MIKA - To continue good performance after solid 1H24 results

KBVS Update
Wednesday, 24 July 2024

MIKA - To continue good performance in 2H24F, after solid 1H24 results
(Maintain BUY, with TP IDR3,400)

* Mitra Keluarga' (MIKA) revenue from its inpatients and outpatients reached IDR838.4 bn (+21.2% yoy/-0.5% qoq) and IDR371.4 bn (+12.6% yoy/-7.3% qoq), respectively in 2Q24, due to higher tariffs, a 12.5% yoy higher inpatient’ admission (mostly private patients) and a 7.3% yoy higher outpatient’ visits. Note that, MIKA has increased its tariffs (exclude JKN’ patients) by around 5%-7% yoy, in January 2024. As a result, MIKA’ revenue in 1H24 grew 19.7% yoy to IDR2.45 tn, which came in-line with ours' (50.2%), but above cons' (51%).    

* MIKA’ earnings reached IDR312 bn (+39.9% yoy/+7.9% qoq) in 2Q24, with a 400bps yoy/260bps qoq net margin expansion, mainly on higher revenue with better cost management. As a result, MIKA' earnings grew 32.5% yoy to IDR600.6 bn in 1H24, which came above ours (55.5%) and consensus' (53.5%) expectation.

* MIKA has succeeded in negotiating the drugs’ costs with its major suppliers in 2Q24. Thus, with higher revenue, softer drugs’ cost and better cost management, MIKA’ gross profit, EBIT and EBITDA reached IDR652.6 bn (+27.6% yoy/-2.0% qoq), IDR380.2 bn (+36.9% yoy/+1.4% qoq) and IDR549.6 bn (+52.2% yoy/+42.2% qoq), respectively in 2Q24. All in all, MIKA’ gross, EBIT, EBITDA and net margin expanded by 410bps yoy, 340bps yoy, 300bps yoy, and 240bps yoy, respectively in 1H24.          

* We adjusted upward our ‘24F revenue and earnings due to its solid 1H24 results and the company also guided for higher revenue growth in 2024, to grow by 15%-17% yoy from prior, with EBITDA margin to be at 37%-38.5% from prior. All in all, we still expect MIKA to be able to grow its revenue and earnings by 16.1% yoy and 26.9% yoy, respectively in ‘24F, with around 200bps yoy net margin expansion on higher tariffs and patients’ traffic.

* Maintain BUY on MIKA with TP of IDR 3,400/share, which implies 26.1x ‘24F EV/EBITDA or at +1 stdv of its 5 years mean EV/EBITDA. Currently, MIKA is trading at 20.4x ‘24F EV/EBITDA or slightly above -1 stdev of its 5 years’ mean EV/EBITDA.

Regards,
Andre Suntono - KBVS Research team