
Growth ratios (%)
Revenue growth 12.2 16.6 9.9 14.0 16.4
EBITDA growth 14.4 17.4 20.6 14.6 19.0
EBIT growth 16.3 19.8 23.3 10.5 20.7
Pretax growth 18.6 60.3 (8.9) 10.8 21.4
Reported net profit growth 26.2 68.0 (8.3) 10.8 21.4
Core net profit growth 26.5 17.3 35.3 10.8 21.4
Profitability ratios (%)
EBITDA margin 24.9 25.1 27.5 27.7 28.3
EBIT margin 19.1 19.6 22.0 21.3 22.1
Pretax profit margin 18.8 25.9 21.4 20.8 21.7
Payout ratio 50.5 49.1 50.0 50.0 50.0
DuPont analysis
Net profit margin (%) 14.3 nm 17.2 16.7 17.4
Revenue/Assets (x) 0.8 0.8 0.8 0.9 0.9
Assets/Equity (x) 2.0 1.9 1.8 1.7 1.7
ROAE (%) 24.1 23.9 27.7 27.0 28.0
ROAA (%) 13.6 12.3 14.9 15.2 16.5
Liquidity & Efficiency
Cash conversion cycle 15.3 14.4 10.9 10.4 9.0
Days receivable outstanding 33.7 34.1 35.5 34.5 33.0
Days inventory outstanding 12.0 10.9 9.7 9.2 9.1
Days payables outstanding 30.4 30.7 34.3 33.3 33.1
Dividend cover (x) 2.0 2.0 2.0 2.0 2.0
Current ratio (x) 1.8 3.6 2.7 2.8 2.9
Leverage & Expense Analysis
Asset/Liability (x) 2.0 2.1 2.2 2.3 2.5
Net debt/equity (%) 54.9 net cash 4.8 net cash net cash
Net interest cover (x) 13.3 17.9 38.1 42.8 56.7
Debt/EBITDA (x) 1.8 1.5 1.3 1.1 0.9
Capex/revenue (%) 9.9 16.5 22.4 9.3 10.4
Net debt/ (net cash) 3,694.2 (1,073.7) 446.1 (577.6) (1,818.7)




January 29, 2014

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SEE PAGE 52 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS



Chularat Hospital (CHG TB)
Share Price: THB10.00 MCap (USD): 334M Thailand
HOLD

Target Price: THB11.50(+15%) ADTV (USD): 0.2M Health Care
(New)


Small can be beautiful
Initiate CHG at HOLD with DCF-based TP of THB11.5 (WACC of
8.5% and terminal growth of 3%). Our TP implies 27.4x FY14F
PER and 3.8x FY14F PBV.
Despite a narrower geographical coverage than other hospital
operators in our coverage, CHG has a strong position in the low-
income segment of the market and social security members,
accounting for 42% of its revenue. CHG is developing three
capacity expansion projects and one greenfield with total
investment of THB1.27b that could raise its existing capacity by
two-thirds in FY17F.
Forecast net profit and EBITDA growth of 13.7% and 13.1% pa
during FY13F-2016F on the back of estimated patient revenue
CAGR of 10.9% pa. ROE is projected to rise from 16.7% in FY13F
to 18.3% in FY15F.
Whats New
CHG is a key hospital operator in the eastern provinces of Samut
Prakarn. Prachinburi, and Chachoengsao. Both provinces are
manufacturing and production bases and have high population
concentration of factory workers. There are five hospitals and five
clinics under CHGs management with total capacity of 365 beds and
87 outpatient exam rooms. CHG plans to enlarge the existing three
hospitals and build one new hospital over FY14-17F, increasing beds
and outpatient rooms by 14% and 15% annually until completion. While
the aggressive capacity expansion could temporarily lead to lower
occupancy rate from 75% to 72% in FY16F we expect strong bounce
starting 2017F. Aggressive capacity expansion, increase portion of cash
patients and focusing on workers in the industrial estates are the main
strategies of growth for CHG.
Whats Our View
CHG has the highest net profit margin in our coverage. Secure
financial position, with net cash on hand of THB500m, is one of the
key strengths of this company that could allow it to move fast when
the opportunity arises. However, in the medium term CHG would show
the slowest earnings growth of 14% pa in the sector (sector average is
15.2%) because of the base effect of its fast-faced capacity expansion
hence our HOLD rating on CHG.

