en dbsv silo initiation2014

Indonesia Company Focus

Siloam International Hospitals
Refer to important disclosures at the end of this report

Bloomberg: SILO IJ | Reuters: SILO.JK

25 Jun 2014

FULLY VALUED Rp14,300

Expansive but expensive

JCI : 4,842.13



Noteworthy healthcare potential in Indonesia

(Initiating Coverage)
Price Target : 12-Month Rp 12,750

Reason for Report : Initiating coverage
Potential Catalyst: New hospital acquisitions



Market leader with aggressive expansion plan



Solid business model



Initiate with FULLY VALUED and Rp12,750 TP

Analyst
Edward Tanuwijaya +6221 3003 4932
Edward.Tanuwijaya@id.dbsvickers.com

Vast growth potential in healthcare industry.

Indonesia’s healthcare expenditure only represents 2.7%
of GDP, despite growing at 12% CAGR for the past four
years. Being one of the lowest healthcare spenders per
capita in Asia Pacific region at US$132, Indonesia (the 4th
most populated country) has vast potential in healthcare,
given its rising middle class and demographic shift.

Price Relative
Rp

Relative Index

16,100.0

209

15,100.0
189

14,100.0

13,100.0

169

12,100.0

149

11,100.0

109

9,100.0
8,100.0
Sep-13

Largest private hospital operator with aggressive
expansion plan. Siloam Hospital (SILO) currently
operates 16 hospitals with 3,755-bed capacity (the largest
among private hospital operators in Indonesia) with an

expansion plan of 4-6 new hospitals annually in its
current expansion phase.

129

10,100.0

89
Dec-13

Mar-14

Siloam International Hospitals (LHS)

Jun-14

Relative JCI INDEX (RHS)

Forecasts and Valuation
FY Dec (Rp bn)

Revenue
EBITDA
Pre-tax Profit
Net Profit
Net Pft (Pre Ex.)
EPS (Rp)
EPS Pre Ex. (Rp)
EPS Gth (%)
EPS Gth Pre Ex (%)
Diluted EPS (Rp)
Net DPS (Rp)
BV Per Share (Rp)
PE (X)
PE Pre Ex. (X)
P/Cash Flow (X)
EV/EBITDA (X)
Net Div Yield (%)
P/Book Value (X)
Net Debt/Equity (X)

ROAE (%)
Consensus EPS (Rp):
No. of brokers following:

2013A

2014F

2015F

2016F

2,504
304
72
50
50
43
43
(15)

(15)
43
0
1,394
331.5
331.5
nm
53.0
0.0
10.3
CASH
5.4

3,283
505
106
79
79
68
68

59
59
68
0
1,462
209.0
209.0
37.2
32.4
0.0
9.8
CASH
4.8

4,358
730
153
114
114
98

98
44
44
98
0
1,561
145.3
145.3
26.9
22.7
0.0
9.2
0.0
6.5

5,839
1,040
219
163
163

141
141
44
44
141
0
1,702
101.2
101.2
18.7
16.1
0.0
8.4
0.1
8.7

93
B: 3

121

S: 1

239
H: 1

ICB Industry : Health Care
ICB Sector: Health Care Equipment & Services
Principal Business: SILO is Indonesia's largest private hospital
operator nationwide with current 16 operational hospitals in
portfolio and plenty of new hospitals in pipeline for the next 5
years.

Source of all data: Company, DBS Vickers, Bloomberg Finance L.P

www.dbsvickers.com
ed: TH / sa: MA

Solid business model. Good frameworks and system,
as described in its “Four Pillar Foundation” strategy. In
addition, SILO (as part of Lippo group) should benefit
from management expertise, real estate know-how and
cash recyling mechanism through Singapore-listed First
REIT (which has the potential to further unlock its value).
Initiate coverage with FULLY VALUED
recommendation and Rp12,750 TP. Our TP implies
20xEV/EBITDA 2015 (expensive against regional peers,
despite offering more growth and commanding scarcity
premium) and is based on discounted cash flow valuation
of existing and new hospitals. Potential upside from our
valuation will be from better-than-expected operational
performance of its newer hospitals and future
acquisitions.
At A Glance
Issued Capital (m shrs)
Mkt. Cap (Rpbn/US$m)
Major Shareholders
Lippo Karawaci TBK (%)
Free Float (%)
Avg. Daily Vol.(‘000)

