INITIATE REPORT - MNC Sekuritas

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INITIATE REPORT

MNC Sekuritas Research Division | July, 22 2021

Key Financial Highlight

Leading Clinical Laboratory with the Largest Lab Network Chain PRDA is the largest clinical laboratory with a revenue market share of 39.2% in Indonesia. PRDA provides clinical laboratory services to diagnose and observe diseases as well as other health conditions with more than 48 years of experience. Currently, PRDA has had the service network that incorporates 269 outlets across 127 cities and 34 provinces in Indonesia. Since 2012, PRDA has been the only clinical laboratory in Indonesia accredited by the College of American Pathologists (CAP), the highest standard of excellence, and the first clinical laboratory in Indonesia to receive NGSP certification for HbA1c testing as well as SNI ISO 15189. Focus on Digitalization and Seizing Opportunities from Covid-19 Currently, PRDA is focusing on developing digital transformation and embracing future healthcare, which has been included in the Company's strategic plan for the past few years. PRDA seeks to increase digitalization through the “Prodia Mobile” application, which is expected to increase its capabilities in data management and business growth in the future. On the other hand, PRDA also seized the opportunity through screening for Covid-19 survivors by launching a service called the quantitative SARS-CoV-2 Antibody test (Spike-Receptor Binding Domain/Spike-RBD), which is to determine whether immunity has been formed or requires adjustments from vaccinations. Moreover, PRDA has opened the Vaccination of Mutual Cooperation program since June-2021. Vaccination of Mutual Assistance is a program service of vaccination Covid-19 to the employer/employee and family funding borne by the company. In the first phase of the Vaccine Mutual Cooperation from May-2021 to 2022, PRDA has prepared 56 branches to distribute the vaccine. Genomic test: Agility to Create Values PRDA has carried out various examination developments and service innovations to become a leader in next-generation technology in the laboratory and healthcare sector. In 2019, PRDA developed a genetic-based examination, namely Prodia Genomics. The Genomic Examination development includes: 1) NIPT-Prosafe to determine the risk of chromosomal abnormalities in the fetus; 2) CArisk, a treatment plan that is likely to reduce cancer risk; 3) DIArisk to assess a person's risk of diabetes; 4) TENSrisk to see the risk of hypertension; 4) IMMUNErisk to detect a person's risk of 7 (seven) types of diseases related to the immune system; 5) VASCULArisk which can detect the risk of cardiovascular and cerebrovascular disease; 6) Prodia Nutrigenomics to identify appropriate nutritional intake and types of exercise. Recommendation BUY for PRDA with Target Price of IDR10,000 We initiate BUY for PRDA IJ with a target price of IDR10,000, which implied PBV FY21E/FY22F at 3.98x/3.16x. We expect PRDA revenue to grow by 17.60% YoY in FY21E, as demand for clinical laboratory tests increases, driving higher prices given its strong competitive position. We see several risks that will occur such as unexpected-regulatory change that can affect the business, especially the price cap for Covid checks and regulations related to home service.

PT Prodia Widyahusada Tbk (PRDA IJ) Healthcare Industry

The Leading Healthcare Provider

Sources: Company , MNCS

In Billion IDR FY18 FY19 FY20 FY21E FY22F

Revenue 1,599.76 1,744.27 1,873.38 2,203.16 2,531.10

EBITDA 245.05 296.68 383.31 550.17 631.05

Net Income 175.45 210.26 268.75 386.82 450.36

ROA (%) 9.09% 10.46% 12.04% 13.47% 12.62%

ROE (%) 11.23% 12.67% 15.03% 16.33% 15.08%

EPS (IDR) 187.15 224.28 286.66 412.61 480.39

BVS (IDR) 1,666.31 1,770.24 1,907.52 2,526.43 3,184.56

Page 1 www.mncsekuritas.id MNC Sekuritas 1-500-899 [email protected]

Research Analyst

Muhamad Rudy Setiawan [email protected] (021) 2980 3111

BUY

Stock Data

Major Shareholders

Curent Price : 7,900

52wk Range H-L : 9,225-2,710

Share Outstanding : 937 mn

Free Float (%) : 25.00%

Mkt Capitalization (IDR bn)

: 7,640

PT Prodia Utama 57.00%

PT Bio Majesty Pte. Ltd.

