瑞信-亚太地区-医疗保健行业-东盟医疗保健行业：不同的市场、新推出的产品与并购-2019.2.18-100页.pdf

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES,ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS.US Disclosure:Credit Suisse does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.18 February 2019 Asia Pacific/Indonesia Equity Research Healthcare Facilities ASEAN Healthcare Sector Research Analysts Ari Jahja 62 21 2553 7976 ariyanto.jahjacredit- Samuel Pratama 62 21 255 37906 samuel.pratamacredit- SECTOR REVIEW Divergent markets,new launches,M&As;getting more constructive on Indonesia Figure 1:We expect EBITDA growth improvement in Indonesia Source:Company data,Credit Suisse estimates Divergent market dynamics;stay selective.We recommend staying selective despite lower valuations.We see pricing/revenue mix as main growth drivers in developed markets(Singapore),while volume is crucial in developing markets(Indonesia,Turkey).Our revenue intensity analysis underscores resiliency on IHHs exposures as a premium provider.Policy relief approaching for BPJS Kesehatan.We view the recent decision to implement co-payments as a gradual step forward(link).The premium hike will ultimately play out post the April 2019 elections,after the last adjustment in 2016.Our calculation implies double-digit revenue upside,which should hugely alleviate BPJS-Ks budget deficit.Indonesias hospitals could find support as they trade between-1 and-2 std.dev.despite the recent rally.Deep dive on new hospitals launches;M&A catalysts.Our analysis suggests longer break-even across different markets.This is affected by the Universal Healthcare in Indonesia or new green-field entry in new markets.We reiterate a NEUTRAL on Raffles on ramp-up of Chongqing hospital.Meanwhile,M&As could drive incremental long-term growth.This catalyst partly underpins our out-of-consensus OUTPERFORM on MIKA,given its strong cash balance and track record of Kasih M&A.Further,India-based Fortis Healthcare M&A represents optionality for IHH shares.Negative sentiment has been priced in.We have reduced forecasts but upside potential remains.Regional EV/EBITDA has derated,with each market facing specific issues.Of note,Indonesian stocks have been laggards and are trading at a discount vs a substantial premium previously.Main risks:unfavourable policy,slower-than-expected growth.Key picks:HEAL,MIKA,IHH,SILO and PRDA.HEAL has the highest growth profile in the group,and looks attractive after the Dec-2018 sell-off.We see MIKAs EBITDA growth improving in the next two years,and upgrade to OUTPERFORM.It trades at a premium vs Indonesian peers on 2019 EV/EBITDA,but 15-70%P/E discount.SILOs negative sentiment has been priced in at lowest EV/EBITDA in the region.For PRDA,esoteric tests uptick could fuel high-single-digit growth.Despite its outperformance YTD,we continue to like IHH on the back of EBITDA growth improvement.18%22%9%12%13%18%23%9%4%8%24%24%24%23%22%10%12%14%16%18%20%22%24%26%0%5%10%15%20%25%2015201620172018E2019EEBITDA margin%YoY growthRevenueEBITDAEBITDA margin 18 February 2019 ASEAN Healthcare Sector 2 Focus charts Figure 2:Our coverage valuation summary Figure 3:Key healthcare themes we explore Note:Priced as at 13 February 2019.Source:Company data Source:Credit Suisse research Figure 4:BPJS-K budget deficit has remained an issue;new initiatives should help reduce that Figure 5:Where ASEAN hospitals stack up relative to regional peers in terms of growth and margins Save as attachment Source:Ministry of Health,Credit Suisse research Source:Company data Figure 6:Regional healthcare stocks have derated due to various factors.Indonesia now trades at a premium due to recent rebound Figure 7:Indonesia trades