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

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<a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> continued to experience a high post-COVID base effect in 3Q2023, with consumer habits shifting to leisure versus health plus there was a softening of consumer demand.</li>
<li>The company also experienced higher raw material prices and higher operating expenses which depressed margins but expectations are for a recovery in margins in 4Q2023 and FY2024. </li>
<li>
<a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma</a> stands out as Indonesia's largest pharmaceutical company with strong exposure to consumer health and nutritional products with rising health consciousness amongst Indonesians. Valuations do not reflect impending recovery.</li>
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Kalbe Farma (KLBF IJ) continued to experience a high post-COVID base effect in 3Q2023, with consumer habits shifting to leisure versus health plus there was a softening of consumer demand.
The company also experienced higher raw material prices and higher operating expenses which depressed margins but expectations are for a recovery in margins in 4Q2023 and FY2024. 

Kalbe Farma stands out as Indonesia's largest pharmaceutical company with strong exposure to consumer health and nutritional products with rising health consciousness amongst Indonesians. Valuations do not reflect impending recovery.


Kalbe Farma (KLBF IJ) - The End of a Long Transition

External broker reports(aggregated public sources), BRI Danareksa Research

BRI Danareksa Research

External broker reports(aggregated public sources)

As a one-stop financial solution with the vision to be the most valuable securities house, BRI Danareksa Sekuritas (BRIDS) has maintained an excellent track record and extensive experience in the capital market as an underwriter, broker, and financial advisor for individual, institutional, foreign and domestic, private and government clients. Established in 1992, PT Danareksa Sekuritas is a securities company that performs activities as a securities broker, underwriter, or arranger and financial advisor.

<ul><li>We are turning more cautious on KLBF’s FY23-25F EPS growth as we see threat for its branded prescription drugs from the persisting rising trend of hospital patients visits from JKN patients in 9M23 (17% CAGR in 2014-22).</li><li>Against this headwind, we project a lower FY24F earnings growth of 2.9% yoy (21-27% cut in FY23-25F est.) and cut our rating to HOLD with a lower TP of IDR1,600.</li><li>Hospital operators MIKA, HEAL and SILO have reported further increase in revenue portion from JKN patients in 9M23, continuing the trend from the past few years (data shown by National Health Program/ BPJS that showed 17% CAGR in 2014-22 (34% in FY22) increase in total number of visits by JKN patients to healthcare facilities.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We are turning more cautious on KLBF’s FY23-25F EPS growth as we see threat for its branded prescription drugs from the persisting rising trend of hospital patients visits from JKN patients in 9M23 (17% CAGR in 2014-22).Against this headwind, we project a lower FY24F earnings growth of 2.9% yoy (21-27% cut in FY23-25F est.) and cut our rating to HOLD with a lower TP of IDR1,600.Hospital operators MIKA, HEAL and SILO have reported further increase in revenue portion from JKN patients in 9M23, continuing the trend from the past few years (data shown by National Health Program/ BPJS that showed 17% CAGR in 2014-22 (34% in FY22) increase in total number of visits by JKN patients to healthcare facilities.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Kalbe Farma (KLBF IJ) - Persisting Headwind in FY24 from Shifting Industry Trend

<ul><li>KLBF foresees better margins in 4Q23 and 2024, supported by the nutritional division (4Q23) and a favorable product mix (2024).</li><li>Additionally, the prolonged dry and hot weather has boosted patient traffic at hospitals and in turn leads to higher demand for pharma and OTC products.</li><li>KLBF currently trades at an attractive FY24F PE of 22.5x (15% discount to its avg 5-year). </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

KLBF foresees better margins in 4Q23 and 2024, supported by the nutritional division (4Q23) and a favorable product mix (2024).Additionally, the prolonged dry and hot weather has boosted patient traffic at hospitals and in turn leads to higher demand for pharma and OTC products.KLBF currently trades at an attractive FY24F PE of 22.5x (15% discount to its avg 5-year). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Kalbe Farma (KLBF IJ) - Better Outlook Amid Potential 4Q23 Improved Margin

