ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

Mitra Keluarga Karyasehat Tbk / Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/mitra-keluarga-karyasehat-tbk" target="_blank" data-smartkarma-citation="entities:288:1" rel="noopener">Mitra Keluarga Karyasehat Tbk (MIKA IJ)</a> announced a robust set of results for 1Q2021 late last week, with revenue growth of +37.6% YoY, mainly driven by COVID-19 cases, which command a higher treatment intensity.</p>
<p>Volume for Non-COVID-19 inpatient days also increased, up +5.6% QoQ compared to 4Q 2020, with occupancy improving to 61% for non-COVID beds. The improvement in non-COVID-19 patients bodes well for this year's outlook. </p>
<p>Mitra Keluarga continues to add more hospitals, through both greenfield and brownfield expansion plans and has opened one new hospital already this year. It will commence the groundbreaking for its 27th &amp; 28th hospitals in 1H2021. M&amp;A opportunities also remain a potential growth driver with two other hospitals currently in the pipeline. </p>
<p>Patient numbers declined in 1Q2021 YoY but revenues per outpatient and inpatient days increased significantly due to a significantly higher number of COVID-19 patients being treated. </p>
<p><a href="https://www.smartkarma.com/entities/mitra-keluarga-karyasehat-tbk" target="_blank" data-smartkarma-citation="entities:288:1" rel="noopener">Mitra Keluarga Karyasehat Tbk (MIKA IJ)</a> bed Occupancy Ratio reached 63.4% for 1Q2021, compared to 65.7% in 1Q2020, mainly boosts by high COVID-19 bed occupancies, although non-COVID bed occupancies were not far off last year.</p>
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<p><a href="https://www.smartkarma.com/entities/mitra-keluarga-karyasehat-tbk" target="_blank" data-smartkarma-citation="entities:288:1" rel="noopener">Mitra Keluarga Karyasehat Tbk (MIKA IJ)</a> trades on 23.9x FY21E EV/EBITDA and 24.2x FY22E EV/EBITDA versus its 5-year average of 29.5x making the company look relatively attractive. It is likely to see a gradual tapering off in terms of revenues from COVID-19 treatments as the vaccination program starts to gain traction but it will still be an important source of revenue in the medium term, together with the fact that it is already seeing a pick-up in its normal elective treatments.</p>
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Mitra Keluarga Karyasehat Tbk (MIKA IJ) announced a robust set of results for 1Q2021 late last week, with revenue growth of +37.6% YoY, mainly driven by COVID-19 cases, which command a higher treatment intensity.
Volume for Non-COVID-19 inpatient days also increased, up +5.6% QoQ compared to 4Q 2020, with occupancy improving to 61% for non-COVID beds. The improvement in non-COVID-19 patients bodes well for this year's outlook. 
Mitra Keluarga continues to add more hospitals, through both greenfield and brownfield expansion plans and has opened one new hospital already this year. It will commence the groundbreaking for its 27th &amp; 28th hospitals in 1H2021. M&amp;A opportunities also remain a potential growth driver with two other hospitals currently in the pipeline. 
Patient numbers declined in 1Q2021 YoY but revenues per outpatient and inpatient days increased significantly due to a significantly higher number of COVID-19 patients being treated. 
Mitra Keluarga Karyasehat Tbk (MIKA IJ) bed Occupancy Ratio reached 63.4% for 1Q2021, compared to 65.7% in 1Q2020, mainly boosts by high COVID-19 bed occupancies, although non-COVID bed occupancies were not far off last year.

Mitra Keluarga Karyasehat Tbk (MIKA IJ) trades on 23.9x FY21E EV/EBITDA and 24.2x FY22E EV/EBITDA versus its 5-year average of 29.5x making the company look relatively attractive. It is likely to see a gradual tapering off in terms of revenues from COVID-19 treatments as the vaccination program starts to gain traction but it will still be an important source of revenue in the medium term, together with the fact that it is already seeing a pick-up in its normal elective treatments.


