en trimegah cf 20151023 silo
October 23, 2015
Siloam Hospitals
Company Focus
Patricia Gabriela
(patricia.gabriela@trimegah.com)
Reaching the Top
Initiate coverage on SILO with BUY
We initiate SILO with a Buy rating as company has been able to deliver
a strong double-digit top line growth. Supported with its network across
Indonesia (20 hospitals and 17 clinics in total), we believe SILO will
have more upside in terms of patient volume that translates to a promising top line growth. The industry is still underpenetrated; and with
MIKA already priced in, we think that SILO might catch up the laggard.
Aggressive hospital development: 4 hospitals per year
SILO managed to add 4-5 hospitals per year in last four years to its
hospital group through greenfield and acquisition. We forecast SILO to
add another 4 hospitals/year (lower than company’s guidance of 8-10
hospitals), but only 1 hospital for 2015F due to delay in permit. We view
that our hospital expansion forecast is still realistic considering the historical data and construction progress of some hospitals.
Positive growth from BPJS program
SILO has recorded robust patient volume growth with 18% CAGR 201214. In 2014, patient from BPJS program contributes 6% to total patient
volume albeit only 7 hospitals registered. Given hospital business’ high
operating leverage and SILO’s currently low occupancy rate, enrolling in
BPJS program makes sense as it should improve asset turnover and
therefore ROE (ROE to rise from 7% in 2015 to 11% in 2017).
Asset-light business model
In order to be able to ramp up its expansion plan, SILO uses light-asset
business model for its greenfield expansion. SILO does not own majority
of land and building of its hospitals. Of 20 hospitals, 12 is rented, 4 is
owned, and 4 is rented from 3rd parties. SILO’s rental expense is ~3%
of net revenue.
Valuation: BUY with TP of Rp 15,500
We recommend SILO at Rp 15,500 using DCF method (WACC of 10%,
LTG of 3%). Our TP implies 2016-17F EV/EBITDA of 28.1x and 23.8x
respectively.
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 15,500
Company Update
Share Price
Sector
Price Target
Rp 12,300
Healthcare
Rp 15,500 (+26%)
Stock Data
Reuters Code
Bloomberg Code
Issued Shares
Mkt Cap. (Rpbn)
Avg. Value Daily 6
Month (Rpbn)
52-Wk range
SILO.JK
SILO.IJ
1,156
14,220
49.1
17100 / 11275
Major Shareholders
PT Megapratama Karya Persada
60.5%
Public
29.5%
Consensus
Core EPS
Consensus (Rp)
TRIM vs Cons. (%)
16F
138
-4.3
17F
182
-24.3
Companies Data
Year end Dec
2013
2014
2015F
2016F
2017F
Net Sales (Rp bn)
EBITDA (Rp bn)
Net Profit (Rp bn)
EPS (Rp)
EPS Growth (%)
DPS (Rp)
1,847
220
50
48
-6%
-
2,472
455
63
54
14%
-
3,123
528
114
99
82%
5
4,013
630
160
138
40%
10
5,104
746
210
182
31%
21
BVPS (Rp)
EV/EBITDA (x)
P/E (x)
1,565
55.8
255.6
1,430
30.4
225.0
1,515
26.3
123.3
1,644
22.0
87.9
1,805
18.6
67.1
0.0
0.0
0.0
0.1
0.2
Div Yield (%)
PT Trimegah Securities Tbk - www.trimegah.com
Stock Price
Avg . 5 Day MA Trading Value (RH S )
18,000
P rice (LHS )
( Rpbn )
0.4
16,000
0.3
14,000
0.3
12,000
10,000
0.2
8,000
0.2
6,000
0.1
4,000
0.1
2,000
0.0
O ct-14
De c-14
Feb -15
Ap r-15
Jun-15
Au g -15
COMPANY FOCUS
O ct-15
1
Hospital network across Indonesia
In 1H15, SILO operates 20 hospitals across Indonesia. Management targets to have more than 50 hospitals by
2017F with 8-10 hospital expansion per year. However, we are being realistic as we forecast company to add 4
hospitals per year. In 2015F, we assume SILO to add only 1 hospitals as management confirmed that they’re
lagging in hospital development due to problem in license. Once license has released, company is ready to open
its hospital in Yogyakarta. Aside from hospitals, SILO also operates 17 clinics that serves as a feeder for BPJS
patients.
Figure 1. SILO’s hospital network
Source: TRIM Research
In order to differentiate its hospital from others, SILO established center of excellence in each of its hospitals.
Moreover, SILO acquired BIMC Kuta and BIMC Nusa Dua in 2013 to achieve medical tourism. These hospitals are
well known with Australian tourists, thus can support SILO’s vision. In 1H15, distinct market segment (incl. BIMC
Kuta and BIMC Nusa Dua) contributes 14% to SILO’s total patient volume.
