PT. Mitra Keluarga Karyasehat, Tbk. recently announced that they will buyback their stock in near time. The total value will be Rp 1.4 trillion with total purchase share 727.540.000 or 5.26% from their outstanding share. I think this is a good news for investor. Honestly, I interested in this announcement and try to figure out that there is opportunity or not.
First, I look up at their assets. Can they do the buyback? because cash and equivalent of this company only Rp 1.085 trillion but when I check it again they have cash in deposit around Rp 989 billion, and other financial assets like mutual fund with total Rp 332 billion with their current liabilites Rp 98 billion and tax liabilites Rp 28 billion with assumption I exclude prepaid revenue. The company will have working capital around Rp 2.431 trillion which would be decreased to Rp 1 trillion if the buyback really happen. With these I believe that they can do a buyback with their current financial condition (based on their 3Q17 financial report).
But sadly, I can't figure the margin of safety that I still learning for. The total equity of this company is Rp 3.691 trillion which made Rp 253 for the book value. Price earning ratio of this company also around 52 times from it's earning (use price: Rp 1.900 - 24/01/2018). That made this stock still overvalued.
Basically, hospital is good business. The company have the most hospital in Jakarta and Surabaya (based on their public expose)
but still, I can't figure out that this will be good opportunities for me. So, I think it's good learn that will this stock rises? I think maybe yes. But since I can't figure the stock is undervalued so I will pass and note this transaction here.
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Sources:
Public Information of Buyback PT Mitra Keluarga Karyasehat, Tbk.
MIKA financial report 3Q17 :
MIKA Public Expose, 08 August 2017
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