Investing in Thailand – BDMS.BK

January is already proving to be a challenging month, with COVID still in full expansion mode. This means that we still follow all the protective measures and restrictions which have been put in place to protect the public, including full or partial lockdowns, travel restrictions, mask mandates etc.

Thailand managed the outbreak pretty well so far, but in the last 3 weeks, things also escalated here a little bit with lots of new infections and putting public life once again under pressure.

But every crisis can also be an opportunity, and as promised, I’d like to present one such potential opportunity in the investment world of Thailand on my blog.

The leader in medical services in Thailand

Things need to get worse before they can better, and for investors with some cash on hand, this is a good time to look for undervalued companies that will either recover after the crisis or which might even profit further from it. And one such company is Bangkok Dusit Medical Services (BDMS.BK).

You can find more information and investor relations for BDMS right HERE. The company operates hospitals, clinics, and other medical facilities, including the production of pharmaceuticals. The “About Us” section of BDMS describes the company as follows:

“Bangkok Dusit Medical Services (BDMS) is one of the most prestigious hospital networks in the Asia-Pacific region, with 26 hospitals and/or clinical programs out of a total of 48 hospitals across the BDMS network that have been accredited by the Joint Commission International (JCI). We are ranked in the top five private hospital groups globally in terms of Market Capitalization. BDMS offers world-class medical care and treatment to both local and international patients, complemented by the latest medical technology. Our team of qualified doctors and nurses consists of specialists in every field. These health professionals have received training from top medical schools around the world, and they are passionate about providing only top-tier health services to every patient.

I can confirm that the company has not just the reputation of being the best in Thailand, they are the best. I am living in Thailand for almost 10 years now, and I can confirm that whenever I get sick, I wouldn’t consider any other hospital than a BDMS operated hospital or clinic. And it’s the same for every single expat here that I know.

They are modern, clean, the staff is professional, the service amazing, and while they are more expensive than other medical facilities in Thailand, the value is still reasonable. Especially if you have insurance.

The Stock

The stock suffered during the crisis as you can see on the chart, but it’s already on track to recover and I expect it to thrive once the vaccinations across the country begin to take place, probably around March and April this year.

While the hospital will certainly benefit as one of the main distributors for future vaccinations, its business is currently also affected by consumer sentiment, and the lack of medical tourism, which is a very strong contributor to the companies top-line. People from all over the world are coming to Thailand to undergo essential and non-essential treatments, thus the current travel restrictions are a serious drag on the companies revenues. Once the restrictions are lifted, the stock should continue its recovery and get back to a level of around 24 THB, thus implicating a 12% upside on this factor alone.

BDMS is also a dividend payer, with the dividends usually being distributed twice a year in April and in September. In 2020 however, there was only one payment. The last dividend came in at 0,25 THB per share, so the yield was not impressive, and overall the dividend history is not showing any real care for dividend-growth or even small growth consistency.

Stability for your depot and long-term benefits

Overall I regard this stock as a good, but not very exciting opportunity. It’s a solid company with good long-term potential and a boring dividend. But boring is good. Long-term potential sounds great to me. And as it’s slowly making its way back up, for me it definitely is one of those SWAN (sleep well at night) stocks that puts stability and trust in my portfolio.

DISCLOSURE: I am managing a portfolio which owns BDMS.

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