Key Data

Share Price Performance


Maybankvs Market



Sittichai Duangrattanachaya
(662) 658 6300 ext 1393
Sittichai.D@maybank-ke.co.th
52w high/low (THB)
Free float (%)
Issued shares (m)
Market capitalization
Major shareholders:
-PHLATSIN KANNIKA 18%
-PANYAPOL APIROM 13%
-PANYAPHOL KOBKUL 11%
na/na
1,100
32.0
THB11.0B
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
8.5
9.0
9.5
10.0
10.5
11.0
11.5
12.0
May-13 Aug-13 Nov-13
Chularat Hospital (L)
Stock Exchange of Thai Index (R)
1 Mth 3 Mth 12 Mth
Absolute(%) 0.0 (2.9) na
Relative to country (%) 2.1 11.1 na
Positive Neutral Negative
Market Recs 4 0 0
Maybank Consensus % +/-
Target Price (THB) 11.50 12.20 (5.7)
2013 PATMI(THBm) 405 417 (2.8)
2014 PATMI(THBm) 461 466 (1.1)
Source: FactSet; Maybank
FYE Dec (THB m) FY11A FY12A FY13E FY14E FY15E
Revenue 1,417.2 1,863.2 2,200.4 2,389.2 2,681.6
EBITDA 344.5 541.3 622.7 704.8 796.4
Core net profit 155.5 303.0 404.8 460.8 520.6
Core EPS (THB) 0.18 0.34 0.37 0.42 0.47
Core EPS growth (%) 38.3 94.9 6.9 13.8 13.0
Net DPS (THB) 0.16 0.31 0.11 0.16 0.18
Core P/E (x) 56.6 29.0 27.2 23.9 21.1
P/BV (x) 9.2 7.8 4.5 4.2 3.9
Net dividend yield (%) 1.6 3.1 1.1 1.6 1.8
ROAE (%) 16.8 29.2 22.8 18.2 19.0
ROAA (%) 13.1 21.7 18.2 15.2 15.8
EV/EBITDA (x) na na 16.6 14.6 12.9
Net debt/equity (%) net cash net cash net cash net cash net cash

January 29, 2014 47

Chularat Hospital Group

Company background
Chularat Hospital (CHG) was established in 1986 by the Plussind family. At
the present, CHG has three hospitals and seven clinics with 365 beds and
86 outpatient rooms. Its area of specialization are hand surgery, neonatal
nursing, cardiology and cancer treatment. CHG was listed on the Stock
exchange of Thailand in July 2013.

Location
Key service areas of CHG are in Samut Prakarn and Chachoengsao
provinces, as well as the eastern part of Bangkok (Bang Na, LatKrabang)
and the nearby Suvarnabhumi Airport. This is due to its proximity to many
industrial estates, including Lat Krabang IE, Theparak IE, Bangpoo IE and
Bangplee IE. CHG is positioned to serving low-middle income patients (55%)
and social security patients (44%). There three main hospitals and seven
clinics around main hospitals that will generate referral client support and
serve the main hospitals.

Figure 1: Chularat Hospital Groups location

Source: Chularat Hospital Group

Shareholder structure
CHG is owned by three families: 39.7% by the Plussind family, 21% by the
Panyaphol family and 2.6% by the Amornpitakkul/Phailee family. We
expect the Plussind and Panyaphol families to remain the major
shareholders of CHG. Khun Patama Leesawadtrakul, who has close
relationship with the Panyaphol family, holds 3.72%. The Leesawadtrakul is
an economically powerful family and is the major shareholder of G Steel
(GSTEL) and G J Steel (GJS).

Figure 2: Chularat Hospital Group shareholder structure

Source: Chularat Hospital Group
Plussind
family
40%
Pattama
Leesawadtrakul
4%
Panyaphol
family
21%
Amornpitakkul
family
1%
Phailee family
1%
Small individual
shareholder
33%

January 29, 2014 48

Chularat Hospital Group

Snapshots of Chularat Hospital Group

Figure 1: Inpatient and outpatient revenue (THBm) Figure 2: Proportion of inpatient and outpatient



Source: Company, MKE-ISR Source: Company, MKE-ISR

Figure 3: Profitability margin trends Figure 4: Net profit (THBm) and net margin (%)



Source: Company, MKE-ISR Source: Company, MKE-ISR

Figure 5: Patient revenue per hospital bed (THBm) Figure 6: EBITDA and net profit per hospital bed (THBm)



Source: Company, MKE-ISR Source: Company, MKE-ISR

Figure 7: Outpatient department utilization rate Figure 8: Inpatient department utilization rate