As of now, SILO has the biggest number of operational bed in Indonesia with 29% CAGR 2011-14.
Figure 2. SILO’s operational beds
6,000
4,978
5,000
3,928
4,000
3,078
3,000
1,533
2,000
1,000
1,985
2,397
857
2011
2012
2013
2014
2015F
2016F
2017F
Source: TRIM Research
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COMPANY FOCUS
2
Figure 3. SILO’s hospital group
Hospitals
Centre of Excellence
Mature:
Lippo Village
Cardiology, Neuroscience, Orthopedics, Emergency
Kebon Jeruk
Urology, Orthopaedic, Cardiology, Emergency
Surabaya
Fertility treatment, Cardiology, Emergency
Cikarang
Occupational health, Emergency
Balikpapan
Orthopedics, Emergency
MRCCC Semanggi
Cancer, Liver, Emergency
Developing:
Jambi
Emergency
Manado
Emergency
Makassar
Cardiology, Endocrinology, Emergency
Palembang
Gastroenterology, Emergency
Bali
Treatment for tourists, Orthopedics, Cardiology, Emergency
TB Simatupang
Cardiology, Oncology, Neuroscience, Emergency
New hospitals:
Purwakarta
Emergency
Medan
Trauma, Emergency
Kupang
Emergency
Distinct market segment hospitals:
RSUS
Emergency
Cinere
Cardiology
BIMC Kuta
Treatment for tourists, Emergency
BIMC Nusa Dua
Cosmetic surgery, Emergency
Asri
Urology
Source: TRIM Research
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COMPANY FOCUS
3
Figure 4. Number of operational beds comparison
Ramsay Sime Darby Health Care
Sari Asih Group
Awal Bros Group
MIKA
SILO
-
500
1,000
1,500
2,000
2,500
3,000
Source: TRIM Research
One stop care for primary, secondary, tertiary, and quaternary levels
By primary, means SILO provides clinics for corporate clients and gateway to Indonesia’s “Universal Healthcare
Coverage” as well as Government Health Insurance Program. As in 1H15, 11 of SILO’s hospitals participates in
BPJS program. SILO eagers to be best in class through rapid expansion of hospital network, attracting and retaining best doctors, and equip hospitals with latest technology. On top of that, SILO also develops integrated
centers of excellence and Digital Tele-Medicine.
As SILO serves all class levels, SILO has a higher revenue per patient compared to MIKA. We expect SILO to
hike its price by 2% CAGR 2015-20F (vs historical 2-6% CAGR 2012-14). The price increase is expected from a
more complex services. In 2011-12, SILO opened comprehensive cancer center and Indonesia’s first Gamma
Knife.
Regarding BPJS program, management stated that there is no problem in terms of payment. Once BPJS patient
has checked out from hospital, the documents related are collected and checked by verifiers. Management confirmed that the money can be received ~15 days after the document is verified.
Figure 5. SILO’s revenue per inpatient day
5.0
4.8
4.8
4.7
4.5
4.6
4.4
4.4
4.2
4.1
4.2
4.1
4.0
3.8
2011
2012
2013
2014
2015F
2016F
2017F
Source: TRIM Research
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COMPANY FOCUS
4
Figure 6. SILO’s revenue per outpatient
1.0
0.8
0.7
0.8
0.7
0.8
0.9
0.9
0.9
2014
2015F
2016F
2017F
0.6
0.4
0.2
2011
2012
2013
Source: TRIM Research
Lower occupancy rate due to new and developing hospitals
SILO has a slight lower occupancy rate at 53.9%, compared to MIKA at 63.6% in FY14. Need to remind that SILO has 4 mature hospitals, 12 developing, and 4 new; while majority of MIKA’s hospitals are considered as mature hospitals. (We base our mature assumption with >3 years of commencing).
A mature hospital tends to have higher occupancy rate; hence, better efficiency. We expect SILO to be able to
raise its occupancy rate overtime and a robust patient volume growth of 22% CAGR 2015-20F on the back of
more mature hospitals.
