November 17, 2015

Siloam Hospitals

Patricia Gabriela

Reduces estimates, maintain BUY

(patricia.gabriela@trimegah.com)

Higher opex from capacity cost, hence lower profit

We reduced our 2015/16F earnings estimates by 28/27% as we now
assume significantly higher opex (our new operating margins for
2015/16F is 5.6/5.7% versus previously 5.9/6.4%). This follows a disappointing 3Q result in which operating profit was down 25% YoY. Management has added more manpower costs than we previously expected
and Yogya hospital remains delayed (has been ready to open since
Apr15 but has not received license yet). Our new earnings estimates for
2016F is 20% below consensus. We think share price has already
moved ahead of earnings downgrades (SILO is down 45% since its high
of Rp16,900 on Aug15).
Solid patient volume growth
Albeit hospital expansion plan is not on track, SILO managed to post a
robust patient volume growth of 25% YoY (vs MIKA at -1%). In 9M15,
SILOs number of inpatient days and outpatient visits grew 21% and
27% YoY. The strong patient volume translates to revenue growth of
24% YoY (vs MIKA of 9%). SILO 9M15 top line formed 71% of TRIM and
51% of consensus forecast, in line with historical performance. On
quarterly basis, total patient volume down by 3% while revenue down
by 1% due to Lebaran season.

Siloam Hospital Group is the leader of integrated healthcare services in Indonesia. It operates 20 hospitals in total with
more than 3,900 bed capacity.

Buy

Rp 12,200

Company Update
Share Price
Sector
Price Target

Rp 9,300
Healthcare
Rp 12,200 (+31%)

Stock Data
Longer gestation period but remains optimistic on growth outlook
We downgrade our margin forecast on SILO but remains optimistic as to
margin expansion. We expect SILOs net margin to grow CAGR 201518F of 36% on the back of more mature hospitals which serves better
profitability. We assume revenue per in and out-patient to grow 2% in
2015-18F.

Reuters Code
Bloomberg Code
Issued Shares
Mkt Cap. (Rp bn)
Avg. Value Daily 6
Month (Rp bn)
52-Wk range

SILO.JK
SILO.IJ
1,156
10,752
45.8
17,100 / 8,600

Major Shareholders
Maintain BUY but lower TP at Rp 12,200
We use DCF methodology to derive our TP at Rp 12,200. The stock
currently trades at 2016F EV/EBITDA 17.1x, -2.5 stdev of forward EV/
EBITDA.

PT Megapratama Karya Persada

60.5%

Public

29.5%

Consensus
Core EPS
Consensus (Rp)
TRIM vs Cons. (%)

16F
112
-9.6

17F
172
-21.5

Companies Data
Year end Dec
Net Sales (Rp bn)
EBITDA (Rp bn)
Net Profit (Rp bn)
EPS (Rp)
EPS Growth (%)
DPS (Rp)
BVPS (Rp)
EV/EBITDA (x)
P/E (x)
Div Yield (%)

2013

2014

2015F

2016F

2017F

1,847
220
50
48
-6%
1,565
30.4
195.3
0.0

2,472
455
63
54
14%
1,430
23.2
171.8
0.0

3,115
510
82
71
31%
5
1,559
20.3
131.5
0.1

4,006
607
116
101
42%
7
1,653
17.1
92.3
0.1

5,092
721
156
135
34%
15
1,773
14.5
68.8
0.2

PT Trimegah Securities Tbk - www.trimegah.com

Stock Price
Avg. 5 Day MA Trading Value (RHS)
18,000

Price (LHS)
(Rpbn)
350.0

16,000

300.0

14,000
250.0

12,000
10,000

200.0

8,000

150.0

6,000

100.0

4,000
50.0

2,000
Nov-14

0.0
Jan-15

Mar-15

May-15

Jul-15

Sep-15

COMPANY FOCUS

Nov-15

Figure 1. 9M15 results - poor profitability

3Q14

2Q15

QoQ Chg.
(%)

3Q15

YoY Chg.
(%)

FY15E

9M15 /
FY15E
(%)

9M15 /
Cons.
(%)

Net revenue

624

746

740

-0.7%

18.5%

3,121

71.1%

51.1%

Gross profit

236

259

290

12.1%

23.3%

1,219

70.2%

68.8%

26

56

21

-63.5%

-19.8%

218

64.6%

60.6%

28

-69.7%

2.1%

114

61.8%

69.9%

37.7%

34.8%

39.2%

39.2%

Operating margin (%)

