Mitra Keluarga Karyasehat (MIKA IJ)

Headwinds Priced-In, as Indicative FY24 are Inline; Reiterate Buy on Attractive Valuation

• MIKA indicated FY24 revenue of Rp4.84-4.9tr with an EBITDA margin of 37-38%, broadly in line with our/consensus estimates.
• MIKA expects another double-digit top-line growth in FY25F, along with EBITDA margin expansion, and introduced a new Pet Hospital business.
• FY24 results and FY25 guidance are within expectations, suggesting headwinds are priced in. Reiterate Buy rating with a TP of Rp3,400.

FY24 Result Indicative: In-Line with Ours and Consensus.

The company indicated IP (Inpatient) Days/OP (Outpatient) Visits growth of 4.7/5.2% yoy in FY24, with revenue guided at Rp4.84-4.9tr and an EBITDA margin ranging from 37-38%, which is in line with our/consensus estimates at Rp4.9/4.8tr and an EBITDA margin of 36.8/36.7%. This implies that 4Q24 IP/OP volume achievement growth stands at +3.5/+1.6% qoq and -1.4/+3.7% yoy, which the company attributed to a higher-intensity case mix and the return of cashless private individual insurance patients, who were previously transitioned to a reimbursement method due to the renegotiation process with its two major private insurance clients (<10% of revenue) (Exhibit 2).

FY25 Guidance: Double-Digit Top-Line Growth and Expanding EBITDA Margin

The company expects another double-digit top-line growth for FY25F, with a balanced contribution between volume and ASP/intensity growth, while the EBITDA margin is expected to expand further from the FY24 level of 37-38%. MIKA also anticipates a relatively modest volume achievement in 1H25 due to the high-base effect from the 1H24 dengue outbreak. Our expectation for FY25F revenue growth stands at 11.3% to Rp5.4tr, with volume growth remaining the primary driver. Meanwhile, we expect the EBITDA margin to expand by 99bps in FY25F, driven by cost-saving initiatives.

Reiterating our Buy rating on MIKA with a DCF-based TP of Rp3,400

We believe the completion of the insurance renegotiation process and indicative FY24 results are in line with expectations. We think this suggests headwinds to the share price in 4Q24 (-19%), which were primarily related to volume disruptions and top-line growth concerns, should be priced in. The stock trades at an attractive 17.1x FY25F EV/EBITDA, slightly below -2SD of its 5-yr. mean and at a -4% disc. to regional peers. Additionally, quarterly IP volume and net profit have improved compared to historical level (Exhibit 12). With the highest EBITDA margin in the region (Exhibit 9), and the potential for further expansion over the next 1-2 years, we view MIKA as a well-managed and undervalued operator. Key risks: 1) weaker volume/intensity growth 2) cost-control execution 3) share price liquidity.

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