BANGKOK--OCT 31--TRIS
THAI RATING AND INFORMATION SERVICES (TRIS) AFFIRMED THURSDAY, 31
OCTOBER 1996, A "BBB+" COMPANY RATING FOR BANGKOK DUSIT MEDICAL SERVICES PLC
(BGH). THE RATING REFLECTS BGH'S STRONG BUSINESS PROFILE AND FAVORABLE
FINANCIAL PERFORMANCE. THESE STRENGTH ARE SOMEWHAT OFFSET BY THE OPERATING
AND FINANCIAL RISKS ASSOCIATED WITH ITS ACTIVE GROWTH STRATEGY, TRIS
REPORTED.
SINCE ITS FOUNDING IN 1969, BGH HAS GROWN STEADILY TO BECOME A
LEADING PRIVATE PROVIDER OF COMPREHENSIVE MEDICAL SERVICES. BANGKOK GENERAL
HOSPITAL, ITS BANGKOK FACILITY, HAS BEEN WELL POSITIONED AS A GENERAL ACUTE-
CARE HOSPITAL WITH MULTI-SUBSPECIALTY SERVICES. THE MINISTRY OF INDUSTRY
CHOSE BGH TO IMPLEMENT AN ISO 9002 PILOT PROJECT TO ASSURE HEALTH SERVICE
STANDARDS. THIS SHOULD STREGHTEN BGH'S OPERATING EFFICIENCY AND SUSTAIN ITS
REPUTATION. AFTER ADDING A NEW 15-STOREY BUILDING, THE HOSPITAL IS
CHALLENGED TO INTEGRATE ITS MUCH ENLARGED OPERATING BASE TO REALIZE
POTENTIAL OPERATING ECONOMIES. FROM 1992, BGH DIVERSIFIED ITS PORTFOLIO TO
BECOME A HEALTH CARE DELIVERY NETWORK. ITS NETWORK OF HOSPITALS PRESENT
QUALITY FACILITIES IN ATTRACTIVE MARKETS AND ARE WELL-POSITIONED TO MEET
COMPETITION. BGH CONTINUES ACTIVE EXPANSION TO SOLIDIFY ITS NATIONAL
PRESENCE, ALTHOUGH THESE ARE NOT EXPECTED TO MAKE SIGNIFICANT CONTRIBUTIONS
FOR SEVERAL YEARS. ALREADY CHALLENGED BY EFFORTS TO INTEGRATE ITS ENLARGED
BASE IN BANGKOK, SUSTAINING ITS EXPANSION STRATEGY IS A MAJOR TASK BGH FACES
IN THE DYNAMIC HEALTH CARE ENVIRONMENT. DESPITE BGH'S ATTEMPTS TO EXPAND
OPERATIONS OUTSIDE THAILAND, MEANINGFUL GEOGRAPHIC DIVERSITY IS STILL
SEVERAL YEARS AWAY. PROMISING DEVELOPMENTS IN BGH'S GEOGRAPHIC STRATEGY ARE
OPERATING SYNERGIES GAINED THROUGH FORMING BUSINESS ALLIANCE WITH OTHER
PRIVATE HEALTH CARE PROVIDERS. BGH HAS OUTLINED A PLAN WITH ITS
PHARMACEUTICAL COMPANY TO REDUCE COSTS BY IMPROVING THE LOGISTIC PROGRAM FOR
SUPPLIES PURCHASING THAT FAVORS ITS NETWORK. POTENTIAL ADVANTAGES OF SCALE
IN MANAGEMENT AND MARKETING, TOGETHER WITH THE PURCHASE OF PHARMACEUTICALS
AND SUPPLIES ARE THE REASONS FOR THIS CONSOLIDATION. ITS NETWORK IS
EXPECTED TO BENEFIT FROM THIS LOGISTIC SYSTEM IN THE NEXT FEW YEARS.
HIGHER OPERATING COSTS AND INCREASING DEBT LOAD FROM ITS BUSINESS
EXPANSION HAS WEAKENED ITS OVERALL FINANCIAL PROFILE. DESPITE RAPID GROWTH,
BGH'S FINANCIAL PERFORMANCE IS ANTICIPATED TO REMAIN SATISFACTORY, WITH DEBT
LEVERAGE APPROACHING 40%. ITS UNHEDGED U.S. DOLLAR-DENOMINATED DEBTS EXPOSE
BGH TO FOREIGN EXCHANGE RISK AND SOMEWHAT OFFSET ITS MODERATE FINANCIAL
PROFILE. IN ADDITION, ITS FINANCIAL POLICY OF GUARANTEEING NETWORK
BORROWINGS IN THE NEAR FUTURE TO REDUCE FINANCING COSTS RAISES CONCERNS.
SIGNIFICANT GROWTH WILL LIKELY CONTINUE BUT COULD SLOW. TRIS EXPECTS BGH TO
MAINTAIN A MODERATE FINANCIAL POLICY AND STRENGTHEN ITS CURRENT BALANCE
SHEET VIA GRADUAL DEBT REDUCTION AND EARNINGS RETENTION.
