In-Depth Analysis of Mitra Keluarga Karyasehat (MIKA IJ)
Broker Name: UOB Kay Hian
Date of Report: Thursday, 02 January 2025
Overview of Mitra Keluarga Karyasehat (MIKA IJ)
Mitra Keluarga Karyasehat (MIKA IJ), one of Indonesia’s largest private hospital operators, remains a strong player in the healthcare sector. Despite challenges in the form of stricter insurance reimbursement policies, the company is expected to sustain double-digit earnings growth in 2025 by leveraging its strategic initiatives such as new hospital openings and adjustments to service pricing.
Key Investment Recommendations
The report reiterates a BUY recommendation for MIKA with a target price of Rp3,300, reflecting a 29.9% upside from its current share price of Rp2,540. The valuation is based on a forward EV/EBITDA of 23.4x for 2024, which aligns with its five-year average EBITDA trends.
Potential Headwinds and Opportunities
Challenges from Insurance Reimbursement
MIKA faces potential headwinds due to stricter reimbursement policies from private insurance companies, including Indonesia’s Social Security Agency (BPJS). This move stems from increased medical claims losses in the sector, which surged to 105.7% in 1Q24, up from 45.0% in 2019. The shift from cashless payments to reimbursement methods could impact hospital earnings and working capital management.
Opportunities from JKN Service Standardization
The Indonesian government is mandating universal healthcare (JKN) hospital partners to implement standardized inpatient services (KRIS) by June 2025. This standardization includes changes in bed allocation, which could lead to a portion of BPJS Class 1 and 2 members opting for private hospital services. MIKA is well-positioned to benefit from this trend due to its largest exposure to private patients and its geographical advantage.
Growth Projections
Double-Digit Earnings Growth
MIKA is projected to achieve a 26% net profit growth in 2024 and 12% in 2025. The company plans to expand its bed capacity from 3,868 beds in 2023 to 4,148 beds by the end of 2024, with an additional 300 beds expected from two new hospitals opening in 2025. This capacity increase is anticipated to support high single-digit patient volume growth in 2025.
Revenue Intensity Improvements
Revenue intensity showed a year-on-year improvement in 3Q24, driven by:
- Annual adjustments in average selling price (ASP).
- Increased contribution from complex services such as radiotherapy centers.
- Consistent contributions from private patients.
MIKA’s recently opened radiotherapy centers in Bekasi and Surabaya have notably contributed to this growth.
Financial Highlights
Key Financial Metrics
| Year |
Net Turnover (Rpb) |
EBITDA (Rpb) |
Net Profit (Rpb) |
EPS (Rp) |
EV/EBITDA (x) |
| 2023 |
4,264 |
1,464 |
915 |
64.3 |
24.7 |
| 2024F |
4,860 |
1,790 |
1,148 |
80.6 |
20.2 |
| 2025F |
5,502 |
2,010 |
1,288 |
90.5 |
18.1 |
Cash Position and Dividend Payouts
MIKA maintains a robust net cash position of Rp1.5 trillion as of September 2024. The company’s strong cash flow allows it to fund its hospital expansion plans internally while maintaining high returns on invested capital (ROIC) of over 20%. Dividend payouts are projected to grow steadily, with a dividend yield of 1.6% in 2024, increasing to 2.2% by 2026.
Pipeline of New Hospitals
MIKA is actively expanding its hospital network. The company has identified eight sites for new hospitals, with two expected to commence operations in 2025:
- Site 1: 200-bed hospital, opening in 2025.
- Site 2: 100-bed hospital, opening in 2025.
- Site 3: 200-bed hospital, planned for 2026.
Additional projects are in the pipeline, ensuring sustained growth and increased market share in the coming years.
Risks and Concerns
Despite its strong fundamentals, MIKA faces potential risks, including:
- Legal challenges and lawsuits.
- Increased competition from both local and international hospital operators.
- Regulatory changes impacting the healthcare sector.
- Investment risks associated with hospital expansions.
Conclusion and Final Recommendation
MIKA’s strategic focus on expanding its hospital network, improving revenue intensity, and leveraging opportunities from JKN standardization positions it for sustained growth. The company’s robust financials and strong cash flow further support its expansion plans and shareholder returns.
The report by UOB Kay Hian reinforces a BUY recommendation for MIKA, with a target price of Rp3,300, highlighting its potential for double-digit earnings growth and valuation upside.