Mitra Keluarga Karyasehat (MIKA IJ) - Occupancy and Profitability Rising

Cross Asset Strategy

<p>Thailand has managed its way through the COVID-19 Pandemic admirably, in terms of bringing the numbers of new infections almost down to zero, outperforming its ASEAN peers along with Vietnam, quite considerably. </p>
<p>In order to achieve this result, the country imposed quite draconian lockdown measures closing restaurants and non-essential retail, even including an alcohol ban for a period to dissuade the population from socialising. </p>
<p>The Kingdom probably saw the impact at its most intense in April and May, with a gradual recovery starting in June and July across the domestic economy. </p>
<p>As part of these measures, Thailand closed its borders to foreigners and most importantly to tourists from the start of the pandemic until now. This has put a significant dent in the country's economy,  given that tourism is estimated to account for anything between 12%-20% of GDP. </p>
<p>The repercussions of this are wide-ranging from the obvious knock to hotels and restaurants but also has a significant impact on retailers, domestic consumption, and indirectly on the banking system, as NPLs from the different tourism-related segments start to rise.</p>
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<p>Thailand is taking the first steps to tentatively re-open the country's doors to tourism, for those wishing to stay more than 90 days, as well as for COVID-19 free medical tourists. There may be a more meaningful opening up towards the end of the year.</p>
<p>We look at <strong>hotels, hospitals, and retailers</strong> in an attempt to identify the key beneficiaries of gradual recovery in tourism and those stocks that remain the most defensive. There is also likely to be a knock-on impact for the<strong> Thai banks</strong>, which are looking attractive from a valuation perspective. </p>
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Thailand has managed its way through the COVID-19 Pandemic admirably, in terms of bringing the numbers of new infections almost down to zero, outperforming its ASEAN peers along with Vietnam, quite considerably. 
In order to achieve this result, the country imposed quite draconian lockdown measures closing restaurants and non-essential retail, even including an alcohol ban for a period to dissuade the population from socialising. 
The Kingdom probably saw the impact at its most intense in April and May, with a gradual recovery starting in June and July across the domestic economy. 
As part of these measures, Thailand closed its borders to foreigners and most importantly to tourists from the start of the pandemic until now. This has put a significant dent in the country's economy,  given that tourism is estimated to account for anything between 12%-20% of GDP. 
The repercussions of this are wide-ranging from the obvious knock to hotels and restaurants but also has a significant impact on retailers, domestic consumption, and indirectly on the banking system, as NPLs from the different tourism-related segments start to rise.

Thailand is taking the first steps to tentatively re-open the country's doors to tourism, for those wishing to stay more than 90 days, as well as for COVID-19 free medical tourists. There may be a more meaningful opening up towards the end of the year.
We look at hotels, hospitals, and retailers in an attempt to identify the key beneficiaries of gradual recovery in tourism and those stocks that remain the most defensive. There is also likely to be a knock-on impact for the Thai banks, which are looking attractive from a valuation perspective. 


Thailand's Tourism Dilemma - Buy Retailers, Hospitals, and Select Hotels

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

<p>The finding of the COVID-19 vaccine is not a risk to the company's expanding EBITDA margin (from 35% to between 45-50%) as the demand for COVID-19 specific testing and medical service will continue for a few years longer. The Ministry of Health capped the price but it is still at a premium compared to the non-COVID-19 service rate. </p>
<p>Trading at a 15% PER premium to the domestic peers, the company is valued at a 39% EV/EBITDA discount to the regional peers (thus it is still favorable to ASEAN investors) despite being the most profitable and pristine balance sheet. BUY.</p>

The finding of the COVID-19 vaccine is not a risk to the company's expanding EBITDA margin (from 35% to between 45-50%) as the demand for COVID-19 specific testing and medical service will continue for a few years longer. The Ministry of Health capped the price but it is still at a premium compared to the non-COVID-19 service rate. 
Trading at a 15% PER premium to the domestic peers, the company is valued at a 39% EV/EBITDA discount to the regional peers (thus it is still favorable to ASEAN investors) despite being the most profitable and pristine balance sheet. BUY.

Mitra Keluarga (MIKA): Margin Expansion from COVID-19

Bangkok Dusit Medical Services / Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/bangkok-dusit-med-service" target="_blank" data-smartkarma-citation="entities:875:1" rel="noopener">Bangkok Dusit Medical Services (BDMS TB)</a> has scrapped its plan to take over <a href="https://www.smartkarma.com/entities/bumrungrad-hospital-pub-co" target="_blank" data-smartkarma-citation="entities:883:1" rel="noopener">Bumrungrad Hospital Pub Co (BH TB)</a> and has no plans to do so in the future according to the Founder Prasert Prasarttong-osoth. We see this as the removal of an overhang. </p>
<p>This move always looked dubious and opportunistic and already had objections from <a href="https://www.smartkarma.com/entities/bumrungrad-hospital-pub-co" target="_blank" data-smartkarma-citation="entities:883:1" rel="noopener">Bumrungrad Hospital Pub Co (BH TB)</a> minority shareholders. This should be seen as the removal of an unwelcome diversion, which allows <a href="https://www.smartkarma.com/entities/bangkok-dusit-med-service" target="_blank" data-smartkarma-citation="entities:875:1" rel="noopener">Bangkok Dusit Medical Services (BDMS TB)</a> to focus on its core business, especially as we come out of COVID-19 restrictions.</p>
<p><a href="https://www.smartkarma.com/entities/bangkok-dusit-med-service" target="_blank" data-smartkarma-citation="entities:875:1" rel="noopener">Bangkok Dusit Medical Services (BDMS TB)</a> looks better positioned in a post-COVID-19 world given it has less exposure to medical tourism than <a href="https://www.smartkarma.com/entities/bumrungrad-hospital-pub-co" target="_blank" data-smartkarma-citation="entities:883:1" rel="noopener">Bumrungrad Hospital Pub Co (BH TB)</a>, where the recovery may be protracted. There is more likely to be a near -term pick-up in Thai patients numbers, given that patients can only hold off on treatments for so long. </p>
<p>The company has undergone a series of cost containment measures in 2Q2020, as well as reducing its Capex considerable for this year, which will provide some offset to the impact of the pandemic. </p>
<p>Valuations look quite reasonable with the company trading on 18.3x FY21E EV/EBITDA versus its 5-year average of 22.5x. </p>

