Hospitals Set to See Brighter Business Outlooks

TEMPO.CO, Jakarta - The Head of Research of NH Korindo Securities Indonesia, Reza Priyambada, said that publicly-traded companies in the healthcare and hospital sector is set to see brighter business outlooks, as Indonesians are increasingly becoming more concerned about their health. "The concern over health is not only universal, but also continuous," said Reza to Tempo on Thursday, March 26, 2015.

An analyst for Investa Saran Mandiri, Hans Kwe, concurs with Reza, and said that hospitals will soon see bigger profit margins as the size of Indonesia's middle classes begin to grow, and their awareness of the importance of their health increases. "Their profits are also supported by government several government initiatives, which includes The Social Security Agency's healthcare program [BPJS Kesehatan]," said Hans to Tempo on Thursday, March 26, 2015.

According to Hans, hospital managers need to look deeper into the quality of the healthcare services that their institutions provide, especially since many Indonesians still perceive Singapore's and/or Malaysia's healthcare services to be far superior compared to what is locally available. "It is very important to foster and maintain customer confidence and trust in this sector in particular," Hans said.

Hans said that other challenges that Indonesia's healthcare sector still needs to face is the fact that around 80 percent of raw chemicals required to manufacture drugs still needs to be imported - which means that it is highly prone to currency fluctuations, including the recent lows which saw the Rupiah dip below the Rp 13,000 per United States (US) Dollar mark. "Although the outlook for Indonesia's healthcare sector is bright, investor still need remain vigilant as it will be hard hit by volatile currency fluctuations," Hans said.

Previously on Tuesday, the administrators of PT Mitra Keluarga Karyasehat (MIKA) launched its' initial public offering (IPO) at the Indonesian Stock Exchange (IDX) - which caused the prices of its' shares to spike by 18 percent to trade from Rp 17,000 per share to a high of Rp 21,250 per share, which is indicative of an over-subscription of around 10.3 percent. "The results were fantastic, and investors were really enthusiastic about the IPO," said the Executive Director of Kresna Graha Sekurindo - the underwriter for the MIKA's IPO - Michael Steven.

"If we were to convert the oversubscription into a concrete figure, the value stands at about Rp 45 trillion," continued Steven.

ADITYA BUDIMAN | ODELIA SINAGA