18.00%

Public < 5% 25.00%

Target Price : IDR 10,000

PT Prodia Widyahusada Tbk (PRDA) is a company engaged in the clinical laboratory business, established in 1973 with more than 48 years of experience in the healthcare services business. PRDA conducted an IPO on December 7, 2016, by releasing 187.5 million shares. PRDA is the largest laboratory with a revenue market share of 39.2% in Indonesia. PRDA operates a service network spread across 127 cities and 34 provinces through 269 outlets, consisting of: 1) 148 clinical labs & PHC; 2) 106 POC outlets; 3) 11 Hospital labs; and 4) 4 Specialty clinics. Since 2012, PRDA has been the only clinical laboratory in Indonesia accredited by the College of American Pathologists (CAP), the highest standard of excellence, and the first clinical laboratory in Indonesia to receive NGSP certification for HbA1c testing as well as SNI ISO 15189.

The Largest Company in The

Clinical Laboratory in

Indonesia


Page 3

www.mncsekuritas.id MNC Sekuritas 1-500-899 [email protected]

Initiate Report | MNC Sekuritas Research Division

Company Profile

Exhibit 01. Shareholder Structure

Source: Company

Exhibit 02. Total Outlet PRDA in FY16-1Q21

Source: Company

In 2015,Prodiadisposedthe4non-

coresubsidiaries toProdiaGroup, inorderto focuson coreclinical

lab business

Contract

Research

Organization

Research, therapy Distributor for

and banking of healthcare

stem cell products

Occupational

Health

Service

In Vitro

Diagnostics

(IVD) industry

PTProdiaWidyahusadaTbk

Nationwide Outlet Networkacross Indonesia

PTProdiaUtama BioMajesty Pte. Ltd. Public57% 18% 25%

129 136 143 147 148 148

118130 128 122

103 106

911 14 14

12 112

57 4

4 4

0

50

100

150

200

250

300

350

2016 2017 2018 2019 2020 1Q21

Clinical Labs & PHC POC Outlets Hospital Lab Speciality Clinics

Strong relationship with

medical commodities supply

chain

Scalable hub and spoke

business model

PRDA provides clinical laboratory services for the diagnosis and observation of diseases and other health conditions. The Company has four (4) regional reference laboratories located in Jakarta, Medan, Surabaya and Makassar to optimize the observation of specimens at the examination location more quickly and efficiently. PRDA has a diversified customer base: 1) Individual patients; 2) Doctor's referral patients; 3) Corporate inspection; 4) Referral to other hospitals/labs.

PRDA applies the hub and spoke business model, which currently has 4 hubs in Jakarta, Medan, Surabaya and Makassar, while the number of spokes owned is around 148 branches. The spokes/branches carry out 300-400 types of routine tests, while at the hubs, they carry out 800-850 types of tests, both routine and esoteric (advanced) tests. If any esoteric checks are not carried out at the branch, the branch (spoke) will send requests for esoteric tests to the nearest hub which operates 24/7. “Hub and spoke” model offers a scalable platform reducing turnaround time and cost. Spokes facilitate deeper penetration within the region, strengthening the brand and driving higher volumes. Efficiency of a clinical laboratory improves with increasing test volumes making automated tests less expensive and labs more cost-efficient.



Business Model


Exhibit 03. Market Share PRDA in FY18-FY19

38.80%

33.00%

28.20%

2018

Prodia

Next 5 Players (Kimia

farma, Pramita, Parahita,

Biomedika, Cito)

Other Independent Labs

39.20%

33.90%

26.90%

2019

Source: Company

TestingCollection / Testing

Our Regional Referral Labs

serves a 24/7 Operation to Fully

Accommodate Referral Needs

from All Prodia Outlets

Prodia Referral

Lab Services

(PRLS)

Prodia Clinical Labs, Hospitals

and Other Clinics may refer tests

to PRLS

Centralized information

with integrated IT

platform that connects

each lab to PRLS

Prodia Clinical Labs &

Clinics / Specialty Clinics Prodia Clinical Labs

4 Referral Labs in Jakarta,

Surabaya, Medan, Makassar

Point-of-Care

Doctor

Referrals

Walk-in

Customers

External

Referrals

Corporate

ClientsDoctor

ReferralsDigital platform for online

registration & results

Exhibit 04. Scalable Hub and Spoke Business Model PRDA

Source: Company


Page 5



PRDA has a comprehensive service offering, providing a one-stop service for clinical laboratory testing in Indonesia. Here are the six main offerings that PRDA provides:

Routine testing

1) Generally performed on whole blood, serum, plasma and other body fluids as well as specimens such as microbiology samples–All Prodia laboratories perform routine tests, which usually take 2-4 hours to examine 2) Routine tests such as lipid profile, kidney and liver function profile