Bangkok Dusit Medical Services (BDMS TB) has scrapped its plan to take over Bumrungrad Hospital Pub Co (BH TB) and has no plans to do so in the future according to the Founder Prasert Prasarttong-osoth. We see this as the removal of an overhang. 
This move always looked dubious and opportunistic and already had objections from Bumrungrad Hospital Pub Co (BH TB) minority shareholders. This should be seen as the removal of an unwelcome diversion, which allows Bangkok Dusit Medical Services (BDMS TB) to focus on its core business, especially as we come out of COVID-19 restrictions.
Bangkok Dusit Medical Services (BDMS TB) looks better positioned in a post-COVID-19 world given it has less exposure to medical tourism than Bumrungrad Hospital Pub Co (BH TB), where the recovery may be protracted. There is more likely to be a near -term pick-up in Thai patients numbers, given that patients can only hold off on treatments for so long. 
The company has undergone a series of cost containment measures in 2Q2020, as well as reducing its Capex considerable for this year, which will provide some offset to the impact of the pandemic. 
Valuations look quite reasonable with the company trading on 18.3x FY21E EV/EBITDA versus its 5-year average of 22.5x. 

Bangkok Dusit Medical (BDMS TB) - Well-Placed to Treat the Recovery

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Hygeia Healthcare Group / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/hygeia-healthcare-group" target="_blank" data-smartkarma-citation="entities:28875:1" rel="noopener">Hygeia Healthcare Group (6078 HK)</a> is the largest oncology healthcare group in China as measured by the revenue generated from radiotherapy-related services in 2019, according to Frost &amp; Sullivan. Hygeia will commence trading on Monday, 29 June. Hygeia priced its IPO at HK$18.50, at the top-end of the indicative price range of HK$17.00-18.50 per share. Hygeia raised net proceeds of HK$2,072 million ($267 million).</p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/hygeia-healthcare-ipo-initiation-on-call" target="_blank" rel="noopener">our initiation note</a>, we stated that Hygeia is a play on China’s oncology healthcare service market which is influenced by structural trends such as increasing market share of radiotherapy, the rise of private hospitals and the growing popularity of multi-discipline treatments. In light of Hygeia's attractive fundamentals (solid organic growth, margin progression and cash generation), we think that the IPO price still offers some upside potential. </p></div></div></div>

Hygeia Healthcare Group (6078 HK) is the largest oncology healthcare group in China as measured by the revenue generated from radiotherapy-related services in 2019, according to Frost &amp; Sullivan. Hygeia will commence trading on Monday, 29 June. Hygeia priced its IPO at HK$18.50, at the top-end of the indicative price range of HK$17.00-18.50 per share. Hygeia raised net proceeds of HK$2,072 million ($267 million).In our initiation note, we stated that Hygeia is a play on China’s oncology healthcare service market which is influenced by structural trends such as increasing market share of radiotherapy, the rise of private hospitals and the growing popularity of multi-discipline treatments. In light of Hygeia's attractive fundamentals (solid organic growth, margin progression and cash generation), we think that the IPO price still offers some upside potential. 

Thailand

Bangkok Chain Hospital Public Company Limited operates a chain of hospitals in Thailand serving both the cash and managed care markets.

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Bangkok Chain Hospital (BCH TB)

Mitra Keluarga Karyasehat (MIKA IJ) - Occupancy and Profitability Rising

Mitra Keluarga (MIKA IJ) is probably the best quality listed hospital player in Indonesia, with good governance and throwing off the highest...

Angus Mackintosh

Thailand's Tourism Dilemma - Buy Retailers, Hospitals, and Select Hotels

Thailand has maanged

Angus Mackintosh

Mitra Keluarga (MIKA): Margin Expansion from COVID-19

The finding of the COVID

Henry Soediarko

Bangkok Dusit Medical (BDMS TB) - Well-Placed to Treat the Recovery

Bangkok Dusit Medical Services (BDMS TB) has scrapped its plan to take over Bumrungrad Hospital Pub Co (BH TB) and has no plans to do so in the...

Angus Mackintosh

Hygeia Healthcare IPO: Trading Debut

Hygeia Healthcare Group (6078 HK) is the largest oncology healthcare group in China as measured by the revenue generated from radiotherapy-related...

Arun George

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