MIKA - To grow further in ‘25F

KBVS Update 
Wednesday, 20 November 2024

MIKA - To grow further in '25F
(Maintain BUY; TP: IDR3,400)

We slightly lowered our revenue expectations on Mitra Keluarga Karyasehat (MIKA) in ‘24F (-2.2% from previous) and ‘25F (-2.9% from previous). Yet, we still expect MIKA’ revenue could grow by 13.5% yoy and 14.8% yoy, respectively in ’24F and '25F, on higher tariffs (2-3% higher in '25F), patients traffic and 2 new hospitals in '25F (1 hospital will start to operate in 3Q25, while the other is going to operate in 4Q25) amidst unpredictable weather.

Still expect MIKA’ EBIT and EBITDA could grow by 23.6% yoy and 21.4% yoy, respectively in ‘24F on higher patients’ traffic, despite higher opex yoy due to early staffs’ hiring for its new hospitals. Thus, we expect MIKA to continue to grow its EBIT and EBITDA by 15% yoy and 16.1% yoy with its EBIT’ and EBITDA’ margin could expand to 30.1% and 38.1%, respectively in ‘25F on 2 new hospitals and better cost management.

All in all, we expect MIKA’ earnings to grow by 26.8% yoy and 15% yoy, respectively in '24F and in ‘25F, on higher tariffs, patients' traffic and better cost management. We also expect MIKA' net margin to expand to 24% and 24.1%, respectively in '24F and '25F.

MIKA' earnings reached IDR272 bn (+16.9% yoy/-12.6% qoq) in 3Q24 with its net margin reached 23.3% (+230bps yoy/-250bps qoq). All in all, MIKA' earnings grew 27.2% yoy in 9M24 with 240bps yoy net margin expansion on higher tariffs,  patients' traffic, better cost management. Moreover, MIKA' 9M24 earnings came in-line with ours' (75.1%), but slightly lower than consensus' (74%).

MIKA' revenue in 3Q24 reached IDR1.17 tn (+5.3% yoy/-3.6% qoq), despite lesser patients' traffic qoq as there were 2 insurance companies that stopped their cashless program, which affected several of MIKA' hospitals. MIKA also informed us on another potential issue that the National Health Social Security (BPJS Kesehatan) has started to reduce its referrals for JKN patients to hospitals, starting this Sept'24. Yet, MIKA' 9M24 revenue still grew 27.2% yoy at IDR873 bn.

Maintain BUY on MIKA with TP of IDR 3,400/share, which implies 22.7x ‘25F EV/EBITDA. Currently, MIKA is trading at 17.4x ‘25F EV/EBITDA or below -1stdev of its 5 years’ mean EV/EBITDA.

Regards,
Andre Suntono – KBVS Research Team