between-1 std.dev.and -2 std.dev.Source:Company data,RAVE,Credit Suisse research Note:Priced as of 13 February 2019.Source:Company data,RAVE,Credit Suisse research FY19FY19MIKA.JKO1,8740.319%25.741.314HEAL.JKO6900.126%14.250.010SILO.JKO4500.127%7.9175.11PRDA.JKO1970.023%7.217.111IHHH.KLO12,0167.017%18.052.34RAFG.SIN1,4671.04%21.834.17Ticker%upside to TPCS ratingMarket cap(US$mn)Avg.daily t/o(US$mn)2019 ROE(%)EV/EBITDA P/E(x)Key themesDivergent market dynamicsNew hospitals launchesM&A catalysts-4,418156-10,198-15,854-20,539-26,173-4,111-30,000-25,000-20,000-15,000-10,000-5,00005,0002015A2016A2017A2018E2019E2020E(NOpremium hike)2020E(premiumhike)Core budget deficit(Rp bn)Mitra KeluargaSiloamBumrungradChularatRaffles Medical*Bangkok ChainKPJ*IHH*Bangkok DusitHermina0%5%10%15%20%25%30%35%40%0%2%4%6%8%10%12%14%16%2019E EBITDA marginRevenue growth-100%-80%-60%-40%-20%0%20%40%60%80%100%10.0 x15.0 x20.0 x25.0 x30.0 x35.0 x40.0 x45.0 x50.0 xMar-15May-15Jul-15Sep-15Nov-15Jan-16Mar-16May-16Jul-16Sep-16Nov-16Jan-17Mar-17May-17Jul-17Sep-17Nov-17Jan-18Mar-18May-18Jul-18Sep-18Nov-18Jan-19Premium(discount)Forward EV/EBITDAID premium to regionalRegionalRegional avgIDRegional avg(ex-Indo)=23.1xID premium/discount=17%Average premium/discount=35%Regional(ex-Indo)=19.0 x12.0 x17.0 x22.0 x27.0 x32.0 x37.0 x42.0 x47.0 xEV/EBITDAAverageSTDEV+1STDEV-1STDEV-2STDEV+2Average=31.3xSTDEV+1=38.5xSTDEV-1=24.1xCurrent=22.2xSTDEV+2=45.7xSTDEV-2=16.9x 18 February 2019 ASEAN Healthcare Sector 3 Divergent markets,new launches,M&As;getting more constructive on Indonesia Divergent market dynamics We see pricing/revenue mix as the main growth driver in developed markets(Singapore),while volume remains crucial in developing markets(Indonesia,Turkey).Our revenue intensity analysis underscores resiliency on IHHs exposure as a premium provider.We like its mid-teen growth potential(thesis)and margin improvement catalyst.In Indonesia,we expect uptick in inpatient admissions,which could be partially boosted by dengue fever cases in 1Q19.Policy relief approaching for BPJS Kesehatan BPJS Kesehatan(BPJS-K)has been a double-edged sword but a key growth driver.There are possible tweaks that can be made by stakeholdersBPJS-K,the government and private players.A healthier budget may translate into healthier hospitals financials.On the slight positive side,the government is exploring ways to fix this,which includes new fees on outpatient and inpatient admissions for non-subsidised patients(link).We view the latter as a positive step forward towards more sustainable financials.BPJS-Ks premium hike has been delayed heading into the April elections.We project widening deficit in 2019-20 assuming no premium hike.However,it should narrow in 2020 to the low-to-mid single digit trillion rupiah assuming premium hike per actuarial figures.This is even when we bake in higher claims expenses due to the pending INA-CBG tariff adjustments.Deep dive on new hospital launches;M&A catalysts New launches remain crucial to boost long-term growth.Nonetheless,a longer EBITDA breakeven period appears to be the new normal in certain markets.We have observed this in Indonesia and Hong Kong.Raffles Chongqing recent opening will be a test case for its long-term growth strategy.Currently,we forecast positive EBITDA by year 4.Meanwhile,we see a margin improvement opportunity for IHH after the gestation period for Gleneagles Hong Kong(possible EBITDA breakeven in 2020)and Acibadem Altunizade.Moreover,a series of M&As has played out in Indonesia and India.This catalyst partly underpins our out-of-consensus OUTPERFORM on MIKA,given its strong cash balance and track record of Kasih M&A(now 10%of