Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

With the ever-increasing COVID-19 cases in Indonesia, combined with the slow action to inoculate the citizens either due to the lack of vaccines supply or due to public distrust of the vaccine or COVID-19 itself, demand for medication is at an all-time high. Amid the ongoing “second wave” of COVID-19, some people have started taking it upon themselves to fend off the ever-looming threat of the coronavirus with unproven do-it-yourself (DIY) remedies and self-medication tips spreading rampantly on social media platforms, such as WhatsApp and Facebook, creating extra demand for a legitimate medicine sold in a licensed pharmacy.The YTD share price weakness and the recent knee jerk reaction from the delay of paid vaccination drive provides a better entry point for investors as the Indonesian government just released a rule to permit certain COVID-19 medications to be sold in licensed pharmacies in Indonesia and <a href="https://www.smartkarma.com/entities/kimia-farma-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:8524:1" rel="noopener">Kimia Farma Persero (KAEF IJ)</a> is the only listed SOE pharmacy in Indonesia with more than 1000 outlets across the country.

With the ever-increasing COVID-19 cases in Indonesia, combined with the slow action to inoculate the citizens either due to the lack of vaccines supply or due to public distrust of the vaccine or COVID-19 itself, demand for medication is at an all-time high. Amid the ongoing “second wave” of COVID-19, some people have started taking it upon themselves to fend off the ever-looming threat of the coronavirus with unproven do-it-yourself (DIY) remedies and self-medication tips spreading rampantly on social media platforms, such as WhatsApp and Facebook, creating extra demand for a legitimate medicine sold in a licensed pharmacy.The YTD share price weakness and the recent knee jerk reaction from the delay of paid vaccination drive provides a better entry point for investors as the Indonesian government just released a rule to permit certain COVID-19 medications to be sold in licensed pharmacies in Indonesia and Kimia Farma Persero (KAEF IJ) is the only listed SOE pharmacy in Indonesia with more than 1000 outlets across the country. 

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

Indonesian hospital operator <a href="https://www.smartkarma.com/entities/medikaloka-hermina-tbk-pt" target="_blank" rel="noopener">Medikaloka Hermina (HEAL IJ)</a> just released a solid set of 1Q2021 results, with a +61.1% YoY increase in revenue and an even more impressive +186% YoY increase in EBITDA.
The majority of <a href="https://www.smartkarma.com/entities/medikaloka-hermina-tbk-pt" target="_blank" rel="noopener">Medikaloka Hermina (HEAL IJ)</a>'s revenue came from the inpatient segment which made up 72.8% of revenue in 1Q2021, with total hospitalisation revenue increasing by +87% YoY, boosted by COVID-19 testing and treatment.
Meanwhile, the outpatient segment contributed 26.5% of the total revenue at IDR419.9bn, with outpatient revenues increasing by +14.7% compared to the same period last year, despite slower patient numbers.
<a href="https://www.smartkarma.com/entities/medikaloka-hermina-tbk-pt" target="_blank" data-smartkarma-citation="entities:27000:1" rel="noopener">Medikaloka Hermina (HEAL IJ)</a> has a unique doctor partnership model with a group of specialist practising doctors owning a minority stake in each hospital, which aligns the interests of doctors and the hospitals.
<a href="https://www.smartkarma.com/entities/medikaloka-hermina-tbk-pt" target="_blank" data-smartkarma-citation="entities:27000:1" rel="noopener">Medikaloka Hermina (HEAL IJ)</a> has a strong heritage in women and children care and is considered the number one hospital group for Obstetrics and Gynecology, as well as Paediatrics in Indonesia.
The company's interests are also aligned with the government since around 50% of its patients come through the JKN scheme (government healthcare program).
<a href="https://www.smartkarma.com/entities/medikaloka-hermina-tbk-pt" target="_blank" data-smartkarma-citation="entities:27000:1" rel="noopener">Medikaloka Hermina (HEAL IJ)</a> looks increasingly interesting, especially given the recently announced 5 for 1 stock split which helps to improve liquidity. It also continues to trade on an attractive 11.9x FY21E EV/EBITDA and 10.4x FY22E EV/EBITDA versus peer <a href="https://www.smartkarma.com/entities/mitra-keluarga-karyasehat-tbk" target="_blank" data-smartkarma-citation="entities:288:1" rel="noopener">Mitra Keluarga Karyasehat Tbk (MIKA IJ)</a> which trades on 24.6x FY21E and FY22E EV/EBITDA. Better liquidity should help the company close this valuation gap.