Source: Company, MKE-ISR Source: Company, MKE-ISR
0%
5%
10%
15%
20%
25%
30%
0
100
200
300
400
500
600
700
800
900
1,000
2011 2012 2013F 2014F 2015F 2016F
Inpatient revenue Outpatient revenue
IPD growth OPD growth
44.3% 44.0% 42.4% 42.6% 42.7% 43.3%
55.7% 56.0% 57.6% 57.4% 57.3% 56.7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013F 2014F 2015F 2016F
IPD OPD
10%
15%
20%
25%
30%
35%
40%
2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F
Gross margin EBIT margin EBITDA margin
0%
5%
10%
15%
20%
25%
0
100
200
300
400
500
600
700
2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F
Net profit Net profit margin
THBm
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
2010 2011 2012 2013F 2014F 2015F 2016F
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F
EBITDA per hospital bed Net profit per hospital bed
77.8%
74.5%
72.5%
71.0%
68.9%
68.6%
67.8%
62%
64%
66%
68%
70%
72%
74%
76%
78%
80%
2010 2011 2012 2013 2014 2015 2016
72.0%
72.4%
84.0%
76.7%
74.8%
72.8%
72.0%
66%
68%
70%
72%
74%
76%
78%
80%
82%
84%
86%
2010 2011 2012 2013 2014 2015 2016

January 29, 2014 49

Chularat Hospital Group






FYE 31 Dec (THB m) FY11A FY12A FY13E FY14E FY15E
Key Metrics
P/E (reported) (x) 51.3 26.3 27.2 23.9 21.1
Core P/E (x) 56.6 29.0 27.2 23.9 21.1
P/BV (x) 9.2 7.8 4.5 4.2 3.9
P/NTA (x) 4.6 7.9 3.6 3.4 3.1
Net dividend yield (%) 1.6 3.1 1.1 1.6 1.8
FCF yield (%) 1.4 2.9 3.0 3.1 3.0
EV/EBITDA (x) na na 16.6 14.6 12.9
EV/EBIT (x) na na 20.4 17.8 15.7
Income Statement
Revenue 1,417.2 1,863.2 2,200.4 2,389.2 2,681.6
Gross profit 433.8 665.3 765.7 841.2 956.3
EBITDA 344.5 541.3 622.7 704.8 796.4
Depreciation (95.7) (99.6) (111.4) (122.4) (137.9)
Amortisation (2.0) (2.3) (3.1) (4.1) (5.2)
EBIT 246.8 439.4 508.2 578.4 653.3
Net interest income /(exp) (2.8) (1.5) (2.2) (2.4) (2.6)
Associates & JV 0.1 (0.2) 0.0 0.0 0.0
Exceptionals 0.0 0.0 0.0 0.0 0.0
Other pretax income 0.0 0.0 0.0 0.0 0.0
Pretax profit 244.2 437.8 506.0 576.0 650.7
Income tax (72.7) (102.8) (101.2) (115.2) (130.1)
Minorities 0.0 0.0 0.0 0.0 0.0
Reported net profit 171.5 335.0 404.8 460.8 520.6
Core net profit 155.5 303.0 404.8 460.8 520.6
Balance Sheet
Cash & Short Term Investments 102.8 233.4 704.2 785.1 826.1
Property, Plant & Equip (net) 754.7 759.2 877.4 1,009.5 1,201.2
Intangible assets 6.8 8.6 10.5 12.5 14.2
Investment in Associates & JVs 3.7 3.5 3.5 3.5 3.5
Other assets 307.6 427.0 1,202.1 1,225.6 1,263.1
Total assets 1,249.0 1,546.1 2,912.1 3,150.6 3,422.5
ST interest bearing debt 52.0 82.1 55.0 60.0 65.0
LT interest bearing debt 0.0 0.0 0.0 0.0 0.0
Other liabilities 244.1 341.2 427.8 463.6 507.1
Total Liabilities 296.1 423.3 482.8 523.6 572.1
Shareholders Equity 952.9 1,122.8 2,429.4 2,627.1 2,850.4
Minority Interest 0.0 0.0 0.0 0.0 0.0
Total shareholders equity 952.9 1,122.8 2,429.4 2,627.1 2,850.4
Cash Flow
Pretax profit 244.2 437.8 506.0 576.0 650.7
Depreciation & amortisation 97.7 101.9 114.5 126.4 143.1
Adj net interest (income)/exp 3.6 2.2 0.0 0.0 0.0
Change in working capital (31.4) (69.5) 30.5 11.8 5.6
Cash taxes paid (56.9) (78.5) (101.2) (115.2) (130.1)
Other operating cash flow 0.8 10.2 50.9 25.9 1.0
Cash flow from operations 258.0 404.0 628.7 640.9 685.1
Capex (132.0) (151.0) (302.0) (301.9) (351.8)
Free cash flow 126.0 252.9 326.7 339.0 333.3
Dividends paid (106.6) (165.2) (231.1) (263.1) (297.2)
Equity raised / (purchased) 0.0 0.0 1,132.9 0.0 0.0
Change in Debt 3.8 30.1 (27.1) 5.0 5.0
OTH investing/financing cash flow 2.3 11.5 (730.0) 0.0 0.0
Effect of exch rate changes 1.0 1.0 0.0 0.0 0.0
Net cash flow 26.6 130.4 471.3 80.9 41.0