4.1%

7.6%

2.8%

5.9%

Net margin (%)

1.3%

3.7%

1.1%

3.7%

Operating profit
Net profit
Gross margin (%)

Source: TRIM Research

Figure 2. SILOs patient volume - double-digit YoY growth

600,000

530,463

517,095

1Q15

2Q15

3Q15

466,421

500,000
400,000

527,025

318,706

300,000
200,000
100,000
3Q14

4Q14

Source: TRIM Research

Valuation and Price Target

We lower our 2015-16F earnings by 28% and 27%, respectively, on the back of further IDR depreciation and
higher financial expenses.
We use DCF methodology to derive TP of Rp 12,200. We still apply 8.4% risk-free rate and 10.4% WACC. SILO
currently trades at 2016F EV/EBITDA 17x. We view this serves as an attractive entry point.

PT Trimegah Securities Tbk - www.trimegah.com

COMPANY FOCUS

Figure 3. Forecast changes

Previous
FY15E
No of hospitals

Current

FY16E

FY15E

Changes

FY16E

FY15E

FY16E

21

25

21

25

0%

0%

2,086,936

2,584,345

2,086,936

2,584,345

0%

0%

Gross sales

4,209

5,404

4,209

5,404

0%

0%

Net sales

3,123

4,013

3,115

4,006

0%

0%

Gross profit

1,224

1,581

1,202

1,563

-2%

-1%

Operating profit

184

255

173

227

-6%

-11%

Net profit

114

160

82

116

-28%

-27%

39.2%

39.4%

38.6%

39.0%

Operating margin

5.9%

6.4%

5.6%

5.7%

Net margin

3.7%

4.0%

2.6%

2.9%

Total patient volume

Gross margin

Source: TRIM Research

Figure 4. DCF calculations

2017F

2018F

2019F

2020F

2021F

2022F

2023F

2024F

2025F

2026F

EBIT

290

409

536

730

957

1,210

1,751

2,152

2,631

3,203

EBIT (1-T)

185

261

342

466

611

773

1,118

1,374

1,680

2,045

Capex

(506)

(582)

(536)

(600)

(672)

(753)

(843)

(944) (1,057) (1,184)

Changes in working capital

(113)

(147)

(185)

(242)

(222)

(264)

(335)

(381)

(456)

(546)

Depreciation

431

489

543

603

670

745

830

924

1,030

1,148

FCFF (Rp bn)

(3)

22

165

227

388

502

770

974

1,197

1,464

Discounted FCFF

(3)

20

135

169

261

306

425

487

543

601

Terminal value
PV of terminal value
Total company value
Net debt
NAV
Source: TRIM Research

NAV / share

30,296
11,277
14,223
98
14,124
12,217

PT Trimegah Securities Tbk - www.trimegah.com

COMPANY FOCUS

Figure 5. Forward EV/EBITDA band

40.00

+2 stdev
35.00

+1 stdev
30.00

average

25.00

-1 stdev

20.00

-2 stdev
-2.5 stdev

15.00

Nov-15

Oct-15

Sep-15

Aug-15

Jul-15

Jun-15

May-15

Apr-15

Feb-15

Mar-15

Jan-15

Dec-14

Nov-14

Oct-14

Sep-14

Aug-14

Jul-14

Jun-14

Apr-14

May-14

Mar-14

Feb-14

Jan-14

Dec-13

Nov-13

Oct-13

Sep-13

10.00

Source: TRIM Research

PT Trimegah Securities Tbk - www.trimegah.com

COMPANY FOCUS

Income Statement (Rpbn)

Balance Sheet (Rpbn)

Year end Dec

2013

2014

2015F

2016F

2017F

Net Revenue
Revenue Growth
(%)
Gross Profit
Opr. Profit

1,847
45.0%

2,472
33.9%

3,115
26.0%

4,006
28.6%

5,092
27.1%

659
79

952
134

1,202
173

1,563
227

1,995
290

306

453

510

607

721

48.1%

12.7%

19.1%

18.7%

(40)

(50)

(49)

(50)

EBITDA
EBITDA Growth (%)
Net Int Inc/(Exp)
Gain/(loss) Forex
Other Inc/(Exp)
Pre-tax Profit
Tax
Minority Int.
Extra. Items
Reported Net Profit
Core Net Profit

