LADPRAO General Hospital will launch an initial public offering to raise up to Bt1 billion from the capital market by the end of this month.
The company yesterda y announced an indicative IPO price range of between Bt4.90 and Bt5.00 per share, after a book-building process held to gauge demand from institutional investors.
The pricing is equivalent to nearly 40 times its earnings.
Patchaporn Sankaburanuruk, head of investment banking at KGI Securities (Thailand) - the company's financial adviser and lead IPO arranger - said the valuation was based on comparing earnings in the last four quarters with those of three mid-level listed hospital operators, namely Bangkok Chain Hospital, Chularat Hospital and Vichaivej International Hospital Group.
Each of these businesses has a price-to-earnings ratio of more than 40 times.
Investors should consider Ladprao General Hospital's growth plans, which would bring down the high P/E ratio in the future, she said.
Of the IPO proceeds, which could range from Bt980 million to Bt1 billion, Bt150 million will be spent on a new centre to accommodate more patients who utilise the government's Social Security Fund (SSF)programme.
The facility, which is being constructed on the site of Ladprao General Hospital's parking building, will be completed in 2017.
Another Bt157 million is earmarked for a rehabilitation and care centre for elderly patients, which will be built in a nearby area by 2018, while Bt300 million will be spent on a new hospital in Lam Luk Ka district in Pathum Thani province, which will be completed in 2019.
The remainder will be used to pay off all of the operator's Bt300-million long-term debts, and for working capital, Patchaporn said.
Ladprao General Hospital currently generates about 45 per cent of its income from patients who utilise the SSF programme.
It has already fully utilised the quota of 149,500 patients annually that it receives from the SSF, while its 180-bed hospital has a total of around 200,000 patients per year.
Ladprao General Hospital chief executive Ungoon Chantanavanich said the business would also grow through the expansion of five excellence centres, which would be fully completed in the next two years.
The first of these centres, focusing on eye care such as Lasik surgery, will open on October 19.
He said there was room for Ladprao General Hospital to improve its outpatient income, after comparing its average of Bt1,500 per head with the amount earned by other mid-level hospitals, as the plan to expand its excellence centres would allow it to provide more sophisticated treatments.
It aims to increase the outpatient department income to Bt2,000 per head.
Ungoon blamed higher medicalpersonnel costs for the lower profits reported for the first half of this year, since the hospital had to hire more nurses to prepare for its e xpansion.
Ladprao General Hospital booked a net profit of Bt32 million in the period, down from Bt38 million a year ago.