Figure 7. SILO’s hospital breakdown
Mature
35
30
25
20
15
10
5
-
Developing
New
4
2
4
4
10
4
10
8
4
12
4
2013
2014
13
7
12
16
2015F
2016F
2017F
Source: TRIM Research
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COMPANY FOCUS
5
Financials
Figure 8. Income statement
Income estimate (Rp bn)
Total patient volume:
2013
2014
2015F
2016F
2017F
1,383,973
1,726,217
2,086,936
2,584,345
3,156,313
369,409
471,775
580,469
731,391
914,239
1,014,564
1,254,442
1,506,467
1,852,954
2,242,074
Per inpatient days
4.1
4.4
4.5
4.7
4.8
Per outpatient visits
0.8
0.8
0.9
0.9
0.9
Gross sales:
2,504
3,341
4,209
5,404
6,864
Inpatient
1,541
2,060
2,638
3,424
4,409
963
1,280
1,570
1,980
2,455
(1,845)
(2,389)
(3,054)
(3,909)
(4,946)
Doctors fee, salary and employee benefits
(848)
(1,107)
(1,439)
(1,842)
(2,358)
Drugs and medical supplies
(621)
(786)
(1,009)
(1,296)
(1,646)
Depreciation charges
(150)
(186)
(201)
(219)
(241)
Clinic supplies
(75)
(90)
(99)
(108)
(119)
Food and beverage
(45)
(53)
(57)
(88)
(124)
Outchecking expense
(36)
(55)
(69)
(86)
(108)
(9)
-
-
-
-
(61)
(112)
(180)
(270)
(351)
1,847
2,472
3,123
4,013
5,104
659
952
1,224
1,581
2,026
79
134
184
255
333
220
455
528
630
746
50
63
114
160
210
Inpatient days
Outpatient visits
Revenue (in mn Rp):
Outpatient
COGS:
Repairs and maintenance
Others
Net sales
Gross profit
EBIT
EBITDA
Net profit
Source: TRIM Research
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COMPANY FOCUS
6
We forecast SILO to post 25% net profit CAGR in 2015-18F as the group’s hospitals maturing. Note that we assume BPJS business will not hurt SILO’s margin (BPJS business is 8% of revenue). Company has assigned a case
manager to keep track of BPJS patient in order to manage their ALoS (Average Length of Stay) low. Management
stated that they will suffer no loss as long as ALoS for BPJS patient under 4 days.
Figure 9. Margin outlook (%)
2013
Gross profit
2014
2015F
2016F
2017F
35.7%
38.5%
39.2%
39.4%
39.7%
4.1%
6.8%
7.0%
7.2%
7.2%
11.9%
18.4%
16.9%
15.7%
14.6%
Pretax profit
3.9%
3.8%
5.6%
6.1%
6.4%
Net profit
2.7%
2.5%
3.7%
4.0%
4.1%
Operating profit
EBITDA
Source: TRIM Research
Figure 10. Balance sheet
Rp bn
2013
2014
2015F
2016F
2017F
Cash
515
280
243
256
248
Receivables
271
393
419
539
685
Inventories
95
106
125
161
203
1,402
1,589
1,717
1,960
2,290
317
476
467
467
467
2,601
2,844
2,971
3,382
3,893
Loan
447
462
462
662
912
Payables
164
193
221
283
359
Others
351
535
535
535
535
Total liability
962
1,190
1,219
1,481
1,806
1,639
1,654
1,752
1,901
2,087
Fixed assets
Others
Total assets
Total equity
Source: TRIM Research
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COMPANY FOCUS
7
Valuation
We initiate SILO with a BUY rating at target price of Rp 15,500, +26% upside from current price. We like SILO as
company managed to deliver double digit top line growth and continue to serve a strong growth on the back of
its aggressive hospital development and participation in BPJS program. We derive our target price using DCF
method assuming a WACC of 10% and LT growth rate of 3%.
Our TP implies 2016-17F EV/EBITDA of 28.1x and 23.8x. This is a 38% discount to MIKA (SILO’s only actively
traded peer in JCI), respectively. We view the discount should narrow as SILO delivers on its growth promise.
