MIKA - Higher tariffs and better payer mix to support further growth

KBVS Update  
Tuesday, 20 May 2025

MIKA - Higher tariffs and better payer mix to support further growth
(Maintain BUY; with TP: IDR3,400)

• MIKA’ earnings grew 7.6% yoy/13.7% qoq in 1Q25 on higher tariffs (includes drugs) with better payers mix and cost management amidst unpredictable weather. As a result, MIKA’ 1Q25 earnings came in-line with ours’ (23.6%) and cons’ (22.9%) expectation.
• MIKA' inpatient admissions and inpatient’ days declined 12.2% yoy and 11.5% yoy, in 1Q25 with a 8.7% yoy lower BOR at 55.4% and a 7.7% yoy lower outpatient’ visits. Yet, MIKA' average revenue per inpatients’ day and average revenue per outpatient’ visits still grew 15.2% yoy and 11.7% yoy, in 1Q25. As a result, MIKA’ revenue still grew 2.3% yoy/1.3% qoq in 1Q25 on higher tariffs, despite with lower traffic of JKN patients and lower cases of dengue fever (-50% yoy).
• Thanks to higher tariffs (includes drugs), MIKA’ gross profit grew 3.6% yoy/2.2% qoq in 1Q25 with 70bps yoy/40bps qoq gross margin expansion. All in all, MIKA’ net margin still reached 24.4% (+120bps yoy/+260bps qoq) in 1Q25.    
• Maintain our ‘25F on MIKA and still expect its revenue and earnings to grow by 13.6% yoy and 14.7% yoy, in 1Q25 on higher tariffs and case mix with better payer mix, despite with lower traffic of JKN patients due to the continuation of tighter referrals for patients from primary hospitals/clinics to private hospitals, amidst high cost pressures as MIKA will continue with its plan to open 2 new hospitals in 2H25F. Yet, a lower traffic of JKN patients is not necessarily bad for MIKA, on contrary it could bode well for the company as it could help improve its payer mix and expand its margins.
• Maintain BUY on MIKA with TP of IDR 3,400/share, which implies 22.7x ‘25F EV/EBITDA. Currently, MIKA is trading at 17.1x ‘25F EV/EBITDA or slightly above -2stdev of its 5 years’ mean EV/EBITDA.

Regards,
Andre Suntono – KBVS Research Team