OBAT IPO: A New Player in Indonesia's Healthcare Sector

PT Brigit Biofarmaka Teknologi Tbk (OBAT) is set to debut on the Indonesia Stock Exchange (IDX) on January 13, 2025, marking its entry into the public trading sphere. The healthcare-focused company is owned by Golkar Party politician Machmud Lutfi Huzain and aims to capitalize on the growing demand for healthcare products.

Key IPO Details

OBAT is offering 170 million new shares to the public, representing 28.33% of its paid-up capital post-IPO, at an offering price of IDR 350 per share. The company expects to raise approximately IDR 59.5 billion, all of which will be allocated for working capital.

To enhance investor interest, OBAT has also issued warrants at a 2:1 ratio, which can be exercised between July 9, 2025, and January 8, 2026. The IPO period, which began on January 3, 2025, will conclude on January 9, 2025, with shares officially trading on January 13.

Financial Performance and Valuation

OBAT's financial performance has been remarkable, with its June 2024 report revealing a 196% year-on-year increase in net profit to IDR 12.8 billion. Revenue also surged by 184% YoY to IDR 54.75 billion. The company maintains a strong gross profit margin of 43.97%, albeit a slight decline from the previous year's 47.31%.

In terms of valuation, OBAT's IPO price corresponds to a Price-to-Earnings (P/E) ratio of 10.26 and a Price-to-Book Value (P/BV) ratio of 2.43. While the P/E ratio suggests a fair valuation, the P/BV ratio leans toward being slightly expensive.

Business Model and Growth Prospects

OBAT specializes in contract manufacturing (maklon) for processed foods, cosmetics, and herbal products. Its offerings include powdered beverages, premium teas, herbal capsules, honey, and personal care items such as body care, hair care, and face care.

The company operates through four subsidiaries, three of which are already active. These subsidiaries contribute to OBAT's integrated operations, offering value-added services to its business model.

OBAT’s IPO funds are expected to fuel growth in Indonesia’s burgeoning healthcare and wellness sector. The company also plans to distribute up to 50% of its annual net profit as dividends, subject to its financial performance and investment needs.

Underwriter Insights

The IPO is backed by PT OSO Sekuritas Indonesia, owned by Hanura Party’s Oesman Sapta Odang (OSO). Known for its involvement in past IPO successes, OSO Sekuritas has returned to the market after regaining its operational license in July 2024.

Future Outlook

As OBAT positions itself as a promising healthcare player, its robust financials and commitment to sustainable growth are likely to attract investors. However, rising raw material costs, which have already impacted gross margins, remain a challenge.

With a focus on innovation and market expansion, OBAT is well-poised to capitalize on Indonesia’s growing healthcare demands, providing opportunities for investors seeking exposure to this sector.

Credit: CNBC Indonesia Research