ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

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

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Indonesia's leading diagnostics company, <a href="https://www.smartkarma.com/entities/prodia-widyahusada" target="_blank" data-smartkarma-citation="entities:23663:1" rel="noopener">Prodia Widyahusada (PRDA IJ)</a> just released a strong set of FY2020 numbers, confirming the company's ability to adapt and thrive in the face of the pandemic. It looks set to resume its expansion and trades on very attractive valuations.
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<a href="https://www.smartkarma.com/entities/prodia-widyahusada" target="_blank" data-smartkarma-citation="entities:23663:1" rel="noopener">Prodia Widyahusada (PRDA IJ)</a> saw its net profit increase by  +7.4% to IDR1,873.38bn, with revenues from each customer segment increasing and making a significant contribution.
Individual and referral customers from doctors made up 61.2% of revenues, whilst third-party referrals and corporate clients made up 38.8% of total revenues.
In 2020, the total number of tests reached 13.99m from 3.06m visits, with the demand for esoteric testing increasing by +191.5% YoY in 2020 to 1.6 million tests. Revenue from esoteric tests increased by +131.8% in 2020 to IDR700.3bn.
<a href="https://www.smartkarma.com/entities/prodia-widyahusada" target="_blank" data-smartkarma-citation="entities:23663:1" rel="noopener">Prodia Widyahusada (PRDA IJ)</a> continues to provide assistance to the government in dealing with the COVID-19 pandemic by providing tests for COVID-19 using the rapid test method, EIA antibody serology test, and PCR COVID-19,  and performing more than 1m COVID-19 tests in Indonesia in 2020.
<a href="https://www.smartkarma.com/entities/prodia-widyahusada" target="_blank" data-smartkarma-citation="entities:23663:1" rel="noopener">Prodia Widyahusada (PRDA IJ)</a> continues to expand the capacity for PCR COVID-19 examinations to more than 2,000 tests/day by adding the Cobas 6800 automatic testing tool.
<a href="https://www.smartkarma.com/entities/prodia-widyahusada" target="_blank" data-smartkarma-citation="entities:23663:1" rel="noopener">Prodia Widyahusada (PRDA IJ)</a> continues to add to its digital capabilities to aims to provide convenience for customers, without them having to visit the Prodia Lab through teleconsulting and the Prodia App. 
The company plans to expand its clinical labs, hospital labs, POC outlets, and add one specialty clinic in 2021, after a pause in 2020. Apart from growing its network of outlets, the company plans to upgrade its existing clinical labs to provide a greater array of tests.
<a href="https://www.smartkarma.com/entities/prodia-widyahusada" target="_blank" data-smartkarma-citation="entities:23663:1" rel="noopener">Prodia Widyahusada (PRDA IJ)</a> valuations are very attractive versus healthcare peers in Indonesia but also Indian diagnostic peers, which trade on significantly higher multiples.


Indonesia's leading diagnostics company, Prodia Widyahusada (PRDA IJ) just released a strong set of FY2020 numbers, confirming the company's ability to adapt and thrive in the face of the pandemic. It looks set to resume its expansion and trades on very attractive valuations.