January 29, 2014 50

Chularat Hospital Group








FYE 31 Dec (THB m) FY11A FY12A FY13E FY14E FY15E
Key Ratios
Growth ratios (%)
Revenue growth 15.3 31.5 18.1 8.6 12.2
EBITDA growth 31.6 57.1 15.0 13.2 13.0
EBIT growth 42.5 78.0 15.7 13.8 13.0
Pretax growth 44.0 79.3 15.6 13.8 13.0
Reported net profit growth 44.3 95.4 20.8 13.8 13.0
Core net profit growth 38.3 94.9 33.6 13.8 13.0
Profitability ratios (%)
EBITDA margin 24.3 29.1 28.3 29.5 29.7
EBIT margin 17.4 23.6 23.1 24.2 24.4
Pretax profit margin 17.2 23.5 23.0 24.1 24.3
Payout ratio 83.0 81.8 30.0 37.0 37.0
DuPont analysis
Net profit margin (%) 12.1 18.0 18.4 19.3 19.4
Revenue/Assets (x) 1.1 1.2 0.8 0.8 0.8
Assets/Equity (x) 1.3 1.4 1.2 1.2 1.2
ROAE (%) 16.8 29.2 22.8 18.2 19.0
ROAA (%) 13.1 21.7 18.2 15.2 15.8
Liquidity & Efficiency
Cash conversion cycle nm nm nm nm nm
Days receivable outstanding 31.0 25.7 25.5 26.6 26.1
Days inventory outstanding 18.1 18.8 18.0 18.9 18.6
Days payables outstanding 57.9 61.8 79.4 94.6 92.9
Dividend cover (x) 1.2 1.2 3.3 2.7 2.7
Current ratio (x) 1.4 1.6 4.1 4.0 3.8
Leverage & Expense Analysis
Asset/Liability (x) 4.2 3.7 6.0 6.0 6.0
Net debt/equity (%) net cash net cash net cash net cash net cash
Net interest cover (x) 88.0 nm nm nm nm
Debt/EBITDA (x) 0.2 0.2 0.1 0.1 0.1
Capex/revenue (%) 9.3 8.1 13.7 12.6 13.1
Net debt/ (net cash) (50.8) (151.3) (649.2) (725.1) (761.1)


