Hotel Business to Boost KAEF
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Hotel Business to Boost KAEF

Kimia Farma’s (KAEF) expansion to the hotel business is expected to boost the company’s revenue in the next few years. The company can optimize its assets without leaving its main line of pharmaceutical business by building hotels on land assets.

KAEF launched Moxy Hotel in Dago, Bandung in August 2017. The company cooperates with Aura Nusantara Abadi under a build operate transfer (BOT) scheme for 20 to 25 years. JW Marriot will manage and operate Moxy Hotel.

Ankga Adiwirasta, Analyst of BNI Sekuritas, said that business diversification will have a positive impact on the company’s performance but cannot be seen in this year’s financial report. “We estimate revenue to grow 15.31 percent to IDR 6.7 trillion in 2017 and net profit by 9.27 percent to IDR 292.21 billion,” said Ankga. This will be supported by increased demand in the pharmaceutical industry.

The operating profit margin is predicted to reach 7.10 percent while net profit margin is only 4.36 percent. Operating profit margin and net profit margin decreased compared to last year’s position at 7.39 percent and 4.6 percent as the company’s production cost increased.

BNI Sekuritas recommended HOLD for KAEF with a target price of IDR 3,300. (*)

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