Indonesian hospital operator Medikaloka Hermina (HEAL IJ) just released a solid set of 1Q2021 results, with a +61.1% YoY increase in revenue and an even more impressive +186% YoY increase in EBITDA.
The majority of Medikaloka Hermina (HEAL IJ)'s revenue came from the inpatient segment which made up 72.8% of revenue in 1Q2021, with total hospitalisation revenue increasing by +87% YoY, boosted by COVID-19 testing and treatment.
Meanwhile, the outpatient segment contributed 26.5% of the total revenue at IDR419.9bn, with outpatient revenues increasing by +14.7% compared to the same period last year, despite slower patient numbers.
Medikaloka Hermina (HEAL IJ) has a unique doctor partnership model with a group of specialist practising doctors owning a minority stake in each hospital, which aligns the interests of doctors and the hospitals.
Medikaloka Hermina (HEAL IJ) has a strong heritage in women and children care and is considered the number one hospital group for Obstetrics and Gynecology, as well as Paediatrics in Indonesia.
The company's interests are also aligned with the government since around 50% of its patients come through the JKN scheme (government healthcare program).
Medikaloka Hermina (HEAL IJ) looks increasingly interesting, especially given the recently announced 5 for 1 stock split which helps to improve liquidity. It also continues to trade on an attractive 11.9x FY21E EV/EBITDA and 10.4x FY22E EV/EBITDA versus peer Mitra Keluarga Karyasehat Tbk (MIKA IJ) which trades on 24.6x FY21E and FY22E EV/EBITDA. Better liquidity should help the company close this valuation gap.

Medikaloka Hermina (HEAL IJ) - Women and Children First

<a href="https://www.smartkarma.com/entities/pt-aneka-gas-industri" target="_blank" data-smartkarma-citation="entities:23564:1" rel="noopener">Aneka Gas (AGII IJ)</a> is Indonesia's leading industrial gas company, which is often under-appreciated as the immediate assumption is that is purely an industrial supplier. In fact, that it is plugged into a broad swath of the Indonesian economy, which makes it a proxy for recovery but relatively defensive at the same time. 
It supplies industrial users but also supplies medical gases, consumer companies, SMEs (retail), and infrastructure through welding and its input into the steel-making process.
The latest potential use-case and growth area comes with the rapid build-out of smelters in Indonesia to process metals and minerals locally. 
<a href="https://www.smartkarma.com/entities/pt-aneka-gas-industri" target="_blank" rel="noopener">Aneka Gas (AGII IJ)</a> has seen an increase in demand for gas products for medical needs of around +50% after the last Eid holiday
We continue to take a positive view of <a href="https://www.smartkarma.com/entities/pt-aneka-gas-industri" target="_blank" data-smartkarma-citation="entities:23564:1" rel="noopener">Aneka Gas (AGII IJ)</a>not only for its exposure to the provision of medical gas but also for overall exposure to the economic recovery, through its exposure to industry consumer goods, SMEs, and infrastructure. The company trades on 10.3x FY21E EV/EBITDA and 9.8x FY22E EV/EBITDA, with the potential for earnings upgrades.

Aneka Gas (AGII IJ) is Indonesia's leading industrial gas company, which is often under-appreciated as the immediate assumption is that is purely an industrial supplier. In fact, that it is plugged into a broad swath of the Indonesian economy, which makes it a proxy for recovery but relatively defensive at the same time. 
It supplies industrial users but also supplies medical gases, consumer companies, SMEs (retail), and infrastructure through welding and its input into the steel-making process.
The latest potential use-case and growth area comes with the rapid build-out of smelters in Indonesia to process metals and minerals locally. 
Aneka Gas (AGII IJ) has seen an increase in demand for gas products for medical needs of around +50% after the last Eid holiday
We continue to take a positive view of Aneka Gas (AGII IJ)not only for its exposure to the provision of medical gas but also for overall exposure to the economic recovery, through its exposure to industry consumer goods, SMEs, and infrastructure. The company trades on 10.3x FY21E EV/EBITDA and 9.8x FY22E EV/EBITDA, with the potential for earnings upgrades.