revenue).Further,India-based Fortis Healthcare M&A represents optionality for IHH shares.Indonesia:Nearing an inflection point Indonesian hospitals are trading at a slight premium to the region but still below historical premium.Valuation has baked in low expectations,and growth has arguably stabilised.Managements 2019 guidance implies the highest growth for HEAL,followed by SILO and MIKA and guided towards top-line growth of 16-17%,10-15%,and 7-10%,respectively.HEALs EBITDA margin is estimated to be flattish,whereas that of SILO/MIKA might temporarily compress given their new hospitals ramp-up and rise in BPJS-Ks contribution.We upgrade MIKA to OUTPERFORM on the back of M&A as it trades at a 15-70%discount to peers on 2019 P/E,despite premium on 2019 EV/EBITDA vs peers.Moreover,we like HEAL due to its highest growth profile and resilient margin despite 50%sales exposure to BPJS-K.We have assumed slightly more conservative growth of 15%relative to the goal of 16-17%.On SILO,we see favourable risk-reward as below book valuation has priced in various concerns.On PRDA,esoteric tests uptick could fuel high-single-digit growth.Valuation still pricing in lower expectations We have modified our estimates and target prices across the board to take into account key developments.Regional EV/EBITDA valuation has derated in the past year with each market facing specific issues.Of note,Indonesias healthcare was the worst performer in 2018 and has further room to rally on improving growth.Main risks for the sector:slower-than-projected growth,unfavourable policy evolution,weaker-than-anticipated margin.Volume crucial in emerging markets;revenue intensity main engine in developed markets BPJS-Ks potential premium hike in 2020 could provide substantial relief Our analysis underscores EBITDA margin improvement opportunity for IHH;wait-and-see for Raffles Constructive on Indonesia on compelling risk-reward,MIKA upgrade We anticipate upside potential despite forecasts cuts 18 February 2019 ASEAN Healthcare Sector 4 Regional comp sheet Figure 8:Regional healthcare comparables Note:Priced as of 13 February 2019.O=Outperform,N=Neutral,U=Underperform.Source:Company data,the BLOOMBERG PROFESSIONAL service,Credit Suisse estimates Figure 9:Regional 2019 EV/EBITDA Note:Priced as of 13 February 2019.Source:Company data,the BLOOMBERG PROFESSIONAL service estimates for KPJ,Credit Suisse estimates for covered companies FY19FY20FY19FY20RevenueEBITDAIndonesiaMitra Keluarga KaryasehatMIKA.JK1,810O1,8740.325.722.341.335.811%9%14Medikaloka HerminaHEAL.JK3,260O6900.114.212.750.044.215%15%10Siloam International HospitalsSILO.JK3,890O4500.17.96.6175.196.713%10%1Market cap weighted avg.1,0040.320.417.863.346.812%10%10.8Prodia WidyahusadaPRDA.JK2,960O1970.07.26.017.114.810%13%11RegionalIHH HealthcareIHHH.KL5.6O12,0167.018.015.352.336.613%15%4Raffles Medical GroupRAFG.SI1.1N1,4671.021.821.034.135.616%1%7Bangkok Dusit Medical Services BDMS.BK23.7O11,83031.519.817.131.927.19%14%16Bumrungrad Hospital PclBH.BK181N4,1908.219.217.929.427.63%5%23Chularat HospitalCHG.BK2.0N7083.818.215.829.926.210%13%21Bangkok Chain HospitalBCH.BK16.8O1,3357.717.415.032.527.413%15%21Apollo Hospitals EnterpriseAPLH.NS1,150O2,25713.918.416.783.557.812%23%6Market cap weighted avg.4,82915.919.016.642.432.910%13%11.8OthersLabCorp of AmericaLH147O14,85133.39.68.513.212.14%3%16Quest DiagnosticsDGX90O12,23029.410.09.813.713.12%3%17Sonic HealthcareSHL.AX24N7,94219.212.711.520.319.210%10%11Ramsay Health CareRHC.AX59U8,39415.810.49.320.919.219%12%27HealiusPRY.AX2.9U1,2795.38.78.818.216.54%3%5HCA HealthcareHCA141O48,48967.68.57.814.112.67%7%N/AUniversal Health ServicesUHS134O12,40725.28.88.213.112.05%5%17Tenet