Esoteric Test

1) Special clinical laboratory tests that are not routine are generally carried out by experts and require more sophis-ticated technology, equipment, and materials than normal routine tests 2) Esoteric tests such as hormone profiles and molecular clinical laboratory tests for infectious diseases or cancer

Reference Lab Services

1) Routine and esoteric testing

2)Advanced molecular diagnostic tesing, chromatographic mass spectrometry, anatomic and immunological pathology, and flow cytometry

Non-Laboratory Testing 1) Offered in several Prodia clinical laboratories 2) Electrocardiogram, X-ray, audiometry, spirometry, ultrasound and treadmill examination

General health check-up

1) Basic health check-up services are available at every Prodia branch

2) Consists of pre-and post-test doctor consultation services, as well as home collection services

Special clinic

1) Develop specialized clinical facilities that focus on a particular field of medicine or a particular type of customer, with general medical services and advice tailored to the specific needs of customer segments

2) Specialty clinics include: Child Health Center, Women's Health Center, and Senior Health Center.

Exhibit 05. Test services provided by PRDA

Source: Company

PRDA has a team of more than 500 marketing personnel and laboratory information services who carry out various marketing activities to reach the general public, doctors and companies. This effort is supported by PRDA's long engagement with the medical community. PRDA engages with the medical community, not only through traditional advertising and marketing, but through scientific marketing activities including supporting physicians and their research in the field of clinical laboratory medicine, holding seminars and other marketing activities to educate physicians, hospitals, companies and the general public on issues health and benefits of clinical trials as well as educating and collaborating with physicians in the development and implementation of tests.

Proactive scientific

marketing strategies

Strong relationships through the work of more

than 500 Marketing and Laboratory

Information Service personnel

Quality Service New Test Introduction

Research Collaboration

Entered into agreement with 38 institutions: 36

Faculty of Medicines, 1 Institution in Science and

Tech. and 1 Faculty of Pharmacy at leading

Universities in Indonesia for collaboration on

research and education

Ongoing Referrals

Received referrals from

>39,000 doctors in 1Q2021

(increased by 12% vs. 2020)

Introduced new tests, such as NIPT ProSafe, Amino Acid Profile,

Fatty Acid Profile, CArisk, DIArisk, Liquid biopsy EGFR Mutation, New

Born Screening, 17OH Progesterone & PKU

Exhibit 06. PRDA Collaboration Strategy with the Medical Community

Source: Company




What’s Next? Currently, PRDA is focusing on developing digital transformation or embracing future healthcare, which has been included in the Company's strategic plan for the past few years. PRDA seeks to increase digitization through the “Prodia Mobile” application, which is expected to increase its capabilities in data management and business growth in the future. This digital implementation is a form of service to customer needs/customer experience, especially in responding to customer needs for Covid-19 examinations. PRDA also continues to increase the number of outlets, which are planned to add 1-2 clinical labs, 20 POC outlets, 1-2 hospital labs and 1 specialty clinic which will start in 2021.

Exhibit 07. Digital Transformation by PRDA

Source: Company

Exhibit 08. Customer Centric Model by PRDA

Source: Company

Prodia in your Car Service

Prodia Home Service

Tele-Consultation

Tele-Radiology

Tele-Health*

Customer Centric

NewInnovation&EnhancementeRegistration

•General Practitioners• Clinical Pathologists• Internist

• Clinical Nutritionist• SportMedicine




Industry Outlook

Indonesia is in Wave II of Covid-19

The existence of three new variants of the Covid-19 virus (alpha, beta, delta variants)

increase the spread which resulting in Indonesia entering the Wave II/Second wave.

Starting with daily cases increasing on June 1, 2021 by 4,824 cases/day to a record high

more than 50,000/day in Indonesia with an average daily test rate of 75,000/day (as of 1

June-6 July 2021). Thus, the government imposes restrictions on emergency micro-scale

activities (PPKM darurat) on 3-20 July 2021. On the other hand, vaccinations in Indonesia

are continuously increasing, where currently only 36 million had received the first dose

and 15 million for the second dose (as of 12 July 2021) from the planned target of 181

million vaccinations with an average daily vaccination level of 360,000/day (as of 11 July

2021).