Figure 11. DCF calculations
2017F
2018F
2019F
2020F
2021F
2022F
2023F
2024F
2025F
EBIT
333
441
557
837
1,084
1,506
1,871
2,306
2,821
EBIT (1-T)
213
282
356
534
692
961
1,195
1,472
1,802
Depreciation
412
457
510
574
651
744
855
987
1,147
Net working capital
306
455
642
887
1,111
1,389
1,711
2,096
2,557
Capex
(742)
(891) (1,069) (1,282)
(1,539) (1,847) (2,216)
(2,659) (3,191)
FCFF (Rp bn)
190
303
440
713
916
1,248
1,545
1,897
2,315
Discounted FCFF
190
275
361
530
617
761
854
950
1,050
Terminal value
32,277
PV of terminal value
13,263
Total company value
18,850
Net debt
728
NAV
18,122
NAV / share
15,675
Source: TRIM Research
PT Trimegah Securities Tbk - www.trimegah.com
COMPANY FOCUS
8
Income Statement (Rpbn)
Balance Sheet (Rpbn)
Year end Dec
2013
2014
2015F
2016F
2017F
Net Revenue
Revenue Growth
1,847
45.0%
2,472
33.9%
3,123
26.3%
4,013
28.5%
5,104
27.2%
659
952
1,224
1,581
2,026
76
168
218
289
367
220
455
106.2%
528
16.1%
630
19.3%
746
18.3%
(7)
(40)
(9)
(9)
(9)
Gross Profit
Opr. Profit
EBITDA
EBITDA Growth (%)
Net Int Inc/(Exp)
Year end Dec
2013
2014
2015F
2016F
2017F
Cash and equivalents
515
280
243
256
248
Other curr asset
392
561
607
761
951
1,402
1,589
1,717
1,960
2,290
291
414
404
404
404
2,601
2,844
2,971
3,382
3,893
Net fixed asset
Other asset
Total asset
ST debt
17
16
16
16
16
Other curr liab
279
462
491
553
628
Gain/(loss) Forex
-
-
-
-
-
Other Inc/(Exp)
3
(34)
(34)
(34)
(34)
LT debt
430
446
446
646
896
72
94
174
246
324
Other LT Liab
236
266
266
266
266
(22)
0
(34)
(3)
(63)
(3)
(89)
(3)
(117)
(3)
28
5
(4)
(4)
(4)
962
1,190
1,219
1,481
1,806
Extra. Items
Reported Net Profit
50
60
111
157
207
1,639
1,654
1,752
1,901
2,087
Core Net Profit
50
63
114
160
210
(69)
182
219
406
664
2,305
2,366
2,464
2,813
3,249
Pre-tax Profit
Tax
Minority Int.
Minority interest
Total Liabilities
Shareholders Equity
Net debt / (cash)
-1.2%
25.5%
82.4%
40.3%
31.1%
Total cap employed
Dividend per share
-
-
5
10
21
Net Working capital
612
363
343
449
555
growth (%)
-
-
-
82.4%
110.4%
Debt
447
462
462
662
912
Dividend payout
-
-
10%
10%
15%
2013
2014
2015F
2016F
2017F
35.7%
38.5%
39.2%
39.4%
39.7%
4.1%
6.8%
7.0%
7.2%
7.2%
11.9%
18.4%
16.9%
15.7%
14.6%
Core Net Margin (%)
2.7%
2.5%
3.7%
4.0%
4.1%
ROAE (%)
5.3%
3.8%
6.7%
8.8%
10.5%
ROAA (%)
2.4%
2.3%
3.9%
5.0%
5.8%
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
50
63
114
160
210
Profitability
142
321
344
375
412
Gross Margin (%)
(2)
(100)
(17)
(93)
(114)
43
(157)
-
-
-
189
284
441
443
508
(386)
(331)
(472)
(618)
(742)
-
-
(6)
(11)
(24)
Others
(375)
(179)
-
(0)
-
CF’s from investing
(761)
(511)
(478)
(630)
(766)
CF’s from financing
904
(8)
-
200
Net cash flow
333
(234)
(37)
Cash at BoY
169
515
515
(479)
Dividend
Cash at EoY
Free Cashflow
Year end Dec
Opr Margin (%)
EBITDA Margin (%)
Stability
3.1
1.8
1.7
1.8
1.9
Net Debt to Equity (x)
(0.0)
0.1
0.1
0.2
0.3
250
Net Debt to EBITDA (x)
(0.3)
0.4
0.4
0.6
0.9
13
(8)
Interest Coverage (x)
4.0
3.0
9.1
12.1
15.3
280
243
256
Efficiency
280
243
256
248
A/P (days)
48
43
39
37
38
(19)
90
112
190
A/R (days)
45
49
47
44
44
Inventory (days)
26
24
22
21
22
Interim Result (Rpbn)
Current ratio (x)
Capital History
2Q14
3Q14
4Q14
1Q15
2Q15
Sales
602
624
926
732
746
Gross Profit
218
236
285
307
259
EBITDA
100
147
106
145
140
Opr. Profit
33
34
55
75
62
Net profit
20
7
8
34
28
Core profit
19
8
8
35
28
Gross Margins (%)
36.3%
37.7%
30.8%
41.9%
34.8%
EBITDA Margins (%)
16.6%
23.5%
11.5%
19.8%
18.8%
Opr Margins (%)
5.4%
5.4%
5.9%
10.2%
8.3%
Net Margins (%)
3.3%
1.1%
0.9%
4.6%
3.8%
Core Margins (%)
3.2%
1.3%
0.9%
4.7%
3.7%
PT Trimegah Securities Tbk - www.trimegah.com
Date
12-Sept-13
IPO@Rp9,000
COMPANY FOCUS
9
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organiza on.