Healthcare CorporationTHC24N2,4157.65.95.513.110.41%4%7Market cap weighted avg.13,50144.09.38.514.813.57%6%16.8StockTickerCurrent price(LCY)CS ratingMarket cap(US$mn)Avg.daily t/o(US$mn)EV/EBITDA P/E(x)CAGR FY18-FY20 2019 ROE(%)15%15%13%11%10%7%7%5%4%-2%9%171820181881126192218-4%-2%0%2%4%6%8%10%12%14%16%051015202530BangkokChain HospitalIHHHealthcareBerhadBangkok DusitMedicalServicesChularatHospitalApolloHospitalsEnterprisePT SiloamInternationalHospitals TbkKPJHealthcare*Mitra KeluargaKaryasehatBumrungradHospital PclRafflesMedical GroupRegionalaverage2019 EBITDA growth(%)2019 EV/EBITDA(x)2019 EV/EBITDA(x)2019 EBITDA growth(%)Regional avg EBITDA growthRegional avg EV/EBITDA 18 February 2019 ASEAN Healthcare Sector 5 Figure 10:Credit Suisse vs Consensus views on key topics Source:Company data,Credit Suisse estimates Figure 11:Generally negative sentiment on Indonesian hospitals has been reflected on consensus,with Buys representing a low portion Figure 12:while the number of analysts covering the sector names appears low Note:Ratings ex-CS rating.Source:The BLOOMBERG PROFESSIONAL service Note:Ratings ex-CS rating.Source:The BLOOMBERG PROFESSIONAL service TopicCredit Suisse viewConsensus viewBPJS KesehatanIndonesia Healthcare-we see gradual policy improvements at BPJS Kesehatan that can help alleviate its budget deficit.Moreover,we expect premium hike to play out after the elections.A healthier budget could help reduce account receivable days for hospitals.Consensus thinks the government initiatives wont move the needle much.We believe the recent copayment policy is a positive step forward.2020 premium hike will be crucial.HEALHEAL is our preferred pick due to resilient top-line growth and EBITDA margin.BPJS-K remains a key driver.Recent sell-off provides a buying opportunity.HEAL looks too expensive on adjusted EV/EBITDA(high-teens).We think there is room for re-rating as MIKA trades at 22x on execution progress.MIKAWe like MIKAs M&A catalysts.EBITDA margin will compress due to new launches and rising BPJS-K exposure but likely less severe than consensus expectations.EBITDA margin remains the best in class.MIKAs growth will likely decelerate further in 2019 after Kasih Groups integration upside in 2018.SILOFavorable risk/reward for SILO as it trades at a substantial discount to the region.Execution progress could drive upside.Consensus is skeptical on whether or not SILOs growth could improve.We do anticipate a gradual improvement.IHHOur market by market analysis suggests that IHHs base business will likely remain resilient.EBITDA growth will likely improve in 2019.IHH may face incremental headwinds in 2019 and overhang due to Khazanahs sell-down.Our 2019 estimates are 6%more conservative than the Street,and still see upside potential.PRDAWe see high-single digit growth for Prodia,partly due to continued uptick of higher-priced esoteric tests.Modest EBITDA margin expansion is plausible as well.Prodia may face challenges to meet growth expectations due to visit headwind after BPJS-Ks emergence.We think this could be more than offset by rising number of tests per visit amid adoption of esoteric tests panel.100%100%61%44%38%18%28%44%63%64%11%18%0%10%20%30%40%50%60%70%80%90%100%HEALPRDAIHHRAFGSILOMIKABuyHoldSell3118981102468101214161820HEALPRDAIHHRAFGSILOMIKANumber of analyst coverage 18 February 2019 ASEAN Healthcare Sector 6 Table of contents Focus charts 2 Divergent markets,new launches,M&As;getting more constructive on Indonesia 3 Regional comp sheet 4 Divergent market dynamics 7 Policy relief approaching for BPJS Kesehatan 17 Deep dive on new hospital launches;M&A catalysts 25 Indonesia:Nearing an inflection point 37 Valuation