Our visit to OMED’s planned automation upgrades at Krian facility revealed expected syringe EBIT margin boost of ~2% while its Mojoagung center’s role as gauze production will soon be taken over by the newly opened Batang plant, allowing for lower raw materials costs by c. 20% through economies of scale. Aggregate IDR 557bn expansion plans, including the establishment of new distribution center in Greater Jakarta to be funded by the company’s strong cash position of IDR 1.3tn (24.0% of market cap), will aid in securing 10% 2025F revenue growth target, driven by stronger domestic sales from private hospital groups and higher export contribution of 2.0% (1H25’s 0.4%) on shifting global supply chain.

 

Solid expansion supported by new facility and cost-efficiency initiatives. The company operates three production plants: Krian, Mojoagung, and Batang, each specializing in distinct product lines (6,000 SKUs). In May 2025, we visited Krian and Mojoagung facilities in East Java. The Krian facility is currently undergoing machinery automation for syringe manufacturing with camera-based inspection system (targeted utilization rate: ~90%). The move is expected to improve syringe’s EBIT margin by ~2% to 38%, given the facility’s lower labor intensity. In contrast, the Mojoagung facility remains highly labor-intensive and produces the majority of the company’s SKUs, contributing to 75% of total output. However, gauze production from Mojoagung will gradually shift to the Batang facility, which began operations in 2024 and will become the sole production site for gauze, replacing Mojoagung. Once the transition is complete, the Batang facility is projected to reduce raw materials costs by 20% through economies of scale and in-house jumbo roll production, with gauze production output expected to reach 9.6mn boxes/annum.

 

Strong cash position fuels flexibility. OMED plans to allocate IDR 557bn for capital expenditure with IDR 301bn designated for a new building in Batang Plant and machinery procurement. The capex plan is supported by solid 1H25 cash position of IDR 1.3tn (24% of market cap), providing the company with flexibility to pursue strategic initiatives. These include automation upgrades at Krian and Batang plants, retail store expansions, and office building development. Additionally, OMED plans to distribute dividends (28% DPR) in FY25F.

 

2025F outlook: Improved market positioning and greater Int'l presence to support volume growth. In 2025F, OMED targets revenue growth of 10%, driven by stronger domestic sales, particularly from major private hospital groups. The company’s focus on strengthening relationships with prominent healthcare providers is expected to boost its market position and drive volume growth. Additionally, OMED is intensifying efforts to expand its international presence, with export contributions projected to exceed 2.0% in FY25F (1H25: 0.4%), supported by rising demand amid ongoing US-China trade tensions and lower tariffs imposed to Indonesia may benefit OMED through favorable input costs. The shift in global sourcing presents opportunities to penetrate new markets and diversify revenue base. Robust expansions from hospital operators are key earnings catalysts. Key risks: 1) intensifying competition and 2) worse-than-expected USD/IDR.