Bangkok Chain Hospital: Set to benefit from Middle East patient recovery
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- Expect 4Q25F earnings to rebound strongly y/y from a low base and shift in seasonal illness patterns
- Management targets 5% revenue growth in 2026, driven by the return of patients from the Middle East and Cambodia
- Solid outlook with 7% earnings CAGR (2025-27) as hospital ramp-up SSO-related revenue volatility declines
- Maintain BUY with DCF-based TP of THB16.00
Expect strong earnings growth in 4Q25F
Key takeaways from discussion with BCH’s investor relations: Overall tone is neutral
Management revised down its FY25F revenue growth target to low single-digit growth (previously 5-10% y/y) due to the sharp drop in Cambodia revenue. For 2026, management target 5% revenue growth amid broader economic slowdowns. The key growth driver would be from Thai international cash patients and rising revenue from SSS.
QTD performance. October revenue rebounded to mid-single-digit growth (vs. -7% in 3Q25). BCH expects revenue to grow 10% in 4Q25F. We forecast BCH’s 4Q25F earnings at THB310–330mn, with strong y/y growth supported by delayed seasonal illness and a low base from last year. In 4Q24, revenue reversals related to high-cost care (adj. RW >2 IPD) amounted to THB164mn. Note that a provision expense of around THB10mn may be booked in 4Q25F for outstanding A/R over one year for Kuwaiti patients.
International patient revenue dropped 10% y/y in 9M25, driven by a 37% y/y decline in patients from the Middle East and a 46% y/y decline from Cambodia. As a result, the contribution from international patients fell to 11.7% in 3Q25 (vs. 12.9% in 3Q24 and 13.5% in 2Q25).
Middle East patient revenue decline driven by UAE and OMAN. The drop in Middle Eastern patients was driven mainly by lower volumes from the UAE (-33% y/y) and Oman (-10% y/y). This was partly due to a key diabetic wound specialist at World Medical Centre (WMC) splitting his time between WMC and another private hospital, resulting in patients being divided between the two hospitals. However, the doctor has confirmed that he will work full-time at WMC next year, which should support a recovery in Middle Eastern revenue.
Cambodia revenue drops, but patient referrals to KIH Vientiane expected to rise in Dec 25. Some patients shifted to hospitals in Malaysia but reported lower service satisfaction and prefer treatment in Thailand. BCH has invited Cambodian agencies to visit KIH Vientiane and expects an increase in referral patients to this facility from Dec 2025 onward. Note that revenue contribution from Cambodia was around 1% of total revenue in 3Q25.
Progress on Kuwait. The Kuwaiti government plans to establish a referral office in Thailand soon to support the return of Kuwaiti patients in 2026. The office will be managed by the Kuwait Ministry of Health (MOH) instead of the embassy. In addition, BCH has been selected as one of six hospitals for the Kuwaiti government delegation to visit in early December.
BCH expects settlement of Kuwaiti receivables by the end of this year. Outstanding A/R from past treatments of Kuwaiti patients totalled THB246mn since 2023, which the Kuwaiti government is expected to settle by year-end. However, if the payment is delayed beyond February 2026, BCH may need to book an additional provision on the outstanding A/R, increasing the provision rate from 3% to around 5–7% in 4Q25F. Note that revenue contribution from Kuwait was around 0.5% of total revenue in 3Q25.
Expect the reimbursement rate under high-cost care to maintain in 2026. This year, the SSO has guaranteed a reimbursement rate of THB12,000 per adj. RW for high-cost care treatment. However, there is still no confirmation that the THB12,000 rate will be maintained in 2026. Nonetheless, BCH’s management expects the rate to remain unchanged.
Three new hospitals generated losses of THB58mn in 3Q25 (vs. losses of THB43mn in 3Q24 and THB55mn in 2Q25). KH Vientiane reported a positive EBITDA of THB19.1mn in 3Q25. KH Aranyaprathet posted a negative EBITDA of THB15.6mn, marking its first quarterly loss since turning positive after 2Q23, due to the Thailand–Cambodia border closure. KH Prachinburi also recorded a negative EBITDA of THB6.4mn, although this improved from 2Q25, supported by higher volumes from both cash and SSO patients.
Key takeaways from discussion with BCH’s investor relations: Overall tone is neutral
Management revised down its FY25F revenue growth target to low single-digit growth (previously 5-10% y/y) due to the sharp drop in Cambodia revenue. For 2026, management target 5% revenue growth amid broader economic slowdowns. The key growth driver would be from Thai international cash patients and rising revenue from SSS.