NOTE: BANGKOK DUSIT MEDICAL SERVICES PLC: RATING ASSIGNED
SENIOR DEBT: BBB+
THAI RATING AND INFORMATION SERVICES (TRIS) AFFIRMED THURSDAY, 31
OCTOBER 1996, A "BBB+" COMPANY RATING FOR BANGKOK DUSIT MEDICAL SERVICES PLC
(BGH). THE RATING REFLECTS BGH'S STRONG BUSINESS PROFILE AND FAVORABLE
FINANCIAL PERFORMANCE. THESE STRENGTH ARE SOMEWHAT OFFSET BY THE OPERATING
AND FINANCIAL RISKS ASSOCIATED WITH ITS ACTIVE GROWTH STRATEGY, TRIS
REPORTED.
SINCE ITS FOUNDING IN 1969, BGH HAS GROWN STEADILY TO BECOME A
LEADING PRIVATE PROVIDER OF COMPREHENSIVE MEDICAL SERVICES. BANGKOK GENERAL
HOSPITAL, ITS BANGKOK FACILITY, HAS BEEN WELL POSITIONED AS A GENERAL ACUTE-
CARE HOSPITAL WITH MULTI-SUBSPECIALTY SERVICES. THE MINISTRY OF INDUSTRY
CHOSE BGH TO IMPLEMENT AN ISO 9002 PILOT PROJECT TO ASSURE HEALTH SERVICE
STANDARDS. THIS SHOULD STREGHTEN BGH'S OPERATING EFFICIENCY AND SUSTAIN ITS
REPUTATION. AFTER ADDING A NEW 15-STOREY BUILDING, THE HOSPITAL IS
CHALLENGED TO INTEGRATE ITS MUCH ENLARGED OPERATING BASE TO REALIZE
POTENTIAL OPERATING ECONOMIES. FROM 1992, BGH DIVERSIFIED ITS PORTFOLIO TO
BECOME A HEALTH CARE DELIVERY NETWORK. ITS NETWORK OF HOSPITALS PRESENT
QUALITY FACILITIES IN ATTRACTIVE MARKETS AND ARE WELL-POSITIONED TO MEET
COMPETITION. BGH CONTINUES ACTIVE EXPANSION TO SOLIDIFY ITS NATIONAL
PRESENCE, ALTHOUGH THESE ARE NOT EXPECTED TO MAKE SIGNIFICANT CONTRIBUTIONS
FOR SEVERAL YEARS. ALREADY CHALLENGED BY EFFORTS TO INTEGRATE ITS ENLARGED
BASE IN BANGKOK, SUSTAINING ITS EXPANSION STRATEGY IS A MAJOR TASK BGH FACES
IN THE DYNAMIC HEALTH CARE ENVIRONMENT. DESPITE BGH'S ATTEMPTS TO EXPAND
OPERATIONS OUTSIDE THAILAND, MEANINGFUL GEOGRAPHIC DIVERSITY IS STILL
SEVERAL YEARS AWAY. PROMISING DEVELOPMENTS IN BGH'S GEOGRAPHIC STRATEGY ARE
OPERATING SYNERGIES GAINED THROUGH FORMING BUSINESS ALLIANCE WITH OTHER
PRIVATE HEALTH CARE PROVIDERS. BGH HAS OUTLINED A PLAN WITH ITS
PHARMACEUTICAL COMPANY TO REDUCE COSTS BY IMPROVING THE LOGISTIC PROGRAM FOR
SUPPLIES PURCHASING THAT FAVORS ITS NETWORK. POTENTIAL ADVANTAGES OF SCALE
IN MANAGEMENT AND MARKETING, TOGETHER WITH THE PURCHASE OF PHARMACEUTICALS
AND SUPPLIES ARE THE REASONS FOR THIS CONSOLIDATION. ITS NETWORK IS
EXPECTED TO BENEFIT FROM THIS LOGISTIC SYSTEM IN THE NEXT FEW YEARS.
HIGHER OPERATING COSTS AND INCREASING DEBT LOAD FROM ITS BUSINESS
EXPANSION HAS WEAKENED ITS OVERALL FINANCIAL PROFILE. DESPITE RAPID GROWTH,
BGH'S FINANCIAL PERFORMANCE IS ANTICIPATED TO REMAIN SATISFACTORY, WITH DEBT
LEVERAGE APPROACHING 40%. ITS UNHEDGED U.S. DOLLAR-DENOMINATED DEBTS EXPOSE
BGH TO FOREIGN EXCHANGE RISK AND SOMEWHAT OFFSET ITS MODERATE FINANCIAL
PROFILE. IN ADDITION, ITS FINANCIAL POLICY OF GUARANTEEING NETWORK
BORROWINGS IN THE NEAR FUTURE TO REDUCE FINANCING COSTS RAISES CONCERNS.
SIGNIFICANT GROWTH WILL LIKELY CONTINUE BUT COULD SLOW. TRIS EXPECTS BGH TO
MAINTAIN A MODERATE FINANCIAL POLICY AND STRENGTHEN ITS CURRENT BALANCE
SHEET VIA GRADUAL DEBT REDUCTION AND EARNINGS RETENTION.
NOTE: BANGKOK DUSIT MEDICAL SERVICES PLC: RATING ASSIGNED
SENIOR DEBT: BBB+