Exhibit 10. Trend of Vaccinated in Indonesia

Sources: Ourworlddata.org, MNCS

Exhibit 09. Trend of Total Cases and Daily Cases in Indonesia

Sources: Ourworlddata.org, MNCS

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Mar

-20

Ap

r-2

0

May

-20

Jun

-20

Jul-

20

Au

g-2

0

Sep

-20

Oct

-20

No

v-2

0

Dec

-20

Jan

-21

Feb

-21

Ma

r-2

1

Ap

r-2

1

May

-21

Jun

-21

Jul-

21

Total Cases (lhs) New Cases/day (rhs)

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

Total Vaccinated (lhs) Full Vaccinated (lhs) New Vaccination (rhs)lhs rhs




Gradual Public Awareness toward the Importance of Healthcare

The existence of Covid-19 raises public awareness of the health system and quality in

Indonesia. Although household spending decreased by -2.23% YoY in 1Q21 (vs 2.83%

YoY in 1Q20), the health and education component grew by 0.31% YoY in 1Q21, or one

of the two components that saw an increase in 1Q21. We assess that people's

consumption patterns are shifting to the health component as a new habit, so that

people are increasingly prioritizing health consumption. More people are enrolled in the

National Health Insurance ("JKN") program followed by the rising income leading them

to access personal or other forms of health insurance. Thus, there will be an increased

demand for quality health services and faster disease screening. Rising income levels

and accessibility of healthcare services combined with increasing incidence of

communicable and non-communicable diseases, such as cardiovascular disease, cancer

and diabetes, are expected to drive the clinical laboratory testing market. This is because

clinical laboratory testing plays a central role in health care, which can provide

information in overall medical decisions.

Exhibit 11. Trend of JKN Members in FY14-FY20 (in million)

Source: BPJS

133

157 172

188

208

224 222

-

50

100

150

200

250

2014 2015 2016 2017 2018 2019 2020

The World Bank and IMF predict that in FY24F, Indonesia will become the fifth-largest economy in the world. The majority of Indonesia's income will come from the middle class, which is expected to drive demand for affordable healthcare. The increase in the middle class will be followed by an increase in unhealthy consumption patterns. Data shows that in 2018, the percentage of smoking among Indonesian youth increased to 9.1% (vs. 7.2% in 2013), and consumption of vegetables and fruits decreased in 95.5% of adults. In addition, 33.5% of people lack physical activity, 29.3% of adults smoke daily, 31% are centrally obese, while 21.8% are obese. The lifestyle of the Indonesian people today will cause more lifestyle-related diseases, such as cardiovascular, tuberculosis, and cancer. Hypertension and stroke lead to the highest death rate, with prevalences of 34.1% and 10.9%, respectively in 2018. WHO estimates that by 2030, lifestyle-related diseases will be the main cause of 87% of deaths. Indonesia has the potential to lose USD4.4 trillion from 2012 to 2030 due to the impact of chronic or “non-communicable” diseases (NCDs).

Sales of medicines and hospitalizations are the main contributors to the hospital business, although some hospitals have laboratory facilities. However, with lower intensity compared to drugs and inpatient care, hospitals prefer to refer to other clinical laboratories to grow in the private laboratory business in Indonesia.

Indonesia's Growing Middle Class Presents Opportunities in Healthcare Sector




14.426.2 31

93.693.5

95.5

34.7

36.3 29.3

0

20

40

60

80

100

120

140

160

180

2007 2013 2018

%

Obesity Central lack of consumption of vegetables and fruit Smoker

Exhibit 12. Cause of Ilnes on Indonesia’s Citizen

Sources: Ministry of Health, MNCS

Exhibit 13. Type of Disease with the Highest Mortality in Indonesia

34.1%

10.9%8.5%

3.8%1.8%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Hypertension Stroke Diabetes Mellitus chronic renalfailure

Cancer

Sources: Ministry of Health, MNCS

Clinical laboratory refers to a center where tests are performed on clinical specimens to obtain information about a patient's health-related to the diagnosis, treatment and prevention of disease. Clinical laboratory testing can be done in many places, such as hospitals, clinics, and independent laboratories. The clinical laboratory testing market is segmented into the public and private sectors. The private sector consists of hospital laboratories, independent laboratories and clinics. However, most tests are outsourced to private independent clinical laboratories, either through a doctor's referral or by referring samples that have been collected on site. In 2019, the private sector owned most clinical laboratories, which was 1,056 laboratories or 81.7%. The second-largest ownership of clinical laboratories is district/city government laboratories, with 206 laboratories or 15.9%. The third-largest ownership is owned by the provincial government, which are 27 laboratories or 2.1%. Hence, the Ministry of Health owned 4 laboratories translating to 0.3% ownership.

