Bangkok Dusit Medical Services (BDMS.BK): Mixed view on increase in investment budget for Silver Wellness Project but valuation

Research evidence excerpt

Bangkok Dusit Medical Services (BDMS.BK): Mixed view on increase in investment budget for Silver Wellness Project but valuation

Goldman Sachs Bangkok Dusit Medical Services (BDMS.BK)

payment and other construction costs, before normalising to 7-8% in 2030-35F.

Management expects net gearing to remain between 0.1.-0.3x, well below covenant

of 1.75x. In terms of cash flow, we forecast free cash flow of Bt1.5b in FY26 and

Bt5-6b over FY27-28 that are available for funding the WellEra project. Management

expects ROE to remain stable and dividend policy remains unchanged.

GS Views

n Strategic rationale: Expansion into wellness segment is in-line with BDMS’s initiative

to expand addressable market and drives referral to its network hospitals. We note

that BDMS has been facing weaker domestic patient revenue growth amidst weak

economic growth and down-trading trends, evidenced by BDMS’s 1Q26 flat overall

revenue but 12% growth in wellness revenue. Longer-term, demographic trends

such as aging population and robust medical tourism industry are supportive of

growth in the wellness industry.

n Increase in execution risk but potential partnership could help: However, the

increase in Capex could bring about greater execution risk given the scale and long

duration of the project, given BDMS’s limited experience in building and managing

residential, hotels and retail malls. Having a more experienced strategic partner,

Capella, to help with its residence could help to partially mitigate the execution risk

in our view.

n Lower IRR: Management has earlier guided for IRR of 11-12% and payback period

of 10-11 years. However, revised guidance is at high single digit IRR, which is lower

than the typical hospital IRR of 10-15%.