Prodia Widyahusada (PRDA IJ) saw its net profit increase by  +7.4% to IDR1,873.38bn, with revenues from each customer segment increasing and making a significant contribution.
Individual and referral customers from doctors made up 61.2% of revenues, whilst third-party referrals and corporate clients made up 38.8% of total revenues.
In 2020, the total number of tests reached 13.99m from 3.06m visits, with the demand for esoteric testing increasing by +191.5% YoY in 2020 to 1.6 million tests. Revenue from esoteric tests increased by +131.8% in 2020 to IDR700.3bn.
Prodia Widyahusada (PRDA IJ) continues to provide assistance to the government in dealing with the COVID-19 pandemic by providing tests for COVID-19 using the rapid test method, EIA antibody serology test, and PCR COVID-19,  and performing more than 1m COVID-19 tests in Indonesia in 2020.
Prodia Widyahusada (PRDA IJ) continues to expand the capacity for PCR COVID-19 examinations to more than 2,000 tests/day by adding the Cobas 6800 automatic testing tool.
Prodia Widyahusada (PRDA IJ) continues to add to its digital capabilities to aims to provide convenience for customers, without them having to visit the Prodia Lab through teleconsulting and the Prodia App. 
The company plans to expand its clinical labs, hospital labs, POC outlets, and add one specialty clinic in 2021, after a pause in 2020. Apart from growing its network of outlets, the company plans to upgrade its existing clinical labs to provide a greater array of tests.
Prodia Widyahusada (PRDA IJ) valuations are very attractive versus healthcare peers in Indonesia but also Indian diagnostic peers, which trade on significantly higher multiples.

Prodia Widyahusada (PRDA IJ) - Diagnosed as Resilient

Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

We had been bearish on the stock for several years because of 1) deceleration in growth, 2) planned significant capacity increases in Singapore, and 3) the launches of two hospitals in China. Now that the market has baked in slower growth in the core business and start-up losses in China should stabilize this year and decline in future years, we think the shares are worth a second look. Further, the lack of a clear succession plan for the Founder/Executive Chairman suggests that we have a path to an exit.

We had been bearish on the stock for several years because of 1) deceleration in growth, 2) planned significant capacity increases in Singapore, and 3) the launches of two hospitals in China. Now that the market has baked in slower growth in the core business and start-up losses in China should stabilize this year and decline in future years, we think the shares are worth a second look. Further, the lack of a clear succession plan for the Founder/Executive Chairman suggests that we have a path to an exit.

Raffles Medical Group: A Path to the Exit

Siloam International Hospitals / Equity Bottom-Up

A recent conversation with <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> revealed that it continues to see positive momentum behind its COVID-19 testing for both PCR and rapid &amp; serology testing, which continue to offset the slower inpatient and outpatient numbers. COVID-19 testing and treatment is filling the revenue gap of lower patient numbers but patient numbers are improving slowly at the same time. 
The company can test and analyze results at 13 different sites currently but can provide the tests at all its 39 hospitals. 
Four Siloam hospitals are set up specifically for COVID-19 patient treatment and the company has now treated just over 8,000 patients so far with average stays of over two weeks per patient. These patients are paid for by the government and at quite a decent commercial rate.
Monthly revenues are now back on a par with last year, with the trough in April and May, with MoM improvements from June onwards but obviously still less people visiting hospitals and even more so for inpatients.
Doctors are also back to working full hours again having cut back due to the pandemic, with COVID-19 treatment and testing helping to plug the gap of lower patient numbers.
The coming months should start to see some of the pent-up demand for elective procedures start to come through in 1H2021, which along with continued testing and the start of vaccinations will start to drive a recovery in earnings. 
<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> looks interesting from a valuation perspective trading on 6.3x FY21E EV/EBITDA and 5.7x FY22E EV/EBITDA versus its 3-year average of 9.7x forward EV/EBITDA and it's going into a recovery, as well as rising profitability.

A recent conversation with Siloam International Hospital (SILO IJ) revealed that it continues to see positive momentum behind its COVID-19 testing for both PCR and rapid &amp; serology testing, which continue to offset the slower inpatient and outpatient numbers. COVID-19 testing and treatment is filling the revenue gap of lower patient numbers but patient numbers are improving slowly at the same time. 
The company can test and analyze results at 13 different sites currently but can provide the tests at all its 39 hospitals. 
Four Siloam hospitals are set up specifically for COVID-19 patient treatment and the company has now treated just over 8,000 patients so far with average stays of over two weeks per patient. These patients are paid for by the government and at quite a decent commercial rate.
Monthly revenues are now back on a par with last year, with the trough in April and May, with MoM improvements from June onwards but obviously still less people visiting hospitals and even more so for inpatients.
Doctors are also back to working full hours again having cut back due to the pandemic, with COVID-19 treatment and testing helping to plug the gap of lower patient numbers.
The coming months should start to see some of the pent-up demand for elective procedures start to come through in 1H2021, which along with continued testing and the start of vaccinations will start to drive a recovery in earnings. 
Siloam International Hospital (SILO IJ) looks interesting from a valuation perspective trading on 6.3x FY21E EV/EBITDA and 5.7x FY22E EV/EBITDA versus its 3-year average of 9.7x forward EV/EBITDA and it's going into a recovery, as well as rising profitability.