Siloam Hospitals
Company Focus
Patricia Gabriela
(patricia.gabriela@trimegah.com)
Reaching the Top
Initiate coverage on SILO with BUY
We initiate SILO with a Buy rating as company has been able to deliver
a strong double-digit top line growth. Supported with its network across
Indonesia (20 hospitals and 17 clinics in total), we believe SILO will
have more upside in terms of patient volume that translates to a promising top line growth. The industry is still underpenetrated; and with
MIKA already priced in, we think that SILO might catch up the laggard.
Aggressive hospital development: 4 hospitals per year
SILO managed to add 4-5 hospitals per year in last four years to its
hospital group through greenfield and acquisition. We forecast SILO to
add another 4 hospitals/year (lower than company’s guidance of 8-10
hospitals), but only 1 hospital for 2015F due to delay in permit. We view
that our hospital expansion forecast is still realistic considering the historical data and construction progress of some hospitals.
Positive growth from BPJS program
SILO has recorded robust patient volume growth with 18% CAGR 201214. In 2014, patient from BPJS program contributes 6% to total patient
volume albeit only 7 hospitals registered. Given hospital business’ high
operating leverage and SILO’s currently low occupancy rate, enrolling in
BPJS program makes sense as it should improve asset turnover and
therefore ROE (ROE to rise from 7% in 2015 to 11% in 2017).
Asset-light business model
In order to be able to ramp up its expansion plan, SILO uses light-asset
business model for its greenfield expansion. SILO does not own majority
of land and building of its hospitals. Of 20 hospitals, 12 is rented, 4 is
owned, and 4 is rented from 3rd parties. SILO’s rental expense is ~3%
of net revenue.
Valuation: BUY with TP of Rp 15,500
We recommend SILO at Rp 15,500 using DCF method (WACC of 10%,
LTG of 3%). Our TP implies 2016-17F EV/EBITDA of 28.1x and 23.8x
respectively.
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 15,500
Company Update
Share Price
Sector
Price Target
Rp 12,300
Healthcare
Rp 15,500 (+26%)
Stock Data
Reuters Code
Bloomberg Code
Issued Shares
Mkt Cap. (Rpbn)
Avg. Value Daily 6
Month (Rpbn)
52-Wk range
SILO.JK
SILO.IJ
1,156
14,220
49.1
17100 / 11275
Major Shareholders
PT Megapratama Karya Persada
60.5%
Public
29.5%
Consensus
Core EPS
Consensus (Rp)
TRIM vs Cons. (%)
16F
138
-4.3
17F
182
-24.3
Companies Data
Year end Dec
2013
2014
2015F
2016F
2017F
Net Sales (Rp bn)
EBITDA (Rp bn)
Net Profit (Rp bn)
EPS (Rp)
EPS Growth (%)
DPS (Rp)
1,847
220
50
48
-6%
-
2,472
455
63
54
14%
-
3,123
528
114
99
82%
5
4,013
630
160
138
40%
10
5,104
746
210
182
31%
21
BVPS (Rp)
EV/EBITDA (x)
P/E (x)
1,565
55.8
255.6
1,430
30.4
225.0
1,515
26.3
123.3
1,644
22.0
87.9
1,805
18.6
67.1
0.0
0.0
0.0
0.1
0.2
Div Yield (%)
PT Trimegah Securities Tbk - www.trimegah.com
Stock Price
Avg . 5 Day MA Trading Value (RH S )
18,000
P rice (LHS )
( Rpbn )
0.4
16,000
0.3
14,000
0.3
12,000
10,000
0.2
8,000
0.2
6,000
0.1
4,000
0.1
2,000
0.0
O ct-14
De c-14
Feb -15
Ap r-15
Jun-15
Au g -15
COMPANY FOCUS
O ct-15
1
Hospital network across Indonesia
In 1H15, SILO operates 20 hospitals across Indonesia. Management targets to have more than 50 hospitals by
2017F with 8-10 hospital expansion per year. However, we are being realistic as we forecast company to add 4
hospitals per year. In 2015F, we assume SILO to add only 1 hospitals as management confirmed that they’re
lagging in hospital development due to problem in license. Once license has released, company is ready to open
its hospital in Yogyakarta. Aside from hospitals, SILO also operates 17 clinics that serves as a feeder for BPJS
patients.
Figure 1. SILO’s hospital network
Source: TRIM Research
In order to differentiate its hospital from others, SILO established center of excellence in each of its hospitals.
Moreover, SILO acquired BIMC Kuta and BIMC Nusa Dua in 2013 to achieve medical tourism. These hospitals are
well known with Australian tourists, thus can support SILO’s vision. In 1H15, distinct market segment (incl. BIMC
Kuta and BIMC Nusa Dua) contributes 14% to SILO’s total patient volume.