(7)
-

3
72

(34)
94

(48)
124

(62)
178

(75)
240

(22)
0

(34)
(3)

(45)
(3)

(64)
(3)

(87)
(3)

50
50

60
63

79
82

114
116

153
156

Year end Dec

2013

2014

2015F

2016F

2017F

Cash and equivalents

515

280

445

401

352

Other curr asset

392

561

607

761

950

1,402

1,589

1,567

1,627

1,702

291

414

404

404

404

2,601

2,844

3,023

3,193

3,408

Net fixed asset

Other asset
Total asset
ST debt

17

16

16

16

16

Other curr liab

279

462

492

554

630

LT debt

430

446

446

446

446

Other LT Liab

236

266

266

266

266

28

79

79

79

962

1,190

1,221

1,282

1,359

1,639

1,654

1,803

1,911

2,050

(69)

182

17

62

111

2,305

2,366

2,515

2,623

2,762

Minority interest
Total Liabilities
Shareholders Equity
Net debt / (cash)

-1.2%

25.5%

30.7%

42.4%

34.1%

Total cap employed

Dividend per share

15

Net Working capital

612

363

543

592

655

growth (%)

30.7%

113.6%

Debt

447

462

462

462

462

Dividend payout
ratio

10%

10%

15%

2013

2014

2015F

2016F

2017F

35.7%

38.5%

38.6%

39.0%

39.2%

4.3%

5.4%

5.6%

5.7%

5.7%

16.6%

18.3%

16.4%

15.2%

14.2%

Core Net Margin (%)

2.7%

2.5%

2.6%

2.9%

3.1%

ROAE (%)

5.3%

3.8%

4.7%

6.3%

7.9%

ROAA (%)

2.4%

2.3%

2.8%

3.7%

4.7%

Growth (%)

Cash Flow (Rpbn)

Year end Dec
Net Profit
Depr / Amort
Chg in Working Cap
Others
CF's from oprs
Capex

Key Ratio Analysis

2013

2014

2015F

2016F

2017F

Year end Dec

50

63

82

116

156

Profitability

142

321

336

381

431

Gross Margin (%)

(2)

(100)

(16)

(93)

(113)

43

(157)

189

284

403

404

475

Opr Margin (%)

EBITDA Margin (%)

(386)

(331)

(314)

(440)

(506)

(6)

(8)

(17)

Others

(375)

(179)

(0)

CFs from investing

(761)

(511)

(321)

(448)

(524)

CFs from financing

904

(8)

Net cash flow

418

(236)

82

(44)

(49)

Interest Coverage (x)

Dividend

Stability
Current ratio (x)

3.1

1.8

2.1

2.0

2.0

Net Debt to Equity (x)

(0.0)

0.1

0.0

0.0

0.1

Net Debt to EBITDA (x)

(0.2)

0.4

0.0

0.1

0.2

4.0

3.0

4.0

5.3

6.6

Cash at BoY

169

601

363

445

401

Efficiency

Cash at EoY

601

363

445

401

352

A/P (days)

48

43

39

37

38

Free Cashflow

227

319

336

381

431

A/R (days)

45

49

47

44

44

Inventory (days)

26

24

22

21

22

Interim Result (Rpbn)

Capital History

3Q14

4Q14

1Q15

2Q15

3Q15

Sales

624

926

732

746

740

Gross Profit

236

285

307

259

290

EBITDA

147

106

145

140

104

26

33

64

56

21

Net profit

34

28

Core profit

35

28

Gross Margins (%)

37.7%

30.8%

41.9%

34.8%

39.2%

EBITDA Margins (%)

Opr. Profit

23.5%

11.5%

19.8%

18.8%

14.1%

Opr Margins (%)

4.1%

4.9%

8.7%

7.6%

2.8%

Net Margins (%)

1.1%

0.9%

4.6%

3.8%

0.8%

Core Margins (%)

1.3%

0.9%

4.7%

3.7%

1.1%

PT Trimegah Securities Tbk - www.trimegah.com

Date
12-Sept-13

IPO@Rp9,000

COMPANY FOCUS

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Gedung Artha Graha 18th Floor
Jl. Jend. Sudirman Kav. 52-53
Jakarta 12190, Indonesia
t. +62-21 2924 9088
f. +62-21 2924 9150
www.trimegah.com

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