Clinical laboratories in Indonesia are dominated by private ownership




Exhibit 14. Ownership of Health Laboratories in Indonesia

Source: Ministry of Health, MNCS

0.30% 2.10%

15.90%

81.70%

Ministry of Health

Provincial Government

District Government

Private

Investment Thesis

PRDA will focus on becoming the largest Clinical laboratory

PRDA will continue to focus on creating the most complete and up-to-date clinical laboratories in Indonesia, both routine and advanced, to support better health diagnoses. Along with health awareness, the demand for laboratory examinations is increasing, especially amid the pandemic. Currently, PRDA is able to conduct 56 Health clinical trials. PRDA cooperates with more than 1,500 hospitals that send samples to PRDA, both private hospitals, chain hospitals and government hospitals. PRDA continues to strive to increase market share in Indonesia. Currently, the independent market lab is around IDR5 trillion and PRDA has 39.2% market share of the total market. In addition to digitization, PRDA plans to launch a minimum of 10 new types of tests every year, such as: 1) Launching Health Genomics, Bone, Muscle & Joint Genomics, and Skin and Hair Genomics; 2) Conducted more than 1,000,000 Covid-19 tests (PCR and Antibody Tests); and 3) Launched Immunohistochemical Testing for Lymphoma Cancer. We believe that these three combinations will be a positive catalyst for PRDA in the future.

1. NIPT (ProSafe)

2. Telomere Analysis

3. Vitamin A & E

4. ProHealthy Gut (GCMS)

5. Varicella Zoster IgG

6. Fenilalanin Neonatus

7. 17-OH Progesteron

Neonatus

8. CA Risk

9. DIArisk

10. Prodia Nutrigenomics

11. VASCULArisk

12. Nutrition Panel (Urine)

13. Toxic Panel (Urine)

14. Amino Profile– 19

15. Vitamin B1 & B6

16. Rasio s-Flt1/PlGF

17. NBS Amino Acid

18. TENSrisk

19. IMMUNErisk

20. Prodia PULS Cardiac

Marker

21. Expanded Lipid Profile

22. Prodia Wellness Genomic

23. Prodia Muscle Bone

Genomic

24. Anti SARS-CoV-2 IgM/IgG

25. Anti SARS-CoV-2

PharmacogenomicsPredictive, Preventive & Screening DiagnosticTargeted

Therapy

55. Warfarin Indiv Test

(CYP2C9 & VCORC1

genotype)

56. CYP2C19

45. Jak 2 Mutation

46. Mutation EGFR

47. Mutation EGFR ctDNA

48. Estrogen Receptor

49. Progesteron Receptor

50. HER2/neu

51. Ki67

52. BCR ABL (Geneexpert)

53. Ultrasensitive Mutation

EGFR ctDNA (T790M)

54. Oncoprecise

31. Jak2 Mutation

32. Kidney Stone Analysis (FTIR)

33. AMA & ASMA IF

34. CT/NG RT PCR (Geneexpert)

35. MTB/MOTT-DNA PCR

36. Fragmentation of DNA

Sperm

37. RotavirusAntigen

38. Anti-AChR Binding

39. ANCA IF

40. Lymphoma Panel

41. SARS-CoV-2 RNA

42. Analysis of Gallstones (FTIR)

43. Systemic Scelrosis Profile

44. Interleukin -6 (IL-6)

45. Blood Chromosome

Analysis (G-Banding)

26. ADMA/SDMA

27. Prodia Skin and

Hair Genomics

28. SARS-CoV-2 Ag

29. Anti SARS-CoV-2

Quantitative

30. Cortisol Urine

Exhibit 15. Number of tests Clinically PRDA

Source: Company




Exhibit 16. PRDA laboratory technology concept

Source: Company

PRDA has carried out various examination developments and service innovations to become a leader in next-generation technology in the laboratory and healthcare sector. In 2019, PRDA developed a genetic-based examination, namely Prodia Genomics. The Genomic Examination development includes: 1) NIPT-Prosafe to determine the risk of chromosomal abnormalities in the fetus; 2) CArisk to determine risk factors for cancer; 3) DIArisk to assess a person's risk of diabetes; 4) TENSrisk to see the risk of hypertension; 4) IMMUNErisk is able to detect a person's risk of 7 (seven) types of diseases related to the immune system; 5) VASCULArisk which can detect the risk of cardiovascular and cerebrovascular disease; and 6) Prodia Nutrigenomics to identify appropriate nutritional intake and types of exercise. Therefore, it is highly recommended to observe a person's genome from the data set that is closest to their racial group. While global genomic studies have advanced, Southeast Asia is still lagging. This knowledge gap is what Prodia is trying to fill.

We consider this strategy to be quite good, given the prevalence of Indonesian public health behaviors. Although genomic testing is a new business that contributes 4% to 5% of total revenue, management targets the contribution to increase to 25% in the next 4 years. We see the segmentation will focus on middle-up income with ASP in the range of IDR7 million-IDR20 million/test and not covered by BPJS. Given the much higher ASP than other tests, this leaves room for management-adjustable margins.

