HEAL IJ: Conference Call KTA; Maintain BUY

Vanessa Karmajaya, Michael Setjoadi – RHB Sekuritas

Link to report: https://bit.ly/3rTNqq8

♦️ Management guided for flat revenue growth and 28-30% EBITDA margins in 2022, given minimal contributions from COVID-19 cases – largely in line with our assumptions. HEAL aims to open 3-4 hospitals nationwide annually and is considering a number of hospitals for acquisition targets.

♦️ Beds for COVID-19 patients is only at c.1,000 now vs 2,500 in mid-2021 during the Delta variant wave. Bed occupation rate or BOR also remains minimal at c.25% vis-à-vis almost 100% during mid-2021. We believe HEAL’s massive footprint outside Java should allow the company to enjoy some windfall from rising COVID-19 cases outside the island – case numbers are lagging in such areas and the hospitalisation rate might even be higher given the lower vaccination rates outside Java

♦️ Current social restriction impacts have been much more benign vis-à-vis previous COVID-19 peaks. Non-pandemic patient traffic recovery is expected to occur immediately once COVID-19 cases dissipate.