Company Update / Healthcare / IJ / Click here for full PDF version
Author(s): Andrianto Saputra ; Lukito Supriadi
- 1Q24 net profit of Rp14bn (-96.4% yoy/-96.1% qoq) was below ours/consensus estimate at 1%, while gross sales/EBITDA were in-line.
- Robust 1Q24 BOR of 70.6% (+628bps yoy/+363bps qoq) leads an improvement on opex to sales ratio to 29.5%.
- Maintain BUY as we think the write-off was a one-off. Valuation remains attractive at 9.4x FY24F EV/EBITDA vs. /HEAL's 21.0/10.6x.
1Q24 net profit below from write off its 4 hospitals
recorded 1Q24 net profit of Rp14bn (-96.4% yoy/-96.1% qoq), came way below ours/consensus estimate at 1%. To note, posted Rp308bn provision on four discontinued hospitals construction. Excluding one-off write-off expenses, 1Q24 core profit of Rp322bn actually grew by +28.9% yoy and this was above ours/consensus estimate at 23% (vs. 5yr avg exclude Covid period of 14%) 1Q24 EBITDA of Rp706bn (+17.1% yoy/-1.9% qoq) with EBITDA margin of 30.2% was in-line with our/consensus estimate at 23%. 1Q24 gross sales stood at Rp3.0tr (+14.0% yoy/+2.8% qoq), also in-line.
1Q24 BOR improvement leads to positive operating leverage
Overall, 1Q24 revenue growth was driven by inpatient traffic (+16.2% yoy/+4.5% qoq) partly driven by dengue haemorrhagic fever (DBD) and other low complexity cases. This leads to lower 1Q24 inpatient revenue intensity of Rp6.5mn/day (-2.3% yoy/-3.6% qoq) and lower 1Q24 GPM of 49.4% (-21bps yoy/-413bos qoq). However, 1Q24 bed occupancy rate (BOR) improved to 70.6% (vs. 64.3/67.0% in 1Q23/4Q23) and this leads an improvement opex to sales ratio of 29.5% (-169bps yoy/-247bps qoq).
Write-off arising from discontinued construction of four hospitals
In FY23, there were 9 hospitals that were under construction since pre-2019. As part of the 5yr strategic plan, decided not to continue with 4 hospitals under construction pre-2019 (Tulungagung, Banjarmasin, Pasar Baru and Bekasi) and wrote off Rp308bn in total value in 1Q24. It is worth highlighting 3 of the 5 remaining hospitals that were under construction from pre-2019 pipeline hospitals are expected to start operations in FY25F; while the plan for the remainder of 2 hospitals remained unclear for now.
Maintain BUY with TP of Rp2,800
remains attractively valued at 9.4x FY24F EV/EBITDA, relative to /HEAL's 21.0/10.6x; hence, we maintain our BUY rating with unchanged TP of Rp2,800/sh based on 11.5x FY24F EV/EBITDA (+3s.d. from its 5yr avg). In addition, we think soft 1Q24 net profit arising from one-off write-off is mostly priced in into the share price (-10% in 26Apr24). Risk is lower than expected revenue growth and healthcare competition from regional players.
Sumber : IPS