1,156
16,532 / 1,380
78.6
14.0
10,698

Company Focus
Siloam International Hospitals

Investment thesis
We initiate coverage of Siloam International Hospitals (SILO)
with FULLY VALUED recommendation and Rp12,750 TP,
based on DCF valuation on its existing hospitals and potential
new hospitals. Despite possessing significant growth potential
by being the market leader in private hospital business and
therefore placing itself in a great position to tap into
Indonesia’s underpenetrated healthcare sector and the
country’s rising healthcare needs, SILO’s current valuation is
rich at 24xEV/EBITDA 2015 (expensive as compared with
regional peers). SILO is in an aggressive expansion mode until
2017, whereby it requires large and constant funding to pull
off its goal. Potential upside to our valuation will be from
better-than-expected operational performance of its newer
hospitals and future acquisitions
1)

Largest private hospital operator in Indonesia with
aggresive expansion plan in the next few years.
SILO, currently with 16 hospitals under its portfolio and
3,755-bed capacity, is the market leader for Indonesia’s
private hospital in terms of existing operational beds (and
bed capacity) and number of hospitals. In its current
expansion phase (from 2011–2017), SILO plans to add six
new hospitals annually (either from acquisitions or greenfield
projects). SILO targets to have 40 operational hospitals with
a 10,000-bed capacity by 2017.

Siloam hospitals map

Source: DBS Vickers, Company

Page 2

We think the target of having 40 hospitals by 2017 is too
aggressive. There is a potential risk on the timeline for new
hospitals to be operational, in addition to cash flow, political
and regulatory risks. The last two hospital additions; TB
Simatupang and Bali; were delayed by between 4-6 months.
Our conservative projection shows that SILO should be able
to achieve its stated target by 2019, considering fewer new
hospital additions annually. Typical cash flow for a new
greenfield hospital is shown on the next page.
Siloam hospitals expansion projection
45

no. of hospitals
40

40

37

35

32

30

27

25

22
18

20
15

12

10
5

14

7
4
1

0
1996

2004

2011

2012

2013

Source: Company, DBS Vickers

2014F

2015F

2016F

2017F

2018F

2019F

Company Focus
Siloam International Hospitals

New greenfield hospital typical cash flow scenario
Items / Year
No of operational beds
Occupancy rate
Average length of stay (ALOS)
No of in-patient
Revenue from in-patient per patient per day
Revenue from in-patient
No of out-patient
Revenue from out-patient per patient per day
Revenue from out-patient
Total revenue
Revenue growth
EBITDA margin assumption
EBITDA
Capex
Depreciation
Tax
Free cashflow
NPV
IRR

Unit

0

%
day
Rp m
Rpbn
Rp m
Rpbn
Rpbn
%
%
Rpbn
Rpbn
Rpbn
Rpbn
Rpbn
Rpbn
%

-300

-300
32
16%

1
150
10%
4
1,369
3.5
19
40,000
0.5
20
39
-2%
-1
-2
-25
-6
-9

2
150
25%
4
3,422
3.9
54
80,000
0.6
45
98
151%
8%
8
-2
-25
-4
1

3
150
40%
4
5,475
4.4
96
120,000
0.6
75
171
74%
14%
24
-2
-26
0
22

4
150
50%
4
6,844
4.9
135
160,000
0.7
112
247
44%
17%
42
-2
-26
4
44

5
150
60%
4
8,213
5.5
181
180,000
0.8
142
323
31%
21%
68
-2
-26
10
76

6
150
70%
4
9,581
6.2
236
200,000
0.9
176
413
28%
23%
95
-2
-26
17
110

7
150
70%
4
9,581
6.9
265
200,000
1.0
197
462
12%
23%
106
-2
-26
20
124

8
150
70%
4
9,581
7.7
297
220,000
1.1
243
540
17%
23%
124
-2
-27
24
147

9
150
70%
4
9,581
8.7
332
240,000
1.2
297
629
17%
23%
145
-2
-27
29
172

10
150
70%
4
9,581
9.7
372
260,000
1.4
361
732
16%
23%
168
-2
-27
35
202

Source: DBS Vickers

Siloam hospitals location breakdown

Outside Java
8 units / 50.0%

Greater Jakarta
7 units / 43.8%

Surabaya
1 unit / 6.3%

Source: Company, DBS Vickers

In addition to its current 16 operational hospitals, there
are six under construction hospitals in the pipeline;
namely Medan (North Sumatra), Kupang (east Nusa
Tenggara), Semarang (Central Java), Bandung (West
Page 3