January 29, 2014 51

Thailand Healthcare Sector

Research Offices


REGIONAL
WONG Chew Hann, CA
Regional Head of Institutional Research
(603) 2297 8686 wchewh@maybank-ib.com
ONG Seng Yeow
Regional Head of Retail Research
(65) 6432 1453
ongsengyeow@maybank-ke.com.sg
Alexander GARTHOFF
Institutional Product Manager
(852) 2268 0638
alexgarthoff@kimeng.com.hk
ECONOMICS
Suhaimi ILIAS
Chief Economist
Singapore | Malaysia
(603) 2297 8682
suhaimi_ilias@maybank-ib.com
Luz LORENZO
Philippines
(63) 2 849 8836
luz_lorenzo@maybank-atrke.com
Tim LEELAHAPHAN
Thailand
(662) 658 1420 tim.l@maybank-ke.co.th
JUNIMAN
Chief Economist, BII
Indonesia
(62) 21 29228888 ext 29682
Juniman@bankbii.com
Josua PARDEDE
Economist / Industry Analyst, BII
Indonesia
(62) 21 29228888 ext 29695
JPardede@bankbii.com
MALAYSIA
WONG Chew Hann, CA Head of Research
(603) 2297 8686 wchewh@maybank-ib.com
Strategy Construction & Infrastructure
Desmond CHNG, ACA
(603) 2297 8680
desmond.chng@maybank-ib.com
Banking & Finance
LIAW Thong Jung
(603) 2297 8688 tjliaw@maybank-ib.com
Oil & Gas - Regional Shipping
ONG Chee Ting, CA
(603) 2297 8678 ct.ong@maybank-ib.com
Plantations - Regional
Mohshin AZIZ
(603) 2297 8692 mohshin.aziz@maybank-ib.com
Aviation - Regional Petrochem
YIN Shao Yang, CPA
(603) 2297 8916 samuel.y@maybank-ib.com
Gaming Regional Media
TAN Chi Wei, CFA
(603) 2297 8690 chiwei.t@maybank-ib.com
Power Telcos
WONG Wei Sum, CFA
(603) 2297 8679 weisum@maybank-ib.com
Property & REITs
LEE Yen Ling
(603) 2297 8691 lee.yl@maybank-ib.com
Building Materials Glove Producers
CHAI Li Shin
(603) 2297 8684 lishin.c@maybank-ib.com
Plantation Construction & Infrastructure
KANG Chun Ee
(603) 2297 8675 chunee@maybank-ib.com
Consumer
Ivan YAP
(603) 2297 8612 ivan.yap@maybank-ib.com
Automotive
LEE Cheng Hooi Regional Chartist
(603) 2297 8694
chenghooi.lee@maybank-ib.com
Tee Sze Chiah Head of Retail Research
(603) 2297 6858 szechiah.t@maybank-ib.com
HONG KONG / CHINA
Howard WONG Head of Research
(852) 2268 0648
howardwong@kimeng.com.hk
Oil & Gas - Regional
Alexander LATZER
(852) 2268 0647
alexanderlatzer@kimeng.com.hk
Metals & Mining - Regional
Alison FOK
(852) 2268 0630 alisonfok@kimeng.com.hk
Consumer
Jacqueline KO, CFA
(852) 2268 0633 jacquelineko@kimeng.com.hk
Consumer
Karen KWAN
(852) 2268 0640 karenkwan@kimeng.com.hk
Property & REITs
Osbert TANG, CFA
(86) 21 5096 8370
osberttang@kimeng.com.hk
Transport & Industrials
Philip TSE, CFA FRM
(852) 2268 0643 philiptse@kimeng.com.hk
Property & REITs
Ricky WK NG, CFA
(852) 2268 0689 rickyng@kimeng.com.hk
Utilities & Renewable Energy
Simon QIAN, CFA
(852) 2268 0634
simonqian@kimeng.com.hk
Telecom & Internet
Steven ST CHAN
(852) 2268 0645 stevenchan@kimeng.com.hk
Banking & Financials
Warren LAU
(852) 2268 0644
warrenlau@kimeng.com.hk
Technology Regional
William YANG
(852) 2268 0675
williamyang@kimeng.com.hk
Technology Regional
INDIA
Jigar SHAH Head of Research
(91) 22 6623 2601
jigar@maybank-ke.co.in
Oil & Gas Automobile Cement
Anubhav GUPTA
(91) 22 6623 2605
anubhav@maybank-ke.co.in
Metal & Mining Capital Goods Property
Urmil SHAH
(91) 22 6623 2606 urmil@maybank-ke.co.in
Technology Media
SINGAPORE
NG Wee Siang Head of Research
(65) 6432 1467 ngweesiang@maybank-ke.com.sg