Siloam International Hospital (SILO IJ) - The Saving Grace

<a href="https://www.smartkarma.com/entities/prodia-widyahusada" target="_blank" data-smartkarma-citation="entities:23663:1" rel="noopener">Prodia Widyahusada (PRDA IJ)</a> is Indonesia's leading diagnostics player and has proved its worth in dealing with COVID-19  with a mix of digital strategies, cost savings, and increasing testing capacity for COVID-19. 
The company recently released its 3Q2020 numbers, which saw a sharp increase in revenues to a level significantly above 1Q2020. 
<a href="https://www.smartkarma.com/entities/prodia-widyahusada" target="_blank" data-smartkarma-citation="entities:23663:1" rel="noopener">Prodia Widyahusada (PRDA IJ)</a> managed to achieve an increase in the number of visits for 9M2020 although the number of tests was lower and hence revenue per visit, given the rise in single COVID-19 tests and the decline in regular medicals due to the pandemic. 
The ramp-up in COVID-19 testing capacity should help to support growth in 4Q2020 and into FY21E, and we would also expect some recovery in regular testing at the same time. 
The move to providing more digital and home services for patients through the company's App has reduced costs and will allow the company to provide a more efficient service. 
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<a href="https://www.smartkarma.com/entities/prodia-widyahusada" target="_blank" data-smartkarma-citation="entities:23663:1" rel="noopener">Prodia Widyahusada (PRDA IJ)</a> is expected to see a sharp rebound in EPS of +28% in 2020 and trades on a reasonable 15.9x FY21E PER and 6.8x FY21E EV/EBITDA, which is at a discount to its 3-year average forward EV/EBITDA of 7.8x. The increasing health consciousness in Indonesia is already reflected in more esoteric testing and preventative treatments, which plays into <a href="https://www.smartkarma.com/entities/prodia-widyahusada" target="_blank" data-smartkarma-citation="entities:23663:1" rel="noopener">Prodia Widyahusada (PRDA IJ)'</a>s strengths. 
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Prodia Widyahusada (PRDA IJ) is Indonesia's leading diagnostics player and has proved its worth in dealing with COVID-19  with a mix of digital strategies, cost savings, and increasing testing capacity for COVID-19. 
The company recently released its 3Q2020 numbers, which saw a sharp increase in revenues to a level significantly above 1Q2020. 
Prodia Widyahusada (PRDA IJ) managed to achieve an increase in the number of visits for 9M2020 although the number of tests was lower and hence revenue per visit, given the rise in single COVID-19 tests and the decline in regular medicals due to the pandemic. 
The ramp-up in COVID-19 testing capacity should help to support growth in 4Q2020 and into FY21E, and we would also expect some recovery in regular testing at the same time. 
The move to providing more digital and home services for patients through the company's App has reduced costs and will allow the company to provide a more efficient service. 

Prodia Widyahusada (PRDA IJ) is expected to see a sharp rebound in EPS of +28% in 2020 and trades on a reasonable 15.9x FY21E PER and 6.8x FY21E EV/EBITDA, which is at a discount to its 3-year average forward EV/EBITDA of 7.8x. The increasing health consciousness in Indonesia is already reflected in more esoteric testing and preventative treatments, which plays into Prodia Widyahusada (PRDA IJ)'s strengths. 