Aneka Gas (AGII IJ) - Living and Breathing the Indonesian Economy

Mitra Keluarga Karyasehat / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/mitra-keluarga-karyasehat-tbk" target="_blank" data-smartkarma-citation="entities:288:1" rel="noopener">Mitra Keluarga Karyasehat Tbk (MIKA IJ)</a> announced a robust set of results for 1Q2021 late last week, with revenue growth of +37.6% YoY, mainly driven by COVID-19 cases, which command a higher treatment intensity.
Volume for Non-COVID-19 inpatient days also increased, up +5.6% QoQ compared to 4Q 2020, with occupancy improving to 61% for non-COVID beds. The improvement in non-COVID-19 patients bodes well for this year's outlook. 
Mitra Keluarga continues to add more hospitals, through both greenfield and brownfield expansion plans and has opened one new hospital already this year. It will commence the groundbreaking for its 27th &amp; 28th hospitals in 1H2021. M&amp;A opportunities also remain a potential growth driver with two other hospitals currently in the pipeline. 
Patient numbers declined in 1Q2021 YoY but revenues per outpatient and inpatient days increased significantly due to a significantly higher number of COVID-19 patients being treated. 
<a href="https://www.smartkarma.com/entities/mitra-keluarga-karyasehat-tbk" target="_blank" data-smartkarma-citation="entities:288:1" rel="noopener">Mitra Keluarga Karyasehat Tbk (MIKA IJ)</a> bed Occupancy Ratio reached 63.4% for 1Q2021, compared to 65.7% in 1Q2020, mainly boosts by high COVID-19 bed occupancies, although non-COVID bed occupancies were not far off last year.
<div class="content-highlight">
<a href="https://www.smartkarma.com/entities/mitra-keluarga-karyasehat-tbk" target="_blank" data-smartkarma-citation="entities:288:1" rel="noopener">Mitra Keluarga Karyasehat Tbk (MIKA IJ)</a> trades on 23.9x FY21E EV/EBITDA and 24.2x FY22E EV/EBITDA versus its 5-year average of 29.5x making the company look relatively attractive. It is likely to see a gradual tapering off in terms of revenues from COVID-19 treatments as the vaccination program starts to gain traction but it will still be an important source of revenue in the medium term, together with the fact that it is already seeing a pick-up in its normal elective treatments.
</div>

Mitra Keluarga Karyasehat Tbk (MIKA IJ) announced a robust set of results for 1Q2021 late last week, with revenue growth of +37.6% YoY, mainly driven by COVID-19 cases, which command a higher treatment intensity.
Volume for Non-COVID-19 inpatient days also increased, up +5.6% QoQ compared to 4Q 2020, with occupancy improving to 61% for non-COVID beds. The improvement in non-COVID-19 patients bodes well for this year's outlook. 
Mitra Keluarga continues to add more hospitals, through both greenfield and brownfield expansion plans and has opened one new hospital already this year. It will commence the groundbreaking for its 27th &amp; 28th hospitals in 1H2021. M&amp;A opportunities also remain a potential growth driver with two other hospitals currently in the pipeline. 
Patient numbers declined in 1Q2021 YoY but revenues per outpatient and inpatient days increased significantly due to a significantly higher number of COVID-19 patients being treated. 
Mitra Keluarga Karyasehat Tbk (MIKA IJ) bed Occupancy Ratio reached 63.4% for 1Q2021, compared to 65.7% in 1Q2020, mainly boosts by high COVID-19 bed occupancies, although non-COVID bed occupancies were not far off last year.

Mitra Keluarga Karyasehat Tbk (MIKA IJ) trades on 23.9x FY21E EV/EBITDA and 24.2x FY22E EV/EBITDA versus its 5-year average of 29.5x making the company look relatively attractive. It is likely to see a gradual tapering off in terms of revenues from COVID-19 treatments as the vaccination program starts to gain traction but it will still be an important source of revenue in the medium term, together with the fact that it is already seeing a pick-up in its normal elective treatments.