Banking & Finance
Gregory YAP
(65) 6432 1450 gyap@maybank-ke.com.sg
SMID Caps Regional
Technology & Manufacturing Telcos
Wilson LIEW
(65) 6432 1454 wilsonliew@maybank-ke.com.sg
Property Developers
ONG Kian Lin
(65) 6432 1470 ongkianlin@maybank-ke.com.sg
S-REITs
James KOH
(65) 6432 1431 jameskoh@maybank-ke.com.sg
Consumer - Regional
YEAK Chee Keong, CFA
(65) 6432 1460
yeakcheekeong@maybank-ke.com.sg
Offshore & Marine
Derrick HENG
(65) 6432 1446 derrickheng@maybank-ke.com.sg
Transport (Land, Shipping & Aviation)
WEI Bin
(65) 6432 1455 weibin@maybank-ke.com.sg
Commodity Logistics S-chips
John CHEONG
(65) 6432 1461 johncheong@maybank-ke.com.sg
Small & Mid Caps Healthcare
INDONESIA
Wilianto IE Head of Research
(62) 21 2557 1125
wilianto.ie@maybank-ke.co.id
Strategy
Rahmi MARINA
(62) 21 2557 1128
rahmi.marina@maybank-ke.co.id
Banking & Finance
Aurellia SETIABUDI
(62) 21 2953 0785
aurellia.setiabudi@maybank-ke.co.id
Property
Anthony YUNUS
(62) 21 2557 1136
anthony.yunus@maybank-ke.co.id
Consumer Poultry
Isnaputra ISKANDAR
(62) 21 2557 1129
isnaputra.iskandar@maybank-ke.co.id
Metals & Mining Cement
Pandu ANUGRAH
(62) 21 2557 1137
pandu.anugrah@maybank-ke.co.id
Infrastructure Construction Transport
Janni ASMAN
(62) 21 2953 0784
janni.asman@maybank-ke.co.id
Cigarette Healthcare Retail
Lucky ARIESANDI, CFA
(62) 21 2557 1127
lucky.ariesandi@maybank-ke.co.id
Telcos Media
PHILIPPINES
Luz LORENZO Head of Research
(63) 2 849 8836
luz_lorenzo@maybank-atrke.com
Strategy
Laura DY-LIACCO
(63) 2 849 8840
laura_dyliacco@maybank-atrke.com
Utilities Conglomerates Telcos
Lovell SARREAL
(63) 2 849 8841
lovell_sarreal@maybank-atrke.com
Consumer Media Cement
Rommel RODRIGO
(63) 2 849 8839
rommel_rodrigo@maybank-atrke.com
Conglomerates Property Gaming
Ports/ Logistics
Katherine TAN
(63) 2 849 8843
kat_tan@maybank-atrke.com
Banks Construction
Ramon ADVIENTO
(63) 2 849 8845
ramon_adviento@maybank-atrke.com
Mining
THAILAND
Maria LAPIZ Head of Institutional Research
Dir (66) 2257 0250 | (66) 2658 6300 ext 1399
Maria.L@maybank-ke.co.th
Consumer / Materials
Jesada TECHAHUSDIN, CFA
(66) 2658 6300 ext 1394
Jesada.T@maybank-ke.co.th
Financial Services
Kittisorn PRUITIPAT, CFA, FRM
(66) 2658 6300 ext 1395
Kittisorn.P@maybank-ke.co.th
Real Estate
Sittichai DUANGRATTANACHAYA
(66) 2658 6300 ext 1393
Sittichai.D@maybank-ke.co.th
Services Sector
Sukit UDOMSIRIKUL Head of Retail Research
(66) 2658 6300 ext 5090
Sukit.u@maybank-ke.co.th
Mayuree CHOWVIKRAN
(66) 2658 6300 ext 1440
mayuree.c@maybank-ke.co.th
Strategy
Padon VANNARAT
(66) 2658 6300 ext 1450
Padon.v@maybank-ke.co.th
Strategy
Surachai PRAMUALCHAROENKIT
(66) 2658 6300 ext 1470
Surachai.p@maybank-ke.co.th
Auto Conmat Contractor Steel
Suttatip PEERASUB
(66) 2658 6300 ext 1430
suttatip.p@maybank-ke.co.th
Media Commerce
Sutthichai KUMWORACHAI
(66) 2658 6300 ext 1400
sutthichai.k@maybank-ke.co.th
Energy Petrochem
Termporn TANTIVIVAT
(66) 2658 6300 ext 1520
termporn.t@maybank-ke.co.th
Property
Woraphon WIROONSRI
(66) 2658 6300 ext 1560
woraphon.w@maybank-ke.co.th
Banking & Finance
Jaroonpan WATTANAWONG
(66) 2658 6300 ext 1404
jaroonpan.w@maybank-ke.co.th
Transportation Small cap
Chatchai JINDARAT
(66) 2658 6300 ext 1401
chatchai.j@maybank-ke.co.th
Electronics