Prodia Widyahusada (PRDA IJ) - Testing Times a Positive

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> just released its 9M2020 results which saw revenues and EBITDA decline by -4.1% and -3.9% respectively but the key positive was a sharp rebound in 3Q2020, where revenues were flat versus 1Q2020 but EBITDA saw a +14.5% increase in 3Q2020 versus 1Q2020. Revenue in 3Q2020 was up by +54% versus 2Q2020 and EBITDA increased in 3Q2020 by +143.6% compared to 2Q 2020. These numbers demonstrate that a recovery is well underway. 
The better result was despite patient volumes declining -22.4% YoY in 3Q2020, as both revenue per inpatient and revenue per outpatient increased by +11.9% and +16.9% YoY respectively, with medication and diagnostic testing to treat COVID-19 patients helping to increase the revenue intensity. 
These look like a positive set of numbers, especially looking at the 3Q2020 versus 2Q2020, which showed a significant rebound and testament to the quality of the management, with costs also kept under control and a rock-solid balance sheet.
<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 27x FY21E EV/EBITDA versus its 5-year average of 30.5x. This positive set of results should be strong evidence of an ongoing recovery in its hospital business, with patients becoming more profitable as revenue intensity improves.

Mitra Keluarga Karyasehat Tbk (MIKA IJ) just released its 9M2020 results which saw revenues and EBITDA decline by -4.1% and -3.9% respectively but the key positive was a sharp rebound in 3Q2020, where revenues were flat versus 1Q2020 but EBITDA saw a +14.5% increase in 3Q2020 versus 1Q2020. Revenue in 3Q2020 was up by +54% versus 2Q2020 and EBITDA increased in 3Q2020 by +143.6% compared to 2Q 2020. These numbers demonstrate that a recovery is well underway. 
The better result was despite patient volumes declining -22.4% YoY in 3Q2020, as both revenue per inpatient and revenue per outpatient increased by +11.9% and +16.9% YoY respectively, with medication and diagnostic testing to treat COVID-19 patients helping to increase the revenue intensity. 
These look like a positive set of numbers, especially looking at the 3Q2020 versus 2Q2020, which showed a significant rebound and testament to the quality of the management, with costs also kept under control and a rock-solid balance sheet.
Mitra Keluarga Karyasehat Tbk (MIKA IJ) trades on 27x FY21E EV/EBITDA versus its 5-year average of 30.5x. This positive set of results should be strong evidence of an ongoing recovery in its hospital business, with patients becoming more profitable as revenue intensity improves. 

Mitra Keluarga Karyasehat Tbk (MIKA IJ) - A Recovery Fully Under Way

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.

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Medikaloka Hermina (HEAL IJ)

Prodia Widyahusada (PRDA IJ) - Diagnosed as Resilient

Prodia remains one of our top healthcare picks in Indonesia, showing resilience during the pandemic, just releasing a strong set of numbers, and...

Angus Mackintosh

Raffles Medical Group: A Path to the Exit

We were bearish for several years because of slowing growth and expected drags from new facilities. We are turning bullish now that the market...

Kemp Dolliver, CFA

Siloam International Hospital (SILO IJ) - The Saving Grace

Siloam is Indonesia's youngest and largest hospital players which is on the cusp of a higher profitability with COVID testing and treatment filling...

Angus Mackintosh

Prodia Widyahusada (PRDA IJ) - Testing Times a Positive

Prodia has rapidly adjusted in the face of COVID-19 and is now benefiting from increased COVID testing capacity and increasing health consciousness...

Angus Mackintosh

Mitra Keluarga Karyasehat Tbk (MIKA IJ) - A Recovery Fully Under Way

Mitra Keluarga is the highest quality healthcare proxy in Indonesia, with exposure to both mainstream private hospitals and BPJS. 3Q2020 results...

Angus Mackintosh

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