GIC’s investment as proof of embedded excellent growth story. Targeting the middle socio-economic segment, Famon Awal Bros Sedaya (PRAY), one of Indonesia’s leading private hospital operators, is on target to achieve our bottom-line growth forecast of +46.9% 5Y CAGR (2022-2027F), supported by strong patient traffic, rising case intensity, and the maturation of its hospital network. The confidence in this growth strategy is also echoed by GIC, 27.2% owner through Archipelago Investment Pte. Ltd. since April 2022, particularly given potential benefits stemming from the involvement of Singapore’s sovereign wealth fund in the form of senior recruitments, industry-related  transfer knowledge, as well as operational refinements and enhancements. In this regard, PRAY is committed to maintaining international standards, including Joint Commission International accreditation.

 

Growth drivers: core hospital services on expansions & case intensity. Current 3,000 operational beds across 20 branches in major cities such as Bekasi, Tangerang, Makassar, and Jakarta will see 2–3 new hospitals between 2026 and 2027 in Java and Medan, potentially from 9 unused land banks in strategic locations, reaching ~26 hospitals (from 16 in FY24) and paving the way for PRAY to achieve 2022–2027F topline CAGR of 14.7%. Revenue growth is backed by higher case intensity in specialties such as cardiovascular, oncology, orthopedics, and urology. Additionally, on top of its  core healthcare services, PRAY has expanded into laboratory services through Westerindo, telemedicine (LinkSehat), IVF clinic (Smart Fertility Clinic), Homecare (Kavacare), and eye care (EYEQU). On the profitability front, PRAY, as its hospital network matures with favorable case mix, is expected to achieve 5-year EBITDA CAGR of 25.9% (2022-2027F) on strong margin expansion, before reaching ~30% beyond 2028F.

 

Spec-Buy with IDR1,200 TP on market cap re-rating to regional peers. We like PRAY as Indonesia’s healthcare system remains attractive on underpenetration (Figure 24-25), providing significant growth potential. The outlook for PRAY is backed by: 1) network expansions, 2) hospital maturity, and 3) favorable case and payer mix (non-JKN contribution rising  to 70%) supporting margins. We assign Spec-BUY on PRAY, with TP of IDR 1,200 (+69% upside) in line with its larger regional peers. However, assuming further adj-market cap augmentation to IDR 4.1tn or share price increase to IDR2,000 per share, we estimate the company could potentially be included in the MSCI small cap index (large cap: IDR 17,300/share). Key risks: 1) weaker patient volumes, 2) hospital expansion delays, and 3) elevated DXY.