Research & Stock Picks

Emiten Report

09 November 2023

By

Healthcare Sector – Neutral – Healthcare 3Q23 Round-Up

Healthcare 3Q23 Round-Up

3Q23 results. The three healthcare companies under our coverage reported combined revenue of IDR 5.6tn in 3Q23 (+12.5% QoQ; +17.3% YoY), supported by patient traffic (inpatient admissions and outpatient visits went up to 320k (+12.8% QoQ; +19.3% YoY) and 3.8mn (+15,9% QoQ; +16.0% YoY), respectively in 3Q23, partly due to the larger number of productive days). However, the average revenue per outpatient visit saw a decline to IDR 654k (-3.5% QoQ; -6.7% YoY), mainly because a large portion of those outpatients were respiratory disease patients, particularly in Jakarta (due to the recent air pollution crisis; ticket size of respiratory diseases was quite low). Meanwhile, the average revenue per inpatient day rose to IDR 4.2mn (+3.9% QoQ; +6.5% YoY), thanks to the higher intensity of those companies’ case mix, bringing the cumulative EBITDA margin to 28.7% in 3Q23 (2Q23: 26.7%; 3Q22: 25.7%). Overall, the three companies’ 9M23 revenues were in line with ours and cons (MIKA: SSI: 71.0%, Cons: 72.4%; SILO: SSI: 75.6%, Cons: 74.5%; HEAL: SSI 73.8%, Cons: 74.2%). From the margin side, all three companies posted EBITDA margin growth in 3Q23 of ~200 bps QoQ on average (+300 bps YoY), supported by several reasons: 1) better volume, 2) normalization of cost (HEAL), 3) higher complexity (especially SILO; SILO high complexity clinical departments (CONGO) posted patient volume and ARPD growth of +12.6% QoQ and ~+6-13% QoQ in 3Q23). On the bottom line, the three companies booked a combined net profit of IDR 735.04bn (+29.0% QoQ; +37.5% YoY). MIKA’s 3Q23 net profit was relatively in line with ours (68.5%) and cons (67.7%), as did HEAL’s (SSI: 75.5%, cons: 76.4%), while SILO managed to beat projections (SSI: 75.6%, Cons: 74.5%).

New guidance. As the case complexity in 4Q is projected to remain somewhat comparable to the previous quarters, MIKA decided to revise its FY revenue growth guidance to 4.5-6% YoY (prev: +8-10% YoY) and EBITDA margin guidance to 35-36% (previous: 36-37%) as the company expects to book higher cost run rate in 4Q due to the opening of its new hospital (Grand Wisata). However, for 2024F, the company projects its revenue growth to normalize, reaching ~mid-teens (Price + intensity: ~+6-8%; Volume: ~6-8%). Meanwhile, we expect HEAL and SILO to deliver their guidance [HEAL aims to book mid to high-teens revenue growth in 2023F, while SILO expects low to mid-teens]. From the margin side, we expect HEAL’s EBITDA margin to continue to hover at ~30% in 4Q, backed by normalization of its cost, while in the medium term, the company expects its EBITDA margin to hover at ~32-33% (potential EBITDA expansion of ~1% in 2024F, 2025-2026F: ~1%), while in terms of volume, the company expects double-digit growth in 2024F. For SILO, we project its topline growth to remain at the teens level in 2024F, backed by positive traction for its Top Craft Group (CONGO), with an EBITDA margin of ~30s, supported by higher case mix intensity and its cost efficiency initiatives (9M23 run rate: IDR 120bn; 5-year target: IDR 840bn) 2024F. In 4Q, we expect SILO to maintain its EBITDA margin at ~30s, supported by its CONGO departments (especially Cardio, Onco, and Neuro).

Remain neutral. We maintain our Neutral view of the healthcare sector, and our pecking order is as follows: HEAL (TP: IDR 1,800/share) > SILO (TP: IDR 2,900/share)> MIKA (TP: IDR 2,700/share). We believe that the new CoB scheme will benefit those with larger share of JKN patients, since it will give them more flexibility to adjust their ASP in the long term. Also, considering the challenging economic situation, which might linger well into 2024F (2023F inflation forecast: ~4%; 5-year average: ~3%), we expect to see positive growth in JKN patient traffic. Lastly, we believe that the potential increase in the supply of doctors due to the new Omnibus law (particularly in second and third-tier cities) will benefit HEAL and help the company’s penetration pace in rural areas. Upside: (1) Better-than-expected patient traffic, (2) better base case revenue. Risks: (1) Economic slowdown (2) worse-than-expected decline in revenue per patient.