<ul>
<li>
<a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> is one of the key proxies for increasing healthcare penetration and health consciousness in Indonesia through prescription drugs, consumer health, and nutritional products.</li>
<li>The company saw a solid sales performance in 1H2023 driven by prescription drugs. There was some lingering margin pressure from higher materials but this should abate in 2H2023.</li>
<li>
<a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma </a>continues to develop its digital capabilities, as well as export markets helping to drive efficiencies and growth. Valuations remain below the historical average despite strong earnings recovery ahead.</li>
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Kalbe Farma (KLBF IJ) is one of the key proxies for increasing healthcare penetration and health consciousness in Indonesia through prescription drugs, consumer health, and nutritional products.
The company saw a solid sales performance in 1H2023 driven by prescription drugs. There was some lingering margin pressure from higher materials but this should abate in 2H2023.

Kalbe Farma continues to develop its digital capabilities, as well as export markets helping to drive efficiencies and growth. Valuations remain below the historical average despite strong earnings recovery ahead.


Kalbe Farma (KLBF IJ) - Back to The Future

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Cisarua Mountain Dairy / Equity Capital Markets

<ul>
<li>PT Cisarua Mountain Dairy (CMD), a producer of dairy and consumer foods, aims to raise up to US$263m in its Indonesian IPO.</li>
<li>It is a market leader in the overall yogurt sub-category as well as in the spoonable and drinking yogurt segments with a market share of 53.2%, 71.9% and 50.3%, respectively. </li>
<li>In our previous notes, links <a href="https://www.smartkarma.com/insights/cisarua-mountain-dairy-cimory-ipo-the-negatives-losing-market-share-margin-sustainability" target="_blank" rel="noopener">here</a> and <a href="https://www.smartkarma.com/insights/cisarua-mountain-dairy-cimory-ipo-the-negatives-losing-market-share-margin-sustainability" target="_blank" rel="noopener">here</a>,  we spoke about the various aspects of the deal. In we will do a peer comparison and talk about valuations.</li>
</ul>


PT Cisarua Mountain Dairy (CMD), a producer of dairy and consumer foods, aims to raise up to US$263m in its Indonesian IPO.
It is a market leader in the overall yogurt sub-category as well as in the spoonable and drinking yogurt segments with a market share of 53.2%, 71.9% and 50.3%, respectively. 
In our previous notes, links here and here,  we spoke about the various aspects of the deal. In we will do a peer comparison and talk about valuations.


Cisarua Mountain Dairy  (Cimory) IPO - Giving It the Benefit of Margin Doubts

Indonesia

PT Tempo Scan Pacific Tbk manufactures and distributes pharmaceutical , health care and cosmetic products. The Company offers a variety of products including prescription drugs, specialty care products, and home care consumer products.

Kimia Farma (Persero) Tbk manufactures, distributes, and sells pharmaceutical, chemical, biological, and other materials for use of manufacturing of contraceptives, cosmetics, medical equipment, medicines, and food and beverages. The Company also produces packing material, machinery, equipment, and supporting facilities related to pharmaceuticals as well as operates pharmacies.

PT Merck Tbk manufactures pharmaceutical products. The Company also distributes pharmaceutical raw materials, chemicals reagents, and medical instruments.

Darya-Varia Laboratoria Tbk PT manufactures, trades, and distributes pharmaceuticals and related chemicals, as well as health care products.

PT Pyridam Farma Tbk manufactures and develops pharmaceutical products as well as distributes medical equipment. Its factory located in Desa Cibodas, West Java.

Indofarma Persero Tbk PT manufactures and trades drugs. The Company's products include generic, branded, licensed, and over the counter (OTC) drugs as well as traditional herbs, health food, cosmetics, and supplementary baby food. Through its subsidiaries, Indofarma also produces packaging materials, machinery and equipment, and infrastructure related to pharmaceutical industry.

Mitra Keluarga Karyasehat Tbk PT engages in hospital management and business services. The Company operates hospitals located in the Greater Jakarta Area, Surabaya and Tegal.