As of now, SILO has the biggest number of operational bed in Indonesia with 29% CAGR 2011-14.
Figure 2. SILO’s operational beds
6,000
4,978
5,000
3,928
4,000
3,078
3,000
1,533
2,000
1,000
1,985
2,397
857
2011
2012
2013
2014
2015F
2016F
2017F
Source: TRIM Research
PT Trimegah Securities Tbk - www.trimegah.com
COMPANY FOCUS
2
Figure 3. SILO’s hospital group
Hospitals
Centre of Excellence
Mature:
Lippo Village
Cardiology, Neuroscience, Orthopedics, Emergency
Kebon Jeruk
Urology, Orthopaedic, Cardiology, Emergency
Surabaya
Fertility treatment, Cardiology, Emergency
Cikarang
Occupational health, Emergency
Balikpapan
Orthopedics, Emergency
MRCCC Semanggi
Cancer, Liver, Emergency
Developing:
Jambi
Emergency
Manado
Emergency
Makassar
Cardiology, Endocrinology, Emergency
Palembang
Gastroenterology, Emergency
Bali
Treatment for tourists, Orthopedics, Cardiology, Emergency
TB Simatupang
Cardiology, Oncology, Neuroscience, Emergency
New hospitals:
Purwakarta
Emergency
Medan
Trauma, Emergency
Kupang
Emergency
Distinct market segment hospitals:
RSUS
Emergency
Cinere
Cardiology
BIMC Kuta
Treatment for tourists, Emergency
BIMC Nusa Dua
Cosmetic surgery, Emergency
Asri
Urology
Source: TRIM Research
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COMPANY FOCUS
3
Figure 4. Number of operational beds comparison
Ramsay Sime Darby Health Care
Sari Asih Group
Awal Bros Group
MIKA
SILO
-
500
1,000
1,500
2,000
2,500
3,000
Source: TRIM Research
One stop care for primary, secondary, tertiary, and quaternary levels
By primary, means SILO provides clinics for corporate clients and gateway to Indonesia’s “Universal Healthcare
Coverage” as well as Government Health Insurance Program. As in 1H15, 11 of SILO’s hospitals participates in
BPJS program. SILO eagers to be best in class through rapid expansion of hospital network, attracting and retaining best doctors, and equip hospitals with latest technology. On top of that, SILO also develops integrated
centers of excellence and Digital Tele-Medicine.
As SILO serves all class levels, SILO has a higher revenue per patient compared to MIKA. We expect SILO to
hike its price by 2% CAGR 2015-20F (vs historical 2-6% CAGR 2012-14). The price increase is expected from a
more complex services. In 2011-12, SILO opened comprehensive cancer center and Indonesia’s first Gamma
Knife.
Regarding BPJS program, management stated that there is no problem in terms of payment. Once BPJS patient
has checked out from hospital, the documents related are collected and checked by verifiers. Management confirmed that the money can be received ~15 days after the document is verified.
Figure 5. SILO’s revenue per inpatient day
5.0
4.8
4.8
4.7
4.5
4.6
4.4
4.4
4.2
4.1
4.2
4.1
4.0
3.8
2011
2012
2013
2014
2015F
2016F
2017F
Source: TRIM Research
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COMPANY FOCUS
4
Figure 6. SILO’s revenue per outpatient
1.0
0.8
0.7
0.8
0.7
0.8
0.9
0.9
0.9
2014
2015F
2016F
2017F
0.6
0.4
0.2
2011
2012
2013
Source: TRIM Research
Lower occupancy rate due to new and developing hospitals
SILO has a slight lower occupancy rate at 53.9%, compared to MIKA at 63.6% in FY14. Need to remind that SILO has 4 mature hospitals, 12 developing, and 4 new; while majority of MIKA’s hospitals are considered as mature hospitals. (We base our mature assumption with >3 years of commencing).
A mature hospital tends to have higher occupancy rate; hence, better efficiency. We expect SILO to be able to
raise its occupancy rate overtime and a robust patient volume growth of 22% CAGR 2015-20F on the back of
more mature hospitals.