Genomic test: Agility to Create Values

Next GenerationLaboratory

Research

LaboratoryEvaluation Laboratory

MolecularDiagnosticLaborator y

Advance Immunology Laboratory

AnatomicalPathologyLaboratory

Mass Spectrometr y &

Separation Science

Laboratory

Exhibit 17. PRDA genomics service promotion

Source: Company




The Covid-19 outbreak has also become a "blessing in disguise" due to several factors, especially for testing kit in which PRDA is using automatic Cobas6800 for Covid-19 RT-PCR testing. On the other hand, PRDA also seized the opportunity through screening for Covid-19 survivors by launching a quantitative SARS-CoV-2 Antibody test (Spike-Receptor Binding Domain/Spike-RBD) is to determine whether immunity has been formed or requires adjustments from vaccinations. Moreover, PRDA has opened the Vaccination of Mutual Cooperation program since June-2021. Vaccination of Mutual Assistance is a program service of vaccination Covid-19 to the employer/employee and family funding borne by the company. In the first phase of the Vaccine Mutual Cooperation from May-2021 to 2022, PRDA has prepared 56 branches to distribute the vaccine. The government has set the price for a complete dose of vaccine at IDR879k/person, the price is determined through the Decree of the Minister of Health number HK.01.05/MENKES/4643/2021. We assess that the "gotong royong" vaccine will have a positive impact on PRDA, due to the potential to increase the volume of patients during the vaccine distribution period.

Covid 19 a ‘Blessing in Disguise’

Exhibit 18. PRDA Gotong Royong Vaccination Promotion

Source: Company

Exhibit 19. Scheme of PCR and Antigen test to Total Revenue PRDA in FY21E

Sources: various Sources, MNCS

Currently, the government has set an upper limit on the price of PCR and rapid antigen at IDR900k/test and IDR250K/test, respectively. In 1H21 PRDA has served 630,000 tests, so if we annualized there would be 1.26 million tests in FY21E (vs 1 million tests in FY20). However, with the current business competition, quite a few other companies offer prices for PCR at the level of IDR900k/test and rapid antigen IDR150k/test. We tried to do a simple calculation to see the contribution of PCR and rapid in PRDA, which resulted in the lowest scenario at IDR378 billion to the highest scenario at IDR929 billion in FY21E. These also calculate the portion disbursement between 25%-75% for each type carried out, and potentially contributes 17%-42% to total revenue in FY21E.

Potential revenue from PCR/antigen test to total PRDA revenue in FY21E

PCR and Rapid Test with Scheme ASP at level IDR900k/test (PCR) and IDR250k/test (Rapid)

PCR 75% 851 PCR 50% 567 PCR 25% 284

Rapid 25% 79 Rapid 50% 158 Rapid 75% 236

Total (IDR Bn) 929 725 520

PCR and Rapid Test with Scheme ASP at level IDR750k/test (PCR) and IDR150k/test (Rapid)

PCR 75% 709 PCR 50% 473 PCR 25% 236

Rapid 25% 47 Rapid 50% 95 Rapid 75% 142

Total (IDR Bn) 756 567 378




Although PRDA has a digital platform since 2018, PRDA has also collaborated with other telemedicine platforms such as HaloDoc, one of the big players in this industry. We believe that this integration will provide good benefits for PRDA to rising patient volume and reducing marketing costs. Telemedicine should play a key role in the future of the healthcare business, in our view. WHO defined telemedicine as health services provided by health workers using information and communication technology to diagnose, treat, prevent, and evaluate the health condition of someone who is in a position far from health facilities. Currently PRDA has collaborated, including with: 1) HaloDoc; 2) AloDokter; 3) Grabhealth; 4) GoodDoctor; 5) Traveloka; 6) Tiket.com

In the financial section, we compare the EBITDA margin and net profit margin of PRDA vs. 3 hospitals and 3 healthcare in Indonesia in the 2018-2020 period. PRDA is able to increase its EBITDA margin and net profit margin above the average in 2019-2020 due to efficiencies related to equipment rental and promotion, this is because management is trying to digitize, which will have an impact on cost efficiency. In addition, the relatively low capital intensity compared to hospitals resulting in better cash flow and return ratios due to payments methods do not come from BPJS which usually require a longer payback period. On the other hand, the healthcare and hospital sectors have increased in line with the Covid-19 pandemic, due to positive financial reports and also healthcare industry needed during the pandemic.