QTD performance. October revenue rebounded to mid-single-digit growth (vs. -7% in 3Q25). BCH expects revenue to grow 10% in 4Q25F. We forecast BCH’s 4Q25F earnings at THB310–330mn, with strong y/y growth supported by delayed seasonal illness and a low base from last year. In 4Q24, revenue reversals related to high-cost care (adj. RW >2 IPD) amounted to THB164mn. Note that a provision expense of around THB10mn may be booked in 4Q25F for outstanding A/R over one year for Kuwaiti patients.
International patient revenue dropped 10% y/y in 9M25, driven by a 37% y/y decline in patients from the Middle East and a 46% y/y decline from Cambodia. As a result, the contribution from international patients fell to 11.7% in 3Q25 (vs. 12.9% in 3Q24 and 13.5% in 2Q25), with details as follows:
Middle East patient revenue decline driven by UAE and OMAN. The drop in Middle Eastern patients was driven mainly by lower volumes from the UAE (-33% y/y) and Oman (-10% y/y). This was partly due to a key diabetic wound specialist at World Medical Centre (WMC) splitting his time between WMC and another private hospital, resulting in patients being divided between the two hospitals. However, the doctor has confirmed that he will work full-time at WMC next year, which should support a recovery in Middle Eastern revenue.
Cambodia revenue drops, but patient referrals to KIH Vientiane expected to rise in Dec 25. Some patients shifted to hospitals in Malaysia but reported lower service satisfaction and prefer treatment in Thailand. BCH has invited Cambodian agencies to visit KIH Vientiane and expects an increase in referral patients to this facility from Dec 2025 onward. Note that revenue contribution from Cambodia was around 1% of total revenue in 3Q25.
Progress on Kuwait. The Kuwaiti government plans to establish a referral office in Thailand soon to support the return of Kuwaiti patients in 2026. The office will be managed by the Kuwait Ministry of Health (MOH) instead of the embassy. In addition, BCH has been selected as one of six hospitals for the Kuwaiti government delegation to visit in early December.
BCH expects settlement of Kuwaiti receivables by the end of this year. Outstanding A/R from past treatments of Kuwaiti patients totalled THB246mn since 2023, which the Kuwaiti government is expected to settle by year-end. However, if the payment is delayed beyond February 2026, BCH may need to book an additional provision on the outstanding A/R, increasing the provision rate from 3% to around 5–7% in 4Q25F. Note that revenue contribution from Kuwait was around 0.5% of total revenue in 3Q25.
Expect the reimbursement rate under high-cost care to maintain in 2026. This year, the SSO has guaranteed a reimbursement rate of THB12,000 per adj. RW for high-cost care treatment. However, there is still no confirmation that the THB12,000 rate will be maintained in 2026. Nonetheless, BCH’s management expects the rate to remain unchanged.
Three new hospitals generated losses of THB58mn in 3Q25 (vs. losses of THB43mn in 3Q24 and THB55mn in 2Q25). KH Vientiane reported a positive EBITDA of THB19.1mn in 3Q25. KH Aranyaprathet posted a negative EBITDA of THB15.6mn, marking its first quarterly loss since turning positive after 2Q23, due to the Thailand–Cambodia border closure. KH Prachinburi also recorded a negative EBITDA of THB6.4mn, although this improved from 2Q25, supported by higher volumes from both cash and SSO patients.
Outlook
Solid outlook with earnings CAGR of 7% (2025-27). Growth is expected to be driven by i) organic expansion at its main campus, ii) reduced losses from its three new hospitals, and iii) decreased volatility under the SSO scheme from high-cost care treatment. There is also upside from the return of Kuwaiti patients, which is expected to resume in 1Q26F onward.
Special dividend under consideration. BCH disclosed that it is reviewing its dividend payout ratio, which is currently set at not less than 40% (although historically the company has paid around 60–70%). The consideration of a special dividend stems from its high retained earnings of THB9.7bn at the end of 3Q25 and its low debt level.
We fine-tuned our FY26F/FY27F earnings forecasts by 1–2%. We also revised down our FY26F/FY27F EBITDA margin forecasts to 24.4%/24.6% (from 24.6%/24.8% previously), reflecting the slower-than-expected breakeven of three new hospitals.
Maintain BUY with DCF-based TP of THB16.00. We derive a TP of THB16.00 based on a DCF valuation. BCH’s FY26F earnings are expected to recover on the back of lower revenue volatility, supported by contributions from existing hospitals and new services/clinics. The stock trades at 17.4x 2026F PE and offers a dividend yield of 3.1%-3.7% for FY25F-FY26F.
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