TRIS Rating Assigns Issue Rating and Affirms Company Rating of “BH” at “A”with “Stable” Outlook

TRIS Rating Co., Ltd. has assigned the rating of “A” to the proposed issue of up to Bt7,000 million in senior debentures of Bumrungrad Hospital PLC (BH). At the same time, TRIS Rating has affirmed the company rating of BH at “A”. The outlook remains “stable”. The proceeds from the debentures will be used to repay BH’s existing debts and to finance future business expansion. The ratings reflect BH’s leading position in Thailand’s private hospital market, the capabilities of the hospital’s physicians and management team, ability to attract medical staff, and a strong financial position. However, these strengths are partially offset by intense competition in both local and international healthcare markets, single premise limitation, and potential future debt-financed investments. The “stable” outlook reflects the expectation that BH will be able to maintain its leading position in Thailand’s private hospital market. With its strong brand and efficient operations, the company should continue to attract strong profile medical staff and premium patients. BH is also expected to maintain its debt to capitalization not to exceed 50% for an extended period.

TRIS Rating reported that BH operates a hospital in Bangkok under the name “Bumrungrad International Hospital”. The flagship hospital in Bangkok generates over 95% of the company’s total revenue. BH is a leading private healthcare provider in Thailand and Asian region with service capacities of 3,900 outpatients per day and 512 inpatient beds. Foreign patients account for approximately 60% of the total revenue. About 70% of total revenue is from self-pay patients. BH is well managed by a competent and experienced professional and medical staff team. Its flagship hospital earns a very strong brand recognition and three decades of solid medical records. BH targets mostly premium local and foreign patients and competes with differentiation on services and quality. The company has a very strong revenue generating capacity per patient, a key factor in attracting and retaining talent medical staff and specialists.

BH’s competitive edge as a medical hub in Asia is underpinned by its first-mover advantage in the regional medical tourist segment, economies of scale, and strong referral networks overseas. In addition, BH enjoys Thailand’s developed infrastructure and welcoming atmosphere as a destination for foreign tourists. Medical costs in Thailand are also highly competitive compared with other advanced neighbouring countries.

TRIS Rating said, hospital industry in Asia, notwithstanding Thailand, is undergoing a consolidation transformation. Several hospitals merged to achieve size and scope. Smaller and stand-alone hospitals, such as BH, are facing rising challenges from strong capital-based hospitals with extensive networks and diverse geographies.

BH’s financial profile is strong. Revenue has grown respectably over the past few years. Rising revenue per patient helped offset slowdown in the number of patient visits during political unrests. Operating margins and cash flows should continue to remain stable in the medium term. Leverage level has risen in recent periods after BH built a new OPD clinic and upgraded its flagship Bangkok facilities, as well as acquired 24.99% of Bangkok Chain Hospital PLC’s (KH) shares. Debt to capitalization rose from 20.1% in 2010 to 44.05% at the end of September 2011. BH’s rating takes into account potential debt-financed investment projects in the future, said TRIS Rating. -- End

Company Rating: Affirmed at A Issue Rating: Up to Bt7,000 million senior debentures due within 2021 A Rating Outlook: Stable TRIS Rating Co., Ltd./www.trisrating.com Contact: [email protected], Tel: 0-2231-3011 ext 500/Silom Complex Building, 24th Floor, 191 Silom Road, Bangkok 10500, Thailand Copyright 2011, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information. All methodologies used can be found at http://www.trisrating.com/en/rating_information/rating_criteria.html.