Integrated Healthcare

Providers, benefiting PRDA

Better margin ratio than

peers, due to independence

on the payment side

Sources: Company, Bloomberg, MNCS

Exhibit 20. PRDA vs Peers

No Ticker 2018 2019 2020

EBITDA Margin

Net Profit Margin

EBITDA Margin

Net Profit Margin

EBITDA Margin

Net Profit Margin

1 PRDA 16.02% 10.97% 17.01% 12.05% 26.83% 14.35%

2 SILO 11.56% 0.27% 6.06% -4.83% 16.69% 1.63%

3 HEAL 19.27% 4.07% 22.31% 7.03% 30.27% 10.72%

4 MIKA 33.71% 22.61% 34.41% 22.78% 37.85% 24.62%

5 KAEF 14.75% 5.81% 8.94% -0.14% 9.37% 0.18%

6 KLBF 17.44% 11.66% 16.92% 11.08% 17.96% 11.83%

7 INAF 3.65% -2.06% 5.17% 0.59% 4.47% 0.00%

Average 16.63% 7.62% 15.83% 6.94% 20.49% 9.04%

We expect PRDA revenue to grow by 17.60% YoY in FY21E, driven by increasing demand for clinical laboratory testing and higher prices given its strong competitive position. Key drivers include year-on-year growth in number of tests, number of tests per customer visit and revenue per visit assuming our ASP blended at IDR654k/person. In addition, the existence of self-vaccination and telemedicine also has the potential to be a catalyst for increased patient visits in FY21E.

-

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

-

500

1,000

1,500

2,000

2,500

3,000

2017 2018 2019 2020 2021E 2022E

Revenue in IDR bn(lhs) Patient visits in million (rhs)

Exhibit 21. Trend and forecasting of revenue and Volume Patient PRDA in FY17-FY22E

Sources: Company, MNCS

Revenue has the potential to grow double digits in FY21E





Exhibit 22. Trend and forecasting of Average Selling Price PRDA in FY17-FY22E

PRDA has regularly distributed dividends with an average DPR level of 53% proving PRDA's strong business position. Furthermore, we believe PRDA will maintain its financial condition and ratios with the company's solvency ratio is relatively stable with a DER level of 0.02x and recorded net-cash at the level of IDR1.09 trillion in FY20. Therefore, we expect management to be able to maintain its leverage, with DER level in FY21E/FY22F of 0.02x. Manageable debt exposure should encourage superior margins in the future.

Exhibit 23. Trend of Dividend Payout and Dividend/share PRDA in FY18-FY20


540,000

560,000

580,000

600,000

620,000

640,000

660,000

680,000

700,000

2017 2018 2019 2020 2021E 2022E

Exhibit 24. Trend of DER and Net-cash in FY18-FY22F

Sources: Bloomberg, MNCS

Manageable debt exposure and dividend in the long run

50% 50%

60%

94 112

172

-

50

100

150

200

44%

46%

48%

50%

52%

54%

56%

58%

60%

62%

2018 2019 2020

Dividend Payout Ratio (%) Dividend/share (IDR)

0.03

0.01

0.02 0.02

0.02

895.65 992.64

1,090.65

1,498.92

1,982.41

0

500

1,000

1,500

2,000

2,500

-

0.01

0.01

0.02

0.02

0.03

0.03

FY18 FY19 FY20 FY21E FY22F

DER (x) Net Cash (IDR Bn)

Exhibit 24. Financial Summary

Sources: Bloomberg, MNCS




Income Statement Balance Sheet

IDR Billion FY18 FY19 FY20 FY21E FY22F IDR Billion FY18 FY19 FY20 FY21E FY22F

Revenue 1,599.76 1,744.27 1,873.38 2,203.16 2,531.10 Cash and cash equivalents 937.48 1,011.85 1,134.54 1,552.01 2,043.03

Cost Of Revenue (656.95) (703.26) (827.15) (837.20) (987.13) Trade Receivables 164.54 147.03 139.43 163.98 188.38

Gross Profit 942.81 1,041.01 1,046.22 1,365.96 1,543.97 Inventory 33.97 32.65 68.20 69.03 81.39

Other Current Assets 66.10 62.82 17.84 20.98 24.10

Operating Expenses (774.23) (824.96) (744.46) (925.33) (1,050.41) Total Current Assets 1,202.10 1,254.35 1,360.01 1,806.00 2,336.91

Operating Profit 132.48 168.58 216.05 301.76 440.63 Fixed Assets - net 519.81 517.91 567.93 708.40 820.91