Share This:

Download PDF

Download PDF

ENG
ID

Download PDF

ENG
ID

More Related

Daily Stock Technical Recommendations

Feb 22, 2024

Daily Report

Feb 22, 2024

Daily Stock Technical Recommendations

Feb 21, 2024

Daily Report

Feb 21, 2024

Daily Stock Technical Recommendations

Feb 20, 2024

Daily Report

Feb 19, 2024

Daily Stock Technical Recommendations

Feb 19, 2024

Daily Report

Feb 16, 2024

Daily Stock Technical Recommendations

Feb 13, 2024

Daily Report

Feb 13, 2024

Daily Stock Technical Recommendations

Feb 12, 2024

Daily Report

Feb 12, 2024

Daily Stock Technical Recommendations

Feb 7, 2024

Daily Report

Feb 7, 2024

Daily Stock Technical Recommendations

Feb 6, 2024

Daily Report

Feb 5, 2024

Daily Report

Feb 2, 2024

Daily Stock Technical Recommendations

Feb 2, 2024

Daily Stock Technical Recommendations

Feb 1, 2024

Daily Report

Feb 1, 2024

Daily Stock Technical Recommendations

Jan 31, 2024

Daily Report

Jan 31, 2024

Daily Stock Technical Recommendations

Jan 30, 2024

Daily Stock Technical Recommendations

Jan 29, 2024

Daily Report

Jan 29, 2024

Daily Stock Technical Recommendations

Jan 26, 2024

Daily Report

Jan 26, 2024

Daily Stock Technical Recommendations

Jan 25, 2024

Daily Report

Jan 25, 2024

Daily Stock Technical Recommendations

Jan 24, 2024

Daily Report

Jan 24, 2024

Daily Stock Technical Recommendations

Jan 23, 2024

Daily Stock Technical Recommendations

Jan 22, 2024

Daily Report

Jan 22, 2024

Daily Stock Technical Recommendations

Jan 19, 2024

Daily Stock Technical Recommendations

Jan 18, 2024

Daily Stock Technical Recommendations

Jan 17, 2024

Daily Stock Technical Recommendations

Jan 16, 2024

Daily Stock Technical Recommendations

Jan 15, 2024

Daily Stock Technical Recommendations

Dec 29, 2023

Daily Report

Dec 29, 2023

Daily Stock Technical Recommendations

Dec 28, 2023

Daily Report

Dec 28, 2023

Daily Stock Technical Recommendations

Dec 27, 2023

Daily Stock Technical Recommendations

Dec 22, 2023

Daily Report

Dec 22, 2023

Daily Stock Technical Recommendations

Dec 21, 2023

Daily Report

Dec 21, 2023

Daily Stock Technical Recommendations

Dec 20, 2023

Daily Report

Dec 19, 2023

Daily Stock Technical Recommendations

Dec 19, 2023

Daily Report

Dec 18, 2023

Daily Report

Dec 18, 2023

Daily Stock Technical Recommendations

Dec 18, 2023

Daily Stock Technical Recommendations

Dec 15, 2023

Daily Report

Dec 15, 2023

Daily Report

Dec 15, 2023

Emiten Report

Dec 14, 2023

Emiten Report

Dec 14, 2023

Daily Stock Technical Recommendations

Dec 14, 2023

Daily Report

Dec 14, 2023

Daily Stock Technical Recommendations

Dec 13, 2023

Daily Stock Technical Recommendations

Dec 12, 2023

Economic & Fixed Income

Dec 11, 2023

Daily Stock Technical Recommendations

Dec 11, 2023

Daily Report

Dec 11, 2023

Daily Stock Technical Recommendations

Dec 8, 2023

Daily Report

Dec 8, 2023

Daily Stock Technical Recommendations

Dec 7, 2023

Daily Report

Dec 7, 2023

Daily Stock Technical Recommendations

Dec 6, 2023

Daily Report

Dec 6, 2023

Daily Stock Technical Recommendations

Dec 5, 2023

Daily Stock Technical Recommendations

Dec 4, 2023