VIETNAM
LE Hong Lien, ACCA
Head of Institutional Research
(84) 844 55 58 88 x 8181
lien.le@maybank-kimeng.com.vn
Strategy Consumer Diversified Utilities
THAI Quang Trung, CFA, Deputy Manager,
Institutional Research
(84) 844 55 58 88 x 8180 trung.thai@maybank-
kimeng.com.vn
Real Estate Construction Materials
TRUONG Thanh Hang
(84) 844 55 58 88 x 8085 hang.truong@maybank-
kimeng.com.vn
Consumer
Le Nguyen Nhat Chuyen
(84) 844 55 58 88 x 8082 chuyen.le@maybank-
kimeng.com.vn
Oil & Gas

NGUYEN Thi Ngan Tuyen, Head of Retail Research
(84) 8 44 555 888 x 8081
tuyen.nguyen@maybank-kimeng.com.vn
Food & Beverage Oil&Gas Banking
NGUYEN Trung Hoa, Dy Head of Retail Research
(84) 8 44 555 888 x 8088
hoa.nguyen@maybank-kimeng.com.vn
Macro Steel Real estate
TRINH Thi Ngoc Diep
(84) 4 44 555 888 x 8208
diep.trinh@maybank-kimeng.com.vn
Technology Utilities Construction
TRUONG Quang Binh
(84) 4 44 555 888 x 8087
binh.truong@maybank-kimeng.com.vn
Rubber plantation Tyres and Tubes Oil&Gas
PHAM Nhat Bich
(84) 8 44 555 888 x 8083
bich.pham@maybank-kimeng.com.vn
Consumer Manufacturing Fishery
NGUYEN Thi Sony Tra Mi
(84) 8 44 555 888 x 8084
mi.nguyen@maybank-kimeng.com.vn
Port operation Pharmaceutical
Food & Beverage



January 29, 2014 52

Thailand Healthcare Sector



APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES

DISCLAIMERS
This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as
an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate
and that each securitys price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental
ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and
volume-related information extracted from the relevant jurisdictions stock exchange in the equity analysis. Accordingly, investors returns may be less than
the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment
advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read
this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment
strategies discussed or recommended in this report.
The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank
Investment Bank Berhad, its subsidiary and affiliates (collectively, MKE) and consequently no representation is made as to the accuracy or completeness of
this report by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates, connected parties and/or employees
(collectively, Representatives) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this
report. Any information, opinions or recommendations contained herein are subject to change at any time, without prior notice.
This report may contain forward looking statements which are often but not always identified by the use of words such as anticipate, believe, estimate,
intend, plan, expect, forecast, predict and project and statements that an event or result may, will, can, should, could or might
occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us
and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking
statements. Readers are cautioned not to place undue relevance on these forward-looking statements. MKE expressly disclaims any obligation to update or
revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence
of unanticipated events.
MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law,
from time to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solicit
business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other
investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. MKE may, to the extent
permitted by law, act upon or use the information presented herein, or the research or analysis on which they are based, before the material is published.
One or more directors, officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report.
This report is prepared for the use of MKEs clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in
whole or in part in any form or manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for
the actions of third parties in this respect.
This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state,
country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. This report is for distribution only
under such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certain
categories of investors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on
geographical location of the person or entity receiving this report.
Malaysia
Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental
ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia
Securities Berhad in the equity analysis.
Singapore
This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (Maybank
KERPL) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact
Maybank KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited
investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally
liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law.
Thailand
The disclosure of the survey result of the Thai Institute of Directors Association (IOD) regarding corporate governance is made pursuant to the policy of the
Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand
and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the
perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the
Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. Maybank Kim Eng Securities (Thailand) Public
Company Limited (MBKET) does not confirm nor certify the accuracy of such survey result.
Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of MBKET.
MBKET accepts no liability whatsoever for the actions of third parties in this respect.
US
This research report prepared by MKE is distributed in the United States (US) to Major US Institutional Investors (as defined in Rule 15a-6 under the
Securities Exchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (Maybank KESUSA), a broker-dealer registered in the US
(registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in
the US shall be borne by Maybank KESUSA. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US.
This report is not directed at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You
should satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investments to you under relevant
legislation and regulations.
UK
This document is being distributed by Maybank Kim Eng Securities (London) Ltd (Maybank KESL) which is authorized and regulated, by the Financial Services
Authority and is for Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the Financial
Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does not take any
responsibility for its comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report should be considered as
constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers.


January 29, 2014 53

Thailand Healthcare Sector


Disclosure of Interest
Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further
act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment
banking services, advisory and other services for or relating to those companies.

Singapore: As of 29 January 2014, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report.
Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the
research report. Therefore, Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors, connected
parties and/or employees may from time to time have interests and/or underwriting commitments in the securities mentioned in this report.

Hong Kong: KESHK may have financial interests in relation to an issuer or a new listing applicant referred to as defined by the requirements under Paragraph
16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.

As of 29 January 2014, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report.

MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in
issues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or
investment services in relation to the investment concerned or a related investment and may receive compensation for the services provided from the
companies covered in this report.

OTHERS
Analyst Certification of Independence
The views expressed in this research report accurately reflect the analysts personal views about any and all of the subject securities or issuers; and no part of
the research analysts compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.

Reminder
Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable
of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political
factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility and the credit quality
of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with its
own professional advisers as to the risks involved in making such a purchase.

No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.










Definition of Ratings
Maybank Kim Eng Research uses the following rating system
BUY Return is expected to be above 10% in the next 12 months (excluding dividends)
HOLD Return is expected to be between - 10% to +10% in the next 12 months (excluding dividends)
SELL Return is expected to be below -10% in the next 12 months (excluding dividends)
Applicability of Ratings
The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only
applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment
ratings as we do not actively follow developments in these companies.