Other Non-Current Assets 208.48 238.71 304.11 357.64 410.88

Finance Cost (5.89) (3.32) (5.16) (9.18) (10.48) Total Non-Current Assets 728.29 756.62 872.04 1,066.04 1,231.79

Finance Income 47.67 52.07 42.48 52.07 79.87 TOTAL ASSETS 1,930.38 2,010.97 2,232.05 2,872.04 3,568.69

Profit Before Income Tax

221.69 264.80 339.08 483.53 562.95 Trade Payables 109.69 106.62 166.23 168.25 198.38

Short-term Debt 22.52 10.64 21.98 25.85 29.70

Income Tax Expenses (46.24) (54.54) (70.33) (96.71) (112.59) Other current liabilities 32.08 26.30 21.94 33.22 38.16

Profit of the Year 175.45 210.26 268.75 386.82 450.36 Total Current Liabilities 164.28 143.55 210.16 227.32 266.24

Long-term Debt 19.32 8.57 21.92 27.24 30.92

Net Profit 175.45 210.26 268.75 386.82 450.36 Other Long-term liabilities 184.61 199.25 211.68 248.95 286.00

Total Long-term Liabilities

203.93 207.81 233.60 276.19 316.92

EPS 187.15 224.28 286.66 412.61 480.39 Total Equity 1,562.17 1,659.60 1,788.30 2,368.53 2,985.53

Cash Flow Ratios

IDR Billion FY18 FY19 FY20 FY21E FY22F Ratio FY18 FY19 FY20 FY21E FY22F

Net Income 175.45 210.26 268.75 386.82 450.36 Growth Year on Year

Depreciation 76.47 80.63 81.54 109.53 137.49 Revenue Growth 9.12% 9.03% 7.40% 17.60% 14.88%

Change in Working Capital

(16.48) 15.76 31.66 (23.35) (6.64) Gross Profit Growth 10.46% 10.42% 0.50% 31.21% 13.03%

Change in others (57.87) (2.50) 40.62 8.14 1.82 Operating Profit Growth 27.25% 28.16% 39.67% 103.95% 12.01%

CFO 177.57 304.15 422.58 481.14 583.03 Net Income Growth 16.35% 19.84% 27.82% 83.97% 16.43%

Capital Expenditure (186.00) (78.73) (131.57) (250.00) (250.00) Profitability

Others 65.60 (30.23) (65.40) (53.53) (53.23) GPM 58.93% 59.68% 55.85% 62.00% 61.00%

CFI (120.41) (108.96) (196.97) (303.53) (303.23) OPM 10.54% 12.39% 16.11% 20.00% 19.50%

EBITDA Margin 15.32% 17.01% 20.46% 24.97% 24.93%

Dividend Paid 60.32 87.73 105.13 193.41 166.63 NPM 10.97% 12.05% 14.35% 17.56% 17.79%

Net Change in Debt (19.78) (22.63) 24.69 9.19 7.53 ROA 9.09% 10.46% 12.04% 13.47% 12.62%

Equity Fund Raised - - - - - ROE 11.23% 12.67% 15.03% 16.33% 15.08%

Others (111.96) 14.63 12.44 37.26 37.06

CFF (71.42) 79.73 142.26 239.87 211.22 DER (x) 0.03 0.01 0.02 0.02 0.02

Net Cash Increase (14.25) 274.92 367.87 417.47 491.02 Current Ratio (x) 7.32 8.74 6.47 7.94 8.78

Closing Balance 937.48 1,011.85 1,134.54 1,552.01 2,043.03 Quick Ratio (x) 7.11 8.51 6.15 7.64 8.47

Disclaimer

This research report has been issued by PT MNC Sekuritas, It may not be reproduced or further distributed or published, in whole or in part, for any purpose. PT MNC

Sekuritas has based this document on information obtained from sources it believes to be reliable but which it has not independently verified; PT MNC Sekuritas makes

no guarantee, representation or warranty and accepts no responsibility to liability as to its accuracy or completeness. Expression of opinion herein are those of the

research department only and are subject to change without notice. This document is not and should not be construed as an offer or the solicitation of an offer to

purchase or subscribe or sell any investment. PT MNC Sekuritas and its affiliates and/or their offices, director and employees may own or have positions in any investment

mentioned herein or any investment related thereto and may from time to time add to or dispose of any such investment. PT MNC Sekuritas and its affiliates may act as

market maker or have assumed an underwriting position in the securities of companies discusses herein (or investment related thereto) and may sell them to or buy them

from customers on a principal basis and may also perform or seek to perform investment banking or underwriting services for or relating to those companies.




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