Figure 7. SILO’s hospital breakdown
Mature
35
30
25
20
15
10
5
-
Developing
New
4
2
4
4
10
4
10
8
4
12
4
2013
2014
13
7
12
16
2015F
2016F
2017F
Source: TRIM Research
PT Trimegah Securities Tbk - www.trimegah.com
COMPANY FOCUS
5
Financials
Figure 8. Income statement
Income estimate (Rp bn)
Total patient volume:
2013
2014
2015F
2016F
2017F
1,383,973
1,726,217
2,086,936
2,584,345
3,156,313
369,409
471,775
580,469
731,391
914,239
1,014,564
1,254,442
1,506,467
1,852,954
2,242,074
Per inpatient days
4.1
4.4
4.5
4.7
4.8
Per outpatient visits
0.8
0.8
0.9
0.9
0.9
Gross sales:
2,504
3,341
4,209
5,404
6,864
Inpatient
1,541
2,060
2,638
3,424
4,409
963
1,280
1,570
1,980
2,455
(1,845)
(2,389)
(3,054)
(3,909)
(4,946)
Doctors fee, salary and employee benefits
(848)
(1,107)
(1,439)
(1,842)
(2,358)
Drugs and medical supplies
(621)
(786)
(1,009)
(1,296)
(1,646)
Depreciation charges
(150)
(186)
(201)
(219)
(241)
Clinic supplies
(75)
(90)
(99)
(108)
(119)
Food and beverage
(45)
(53)
(57)
(88)
(124)
Outchecking expense
(36)
(55)
(69)
(86)
(108)
(9)
-
-
-
-
(61)
(112)
(180)
(270)
(351)
1,847
2,472
3,123
4,013
5,104
659
952
1,224
1,581
2,026
79
134
184
255
333
220
455
528
630
746
50
63
114
160
210
Inpatient days
Outpatient visits
Revenue (in mn Rp):
Outpatient
COGS:
Repairs and maintenance
Others
Net sales
Gross profit
EBIT
EBITDA
Net profit
Source: TRIM Research
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COMPANY FOCUS
6
We forecast SILO to post 25% net profit CAGR in 2015-18F as the group’s hospitals maturing. Note that we assume BPJS business will not hurt SILO’s margin (BPJS business is 8% of revenue). Company has assigned a case
manager to keep track of BPJS patient in order to manage their ALoS (Average Length of Stay) low. Management
stated that they will suffer no loss as long as ALoS for BPJS patient under 4 days.
Figure 9. Margin outlook (%)
2013
Gross profit
2014
2015F
2016F
2017F
35.7%
38.5%
39.2%
39.4%
39.7%
4.1%
6.8%
7.0%
7.2%
7.2%
11.9%
18.4%
16.9%
15.7%
14.6%
Pretax profit
3.9%
3.8%
5.6%
6.1%
6.4%
Net profit
2.7%
2.5%
3.7%
4.0%
4.1%
Operating profit
EBITDA
Source: TRIM Research
Figure 10. Balance sheet
Rp bn
2013
2014
2015F
2016F
2017F
Cash
515
280
243
256
248
Receivables
271
393
419
539
685
Inventories
95
106
125
161
203
1,402
1,589
1,717
1,960
2,290
317
476
467
467
467
2,601
2,844
2,971
3,382
3,893
Loan
447
462
462
662
912
Payables
164
193
221
283
359
Others
351
535
535
535
535
Total liability
962
1,190
1,219
1,481
1,806
1,639
1,654
1,752
1,901
2,087
Fixed assets
Others
Total assets
Total equity
Source: TRIM Research
PT Trimegah Securities Tbk - www.trimegah.com
COMPANY FOCUS
7
Valuation
We initiate SILO with a BUY rating at target price of Rp 15,500, +26% upside from current price. We like SILO as
company managed to deliver double digit top line growth and continue to serve a strong growth on the back of
its aggressive hospital development and participation in BPJS program. We derive our target price using DCF
method assuming a WACC of 10% and LT growth rate of 3%.
Our TP implies 2016-17F EV/EBITDA of 28.1x and 23.8x. This is a 38% discount to MIKA (SILO’s only actively
traded peer in JCI), respectively. We view the discount should narrow as SILO delivers on its growth promise.