Mitra Keluarga Karyasehat (MIKA IJ) - Occupancy and Profitability Rising

Siloam International Hospitals / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/siloam-international-hospital" target="_blank" data-smartkarma-citation="entities:878:1" rel="noopener">Siloam International Hospital (SILO IJ)</a> released an impressive set of FY2020 numbers last week evening with net operating revenues up by +5.3% but EBITDA up by +37.4% and with EBITDA margins increasing to 21.6% versus 16.6% in 2019. Net profit was up by +365.8% YoY to IDR125bn in FY2020, whilst the company's free cash flow increased by +772% to IDR1,068bn in FY2020 as a whole. 
Average revenue per inpatient days increased by +19.1% YoY, whilst average revenue per outpatient visits increased by +39.9% YoY in FY2020, both of which helped to offset lower inpatient and outpatient numbers. 
The company has put in place a number of new initiatives to grow the business and continue to monetize existing assets more effectively. This should continue to drive future revenues and profitability, coupled with more effective pricing across its hospital network and more effective cost savings as procurement.
<a href="https://www.smartkarma.com/entities/siloam-international-hospital" target="_blank" data-smartkarma-citation="entities:878:1" rel="noopener">Siloam International Hospital (SILO IJ)</a> continues to benefit from COViD-19 testing and treatment, which saw a ramp-up during 2020, and has continued into 2021. 
The company also paid a special dividend to recognize its transformation successes on top of a 45% payout ratio bringing the total payout to 181%, with a commitment to payout more than 25% of earnings as a dividend barring unforeseen circumstances.
<a href="https://www.smartkarma.com/entities/siloam-international-hospital" target="_blank" data-smartkarma-citation="entities:878:1" rel="noopener">Siloam International Hospital (SILO IJ)</a> trades on an FY21E EV/EBITDA of 9.9x and FY22E EV/EBITDA of 6.6x making it look attractive both from a historical perspective  and versus local hospital peers <a href="https://www.smartkarma.com/entities/mitra-keluarga-karyasehat-tbk" target="_blank" data-smartkarma-citation="entities:288:1" rel="noopener">Mitra Keluarga Karyasehat Tbk (MIKA IJ)</a> and <a href="https://www.smartkarma.com/entities/medikaloka-hermina-tbk-pt" target="_blank" data-smartkarma-citation="entities:27000:1" rel="noopener">Medikaloka Hermina (HEAL IJ)</a>, as well as its regional peer group. We also expect upward revisions to analyst forecasts.

Siloam International Hospital (SILO IJ) released an impressive set of FY2020 numbers last week evening with net operating revenues up by +5.3% but EBITDA up by +37.4% and with EBITDA margins increasing to 21.6% versus 16.6% in 2019. Net profit was up by +365.8% YoY to IDR125bn in FY2020, whilst the company's free cash flow increased by +772% to IDR1,068bn in FY2020 as a whole. 
Average revenue per inpatient days increased by +19.1% YoY, whilst average revenue per outpatient visits increased by +39.9% YoY in FY2020, both of which helped to offset lower inpatient and outpatient numbers. 
The company has put in place a number of new initiatives to grow the business and continue to monetize existing assets more effectively. This should continue to drive future revenues and profitability, coupled with more effective pricing across its hospital network and more effective cost savings as procurement.
Siloam International Hospital (SILO IJ) continues to benefit from COViD-19 testing and treatment, which saw a ramp-up during 2020, and has continued into 2021. 
The company also paid a special dividend to recognize its transformation successes on top of a 45% payout ratio bringing the total payout to 181%, with a commitment to payout more than 25% of earnings as a dividend barring unforeseen circumstances.
Siloam International Hospital (SILO IJ) trades on an FY21E EV/EBITDA of 9.9x and FY22E EV/EBITDA of 6.6x making it look attractive both from a historical perspective  and versus local hospital peers Mitra Keluarga Karyasehat Tbk (MIKA IJ) and Medikaloka Hermina (HEAL IJ), as well as its regional peer group. We also expect upward revisions to analyst forecasts. 

Siloam International Hospital (SILO IJ) - A Quickening Metabolism

Indonesia

PT Medikaloka Hermina Tbk is an Indonesian healthcare company operating a network of general hospitals under the Hermina name. The company provides a wide range of medical services, including maternal and child health, specialized treatments, emergency care, and diagnostics. It is headquartered in Jakarta, Indonesia, and was founded in 1985.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Medikaloka Hermina (HEAL IJ)

Kimia Farma (KAEF): Legitimate Pharmacy

ID government just released a rule to permit certain COVID-19 medications to be sold in pharmacies in Indonesia and Kimia Farma is the only listed...

Henry Soediarko