DISCLOSUREAPPENDIXATTHEBACKOFTHISREPORTCONTAINSIMPORTANTDISCLOSURES,ANALYSTCERTIFICATIONS,LEGALENTITYDISCLOSUREANDTHESTATUSOFNON-USANALYSTS.USDisclosure:CreditSuissedoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethattheFirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.18February2019AsiaPacific/IndonesiaEquityResearchHealthcareFacilitiesASEANHealthcareSectorResearchAnalystsAriJahja622125537976ariyanto.jahja@credit-suisse.comSamuelPratama622125537906samuel.pratama@credit-suisse.comSECTORREVIEWDivergentmarkets,newlaunches,M&As;gettingmoreconstructiveonIndonesiaFigure1:WeexpectEBITDAgrowthimprovementinIndonesiaSource:Companydata,CreditSuisseestimates■Divergentmarketdynamics;stayselective.Werecommendstayingselectivedespitelowervaluations.Weseepricing/revenuemixasmaingrowthdriversindevelopedmarkets(Singapore),whilevolumeiscrucialindevelopingmarkets(Indonesia,Turkey).OurrevenueintensityanalysisunderscoresresiliencyonIHH'sexposuresasapremiumprovider.■PolicyreliefapproachingforBPJSKesehatan.Weviewtherecentdecisiontoimplementco-paymentsasagradualstepforward(link).ThepremiumhikewillultimatelyplayoutposttheApril2019elections,afterthelastadjustmentin2016.Ourcalculationimpliesdouble-digitrevenueupside,whichshouldhugelyalleviateBPJS-K'sbudgetdeficit.Indonesia’shospitalscouldfindsupportastheytradebetween-1and-2std.dev.despitetherecentrally.■Deepdiveonnewhospitalslaunches;M&Acatalysts.Ouranalysissuggestslongerbreak-evenacrossdifferentmarkets.ThisisaffectedbytheUniversalHealthcareinIndonesiaornewgreen-fieldentryinnewmarkets.WereiterateaNEUTRALonRafflesonramp-upofChongqinghospital.Meanwhile,M&Ascoulddriveincrementallong-termgrowth.Thiscatalystpartlyunderpinsourout-of-consensusOUTPERFORMonMIKA,givenitsstrongcashbalanceandtrackrecordofKasihM&A.Further,India-basedFortisHealthcareM&ArepresentsoptionalityforIHHshares.■Negativese...