Figure 11. DCF calculations
2017F
2018F
2019F
2020F
2021F
2022F
2023F
2024F
2025F
EBIT
333
441
557
837
1,084
1,506
1,871
2,306
2,821
EBIT (1-T)
213
282
356
534
692
961
1,195
1,472
1,802
Depreciation
412
457
510
574
651
744
855
987
1,147
Net working capital
306
455
642
887
1,111
1,389
1,711
2,096
2,557
Capex
(742)
(891) (1,069) (1,282)
(1,539) (1,847) (2,216)
(2,659) (3,191)
FCFF (Rp bn)
190
303
440
713
916
1,248
1,545
1,897
2,315
Discounted FCFF
190
275
361
530
617
761
854
950
1,050
Terminal value
32,277
PV of terminal value
13,263
Total company value
18,850
Net debt
728
NAV
18,122
NAV / share
15,675
Source: TRIM Research
PT Trimegah Securities Tbk - www.trimegah.com
COMPANY FOCUS
8
Income Statement (Rpbn)
Balance Sheet (Rpbn)
Year end Dec
2013
2014
2015F
2016F
2017F
Net Revenue
Revenue Growth
1,847
45.0%
2,472
33.9%
3,123
26.3%
4,013
28.5%
5,104
27.2%
659
952
1,224
1,581
2,026
76
168
218
289
367
220
455
106.2%
528
16.1%
630
19.3%
746
18.3%
(7)
(40)
(9)
(9)
(9)
Gross Profit
Opr. Profit
EBITDA
EBITDA Growth (%)
Net Int Inc/(Exp)
Year end Dec
2013
2014
2015F
2016F
2017F
Cash and equivalents
515
280
243
256
248
Other curr asset
392
561
607
761
951
1,402
1,589
1,717
1,960
2,290
291
414
404
404
404
2,601
2,844
2,971
3,382
3,893
Net fixed asset
Other asset
Total asset
ST debt
17
16
16
16
16
Other curr liab
279
462
491
553
628
Gain/(loss) Forex
-
-
-
-
-
Other Inc/(Exp)
3
(34)
(34)
(34)
(34)
LT debt
430
446
446
646
896
72
94
174
246
324
Other LT Liab
236
266
266
266
266
(22)
0
(34)
(3)
(63)
(3)
(89)
(3)
(117)
(3)
28
5
(4)
(4)
(4)
962
1,190
1,219
1,481
1,806
Extra. Items
Reported Net Profit
50
60
111
157
207
1,639
1,654
1,752
1,901
2,087
Core Net Profit
50
63
114
160
210
(69)
182
219
406
664
2,305
2,366
2,464
2,813
3,249
Pre-tax Profit
Tax
Minority Int.
Minority interest
Total Liabilities
Shareholders Equity
Net debt / (cash)
-1.2%
25.5%
82.4%
40.3%
31.1%
Total cap employed
Dividend per share
-
-
5
10
21
Net Working capital
612
363
343
449
555
growth (%)
-
-
-
82.4%
110.4%
Debt
447
462
462
662
912
Dividend payout
-
-
10%
10%
15%
2013
2014
2015F
2016F
2017F
35.7%
38.5%
39.2%
39.4%
39.7%
4.1%
6.8%
7.0%
7.2%
7.2%
11.9%
18.4%
16.9%
15.7%
14.6%
Core Net Margin (%)
2.7%
2.5%
3.7%
4.0%
4.1%
ROAE (%)
5.3%
3.8%
6.7%
8.8%
10.5%
ROAA (%)
2.4%
2.3%
3.9%
5.0%
5.8%
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
50
63
114
160
210
Profitability
142
321
344
375
412
Gross Margin (%)
(2)
(100)
(17)
(93)
(114)
43
(157)
-
-
-
189
284
441
443
508
(386)
(331)
(472)
(618)
(742)
-
-
(6)
(11)
(24)
Others
(375)
(179)
-
(0)
-
CF’s from investing
(761)
(511)
(478)
(630)
(766)
CF’s from financing
904
(8)
-
200
Net cash flow
333
(234)
(37)
Cash at BoY
169
515
515
(479)
Dividend
Cash at EoY
Free Cashflow
Year end Dec
Opr Margin (%)
EBITDA Margin (%)
Stability
3.1
1.8
1.7
1.8
1.9
Net Debt to Equity (x)
(0.0)
0.1
0.1
0.2
0.3
250
Net Debt to EBITDA (x)
(0.3)
0.4
0.4
0.6
0.9
13
(8)
Interest Coverage (x)
4.0
3.0
9.1
12.1
15.3
280
243
256
Efficiency
280
243
256
248
A/P (days)
48
43
39
37
38
(19)
90
112
190
A/R (days)
45
49
47
44
44
Inventory (days)
26
24
22
21
22
Interim Result (Rpbn)
Current ratio (x)
Capital History
2Q14
3Q14
4Q14
1Q15
2Q15
Sales
602
624
926
732
746
Gross Profit
218
236
285
307
259
EBITDA
100
147
106
145
140
Opr. Profit
33
34
55
75
62
Net profit
20
7
8
34
28
Core profit
19
8
8
35
28
Gross Margins (%)
36.3%
37.7%
30.8%
41.9%
34.8%
EBITDA Margins (%)
16.6%
23.5%
11.5%
19.8%
18.8%
Opr Margins (%)
5.4%
5.4%
5.9%
10.2%
8.3%
Net Margins (%)
3.3%
1.1%
0.9%
4.6%
3.8%
Core Margins (%)
3.2%
1.3%
0.9%
4.7%
3.7%
PT Trimegah Securities Tbk - www.trimegah.com
Date
12-Sept-13
IPO@Rp9,000
COMPANY FOCUS
9
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