1H24 Results: Digitalization Leading to Expansive Margins
Key Takeaways:
▪️In 1H24, HEAL booked a revenue of IDR3.3tn, growing by 24.3% YoY (vs IDR2.7tn in 1H23), implying 49.9% of MNCS/consensus. GPM in 1H24 advanced by 265bps YoY to 38.4% (vs 35.8% in 1H23). On top of that, OPM rose by 507bps YoY to 18.3% in 1H24 (vs 13.2% in 1H23), spurred by disciplined cost management from digitalization. HEAL posted a net profit of IDR343.2bn, or grew by 69.6% YoY in 1H24, implying 49.9%/57.5% of MNCS/Cons. This achievement was primarily due to an increase in costs efficiency, delivering margin expansion.
▪️As of 1H24, HEAL has absorbed ~50% capex, amounting to IDR1.1tn from IDR2tn total allocation for FY24E. As of now, the management is still planning to add 3 new hospitals, namely: 1) Hermina Madiun (3Q24); 2) Hermina PIK 2 (4Q24); and 3) Hermina IKN (3Q24). These new hospitals are expected to contribute positively to the company, starting from at least 1Q25F.
▪️We believe HEAL can maintain its solid performance at least until FY25F, while also evaluating the significant impacts of KRIS implementation on the company’s earnings profile. Given its relatively strong performance, HEAL could be considered a defensive stock alternative. Our view is based on: 1) Appealing performance in 1H24; 2) Stable balance sheet; 3) Dividend player.
▪️We maintain BUY for HEAL with a higher TP : IDR1,680, which implies PE/PBV 36.5x/5.6x on FY24E and 31.2x/4.9x in FY25F.
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