DISCLOSURES
Legal Entities Disclosures
Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938-H) which is a Participating Organization of Bursa
Malaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This material is issued and
distributed in Singapore by Maybank KERPL (Co. Reg No 197201256N) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Kim Eng
Securities (PTKES) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK. Thailand: MBKET (Reg.
No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission.
Philippines: Maybank ATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities and Exchange
Commission. Vietnam: Maybank Kim Eng Securities JSC (License Number: 71/UBCK-GP) is licensed under the State Securities Commission of Vietnam.Hong
Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (KESI) is a
participant of the National Stock Exchange of India Limited (Reg No: INF/INB 231452435) and the Bombay Stock Exchange (Reg. No. INF/INB 011452431) and is
regulated by Securities and Exchange Board of India. KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) US: Maybank
KESUSA is a member of/ and is authorized and regulated by the FINRA Broker ID 27861. UK: Maybank KESL (Reg No 2377538) is authorized and regulated by
the Financial Services Authority.


January 29, 2014 54

Thailand Healthcare Sector



Malaysia
Maybank Investment Bank Berhad
(A Participating Organisation of
Bursa Malaysia Securities Berhad)
33rd Floor, Menara Maybank,
100 Jalan Tun Perak,
50050 Kuala Lumpur
Tel: (603) 2059 1888;
Fax: (603) 2078 4194

Singapore
Maybank Kim Eng Securities Pte Ltd
Maybank Kim Eng Research Pte Ltd
9 Temasek Boulevard
#39-00 Suntec Tower 2
Singapore 038989

Tel: (65) 6336 9090
Fax: (65) 6339 6003


London
Maybank Kim Eng Securities
(London) Ltd
6/F, 20 St. Dunstans Hill
London EC3R 8HY, UK

Tel: (44) 20 7621 9298
Dealers Tel: (44) 20 7626 2828
Fax: (44) 20 7283 6674


New York
Maybank Kim Eng Securities USA
Inc
777 Third Avenue, 21st Floor
New York, NY 10017, U.S.A.

Tel: (212) 688 8886
Fax: (212) 688 3500


Stockbroking Business:
Level 8, Tower C, Dataran Maybank,
No.1, Jalan Maarof
59000 Kuala Lumpur
Tel: (603) 2297 8888
Fax: (603) 2282 5136


Hong Kong
Kim Eng Securities (HK) Ltd
Level 30,
Three Pacific Place,
1 Queens Road East,
Hong Kong

Tel: (852) 2268 0800
Fax: (852) 2877 0104


Indonesia
PT Maybank Kim Eng Securities
Plaza Bapindo
Citibank Tower 17
th
Floor
Jl Jend. Sudirman Kav. 54-55
Jakarta 12190, Indonesia

Tel: (62) 21 2557 1188
Fax: (62) 21 2557 1189


India
Kim Eng Securities India Pvt Ltd
2nd Floor, The International 16,
Maharishi Karve Road,
Churchgate Station,
Mumbai City - 400 020, India

Tel: (91).22.6623.2600
Fax: (91).22.6623.2604


Philippines
Maybank ATR Kim Eng Securities Inc.
17/F, Tower One & Exchange Plaza
Ayala Triangle, Ayala Avenue
Makati City, Philippines 1200

Tel: (63) 2 849 8888
Fax: (63) 2 848 5738


Thailand
Maybank Kim Eng Securities
(Thailand) Public Company Limited
999/9 The Offices at Central World,
20
th
- 21
st
Floor,
Rama 1 Road Pathumwan,
Bangkok 10330, Thailand

Tel: (66) 2 658 6817 (sales)
Tel: (66) 2 658 6801 (research)


Vietnam
Maybank Kim Eng Securities Limited
4A-15+16 Floor Vincom Center Dong
Khoi, 72 Le Thanh Ton St. District 1
Ho Chi Minh City, Vietnam

Tel : (84) 844 555 888
Fax : (84) 8 38 271 030


Saudi Arabia
In association with
Anfaal Capital
Villa 47, Tujjar Jeddah
Prince Mohammed bin Abdulaziz
Street P.O. Box 126575
Jeddah 21352

Tel: (966) 2 6068686
Fax: (966) 26068787



South Asia Sales Trading
Kevin FOY
kevinfoy@maybank-ke.com.sg
Tel: (65) 6336-5157
US Toll Free: 1-866-406-7447

North Asia Sales Trading
Alex TSUN
alextsun@kimeng.com.hk
Tel: (852) 2268 0228
US Toll Free: 1 877 837 7635




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