KKPS Upgrades BDMS to ‘Buy’ Citing Undervaluation and Strong Margin Performance
Kiatnakin Phatra Securities (KKPS) has taken a decisive step by upgrading the rating of Bangkok Dusit Medical Services (SET: BDMS) to a definitive ‘Buy’, simultaneously increasing its target price for the stock to THB 26 per share. This significant upgrade by KKPS is underpinned by a 2% upward adjustment in the firm’s profit forecasts for the 2025–2027 fiscal years, a revision driven primarily by the strong EBITDA margin that BDMS demonstrated in the 3Q25 results.
Crucially, the brokerage noted that BDMS is currently trading at an extremely low valuation of only 16 times its expected 2026 earnings, a striking discount when compared to the regional peer average, which sits significantly higher at 28 times. KKPS argues that the recent weak earnings growth observed by the market is merely a temporary phenomenon and does not stem from any fundamental structural issues within the company’s Business model or the healthcare sector.
This reassessment comes at a time when shares of BDMS have experienced a notable decline of 24% year-to-date, resulting in an underperformance relative to the SET Index by 14%. KKPS believes that the market’s existing concerns and negativity surrounding the stock are already comprehensively priced into the current share price, suggesting limited further downside risk and a compelling entry point for Investment.
The firm’s analysis focuses on demonstrating that the core drivers of long-term profitability remain intact and are set for a strong recovery.
Analyzing Patient Growth Dynamics and Mitigating Market Concerns
KKPS thoroughly reviewed and addressed the three main issues that have recently fueled market concerns and contributed to the stock’s undervaluation. The first concern related to the slowdown in Thai patient revenue growth, which registered only a 1% year-on-year increase in 3Q25.
However, KKPS attributed this temporary dip not to broader Economy challenges, but specifically to fewer influenza cases recorded during that period. More importantly, the sustained growth in higher-intensity, complex medical cases and a robust forecast of 4% Thai patient revenue growth for the 2025-2026 period—a rate approximately double Thailand’s projected GDP growth—effectively position BDMS as a highly resilient defensive stock within the SET.
The second major concern involved international patients, where revenue growth was limited by a sharp fall in patients from Cambodia, a decline directly linked to political tensions in that country. Nevertheless, when excluding this specific patient group from the data, international revenue exhibited healthy growth, expanding by 10-11% in both 3Q25 and October, primarily driven by the strong operational performance and brand pull of the Bangkok Hospital headquarters.
Finally, market skepticism regarding BDMS’ Silver Wellness senior-living project was substantially mitigated by the company’s clear strategy: the plan to partner with specialized professional operators, including the luxury brand Capella, for the residential segment, coupled with the project’s premium and strategic Lang Suan location, significantly de-risks the Investment and enhances its long-term value proposition for the Business.
Strong Margin Performance and Positive Forecasts Support Financial Outlook
The core of the KKPS upgrade hinges on the strong financial performance and positive outlook for future earnings. In 3Q25, BDMS reported a 2% year-on-year growth in core profit, a result that successfully exceeded general market expectations, primarily due to the delivery of robust margin performance across its hospitals.
This margin strength indicates effective cost management and a favorable revenue mix tilted towards high-value medical services. Looking ahead, the brokerage firm noted that revenue growth is already showing strong signs of acceleration, improving to 7% in October (8% Thai patient growth, 3% international patient growth).
Based on these improving trends and the sustained operational efficiency, KKPS expects 4Q25 core profit to expand by a conservative yet solid 2-4% year-on-year, which is projected to achieve a record quarterly high for the company. This positive momentum is fully reflected in KKPS’ upwardly revised net profit forecasts for the coming years, providing a clear trajectory for financial expansion.
Specifically, net profit forecasts stand at THB 16.62 billion for 2025, rising to THB 18.21 billion for 2026, and further increasing to THB 19.98 billion for 2027. This projected stable, double-digit growth in profitability over three years, coupled with the current undervaluation, underpins the conviction behind the ‘Buy’ rating and the increased target price, demonstrating strong confidence in BDMS’s sustained market leadership and its ability to generate significant returns on Investment for its shareholders, making it an attractive healthcare Business proposition.
Financial Analyst Commentary: The Strategic Value of Medical Tourism in Southeast Asia
The KKPS analysis on BDMS transcends a simple earnings forecast; it provides a structural assessment of Thailand’s dominant position in the high-margin regional medical tourism market, which is a crucial pillar of the national Economy. The identified 10-11% international revenue growth (excluding the volatile Cambodian segment) signifies that demand from high-value patient corridors—particularly the Middle East and neighboring Myanmar, Vietnam, and Laos—remains robust, reinforcing BDMS’s status as a key proxy for this resilient export service.
The significant valuation gap (16x expected P/E vs. 28x regional peer average) suggests the market is deeply discounting this structural advantage due to short-term, non-structural issues like the flu season and political tensions. This undervaluation presents an arbitrage opportunity, especially since Asian healthcare peers often command premium multiples due to demographic tailwinds (aging populations) and increasing wealth, both of which strongly favor BDMS’s long-term Investment profile.
Furthermore, the strategic de-risking of the Silver Wellness project through partnerships like Capella demonstrates a sophisticated Finance approach to asset utilization, transforming a capital-intensive real estate Investment into a steady, service-fee-generating Business line that taps into the high-net-worth retirement segment. Ultimately, the brokerage’s ‘Buy’ thesis hinges on the conviction that Thailand’s expertise in high-intensity medical care, coupled with favorable regional currency differentials and BDMS’s pricing power, will inevitably close the valuation gap, making it a cornerstone Investment in Southeast Asia’s defensive healthcare sector.