PT Siloam International Hospitals Tbk owns and operates hospitals. The Company offers a comprehensive range of specialist medical services including laboratory services, radiology, imaging and complex surgical procedures. Siloam International operates its hospitals throughout Indonesia.

PT Sejahteraraya Anugrahjaya Tbk operates hospitals.

PT Medikaloka Hermina Tbk owns and operates a chain of hospitals. The Hospital provides professional healthcare services, as well as focuses on obstetric and pediatric care. Medikaloka Hermina also offers consulting services. Medikaloka Hermina serves patients in Indonesia.

Guangzhou Baiyunshan Pharmaceutical Holdings Co., Ltd. manufactures and sells Chinese patent medicine. The Company also wholesales, retails, imports, and exports Western and Chinese pharmaceutical products and various medical apparatus.

Guangzhou Baiyunshan Pharmaceutical Holdings (874 HK)

Guangzhou Baiyunshan Pharmaceutical Holdings

Perrigo Company PLC is a global healthcare supplier that develops, manufactures, and distributes OTC and generic prescription pharmaceuticals, infant formulas, nutritional products, active pharmaceutical ingredients and pharmaceutical and medical diagnostic products. The Company's primary markets and locations of manufacturing and logistics operations are the US, UK, Mexico, and Australia.

Changchun High & New Technology Industry (Group) Inc. is an investment holding company.  Through its subsidiaries, the Company manufactures biopharmaceuticals and Chinese traditional medicines, constructs infrastructure facilities, manufactures electrolytic condensers, and develops and manages real estate.

ROHTO PHARMACEUTICAL CO., LTD. manufactures and markets pharmaceuticals and cosmetics products.  The Company's products include eyewash, bath soaps, gastrointestinal medicine, and hand cream.  Rohto Pharmaceutical also has a license agreement with its subsidiary, Mentholatum (US) to sell their brand products.  The Company also manufactures contact lenses and health foods.

Xizang Haisco Pharmaceutical Group Company Limited develops, manufactures and sells drug formulations and active pharmaceutical ingredients. The Company's main products include hepatobiliary disease medication, anti-infective drugs, parenteral nutrition drugs, invert sugar for injection, and other related products.

Xizang Haisco Pharmaceutical Group Co (002653 CH)

Shenzhen Salubris Pharmaceuticals Co., Ltd. develops, manufactures, and distributes pharmaceutical and healthcare products such as tablets, capsules, injection formulations and active pharmaceutical ingredients.

Shenzhen Salubris Pharmaceuticals A (002294 CH)

Corcept Therapeutics Inc. is a pharmaceutical company that discovers and develops drugs for the treatment of severe metabolic and psychiatric disorders. The Company's lead product modulates the effect of cortisol, also known as the "stress hormone", by selectively blocking the binding of cortisol to one of its two known receptors, the GR-II receptor.

Dong-E-E-Jiao Co., Ltd. primarily manufactures and sells traditional Chinese medicine, health care products, health foods, and bio-medicine. The company also engages in gelatin products manufacturing.

SANTEN PHARMACEUTICAL CO., LTD. produces and sells ophthalmic medicine.  The Company manufactures a variety of products including eye drops and ointments. Santen Pharmaceutical also imports lenses and tools and equipment used by optometrists and produces anti-rheumatic drugs.

Glaxosmithkline Pharmaceuticals Ltd. manufactures and distributes a wide variety of pharmaceutical drugs, veterinary products and laboratory chemicals. The Company's products include "Phexin" capsules, "Betnesol" tablets and injections, "Becoride" asthma treatment, "Betnovate" ointment, "Cetzine" antihistamine, "Zucox" and "Rizap" anti-tuberculosis products.

Glaxosmithkline Pharmaceuticals (GLXO IN)

PT Kalbe Farma Tbk produces and develops pharmaceutical products for human and animal healthcare.  Through its subsidiaries, the Company also operates in the pharmaceutical, health food, and packaging industries.

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Kalbe Farma (KLBF IJ)