Private hospital competition landscape
18

unit

beds

Operational beds (RHS)

16

2000
1800

No. of hospital (LHS)

1600

14

1400

12

1200

10

1000
8

800

6

600

4

400

Pluit

Mayapada

Omni
Hospitals

Pondok
Indah Group

Eka
Hospitals

Sari Asih

0
Sime Darby Ramsay
Health Care

200

0
Awal Bros

2
Hermina

Potential expansion outside Jakarta and Bali island makes
SILO’s outlook more compeling as its target market
segment (i.e. middle to upper class) in those areas are still
underpenetrated.

Java), Yogyakarta (Central Java) and Purwakarta (West
Java).

Mitra
Keluarga

Strong brand presence nationwide provide firstmover advantage for potential new locations
Currently, SILO hospitals’ location composition is 50% in
the two largest and densest cities in Indonesia (i.e.
Greater Jakarta & Surabaya) and another 50% outside
Java island. SILO (with the connection from parent Lippo
group) has identified locations for the next expansion. In
fact, SILO has signed a master agreement with its parent
company Lippo Karawaci (LPKR IJ) and strategic partner
MPU (e.g. sale purchase, rental agreement and rights to
build hospital) on 30th April 2013 for 30 locations
nationwide.

Siloam

2)

Source: Company, DBS Vickers

Given the network (current and potential) nationwide,
infrastructure advantage and expected strong cash flow
from its maturing hospitals, SILO should be on track to
become the largest one-stop hospital chain in Indonesia.
3)
Well-managed hospital with solid business model.
SILO’s sheer operation size and its network require a
good framework and system, which is described in its
“Four Pillar Foundation” strategy. It includes excellence in
emergency services, state-of-the-art medical equipment &
system, digital tele-medicine and doctor partnership
development program.
The centralised “500-911” call service and modern
equipment & supplies, coupled with well-established
teams helps shorten response time in emergency cases.
Private jets (joint-venture with Susi Air) and helicopter
services on emergencies are also available on request.

Company Focus
Siloam International Hospitals

Siloam Medivac Emergency service

Source: DBS Vickers

SILO is one of the pioneers in Indonesia, using 3-Tesla
MRI, 256 slice CT-Scan, Rapid Arc Linear Accelerator and
Gamma Knife (the first knifeless brain surgery equipment
in Indonesia) medical equipment at its Center of
Excellence hospitals. SILO’s hospitals have a minimum
standard suite that includes 1.5-Tesla MRI, 128 slice CTScan, 4D ultrasound, digital mammography and digital Xray.
Gamma Knife equipment in Siloam Hospital Lippo
Village

Source: Company brochure

SILO centralises its operating activities through an
integrated system (which includes keeping patient & lab
records, billing & price system, and procurement
activities) and consolidation for backoffice functions at its
HQ. Through its “Tele-Medicine” system, SILO also
adopts “hub” and “spoke” strategy between its
hospitals. The “spoke” hospitals located in smaller cities
and large towns act as a source of referrals for more
complex cases to the “hub” hospitals (i.e. hospitals with a
high number of specialists, in large urban cities and offers
a greater range of clinical specialities).

Page 4

Siloam Center of Excellent and Hub/Spoke
Hospital

Hub /
spoke

Lippo Village
Kebon Jeruk
Surabaya
MRCCC
Makassar
Cinere
Bali

Hub
Hub
Hub
Hub
Hub
Hub
Hub

Lippo Cikarang
Jambi
Balikpapan
General
Hospital
Manado
Sriwijaya
TB Simatupang
Kuta
Nusa Dua

Center of Excellence

Spoke
Spoke
Spoke
Spoke

Cardiology, neurosciences and orthopedics
Cardiac surgery, urology and orthopedics
Cardiology, and fertility treatment
Cancer treatment
Cardiology for East Indonesia area
Cardiology
Orthopedics, cardiology and medical
tourism hub
Occupational medicine
-

Spoke
Spoke
Spoke
Spoke
Spoke

Gastroenterology
-

Source: DBS Vickers, Company

To attract, retain and develop quality medical personnel,
SILO implement a number of initiatives such as:
 Siloam Doctor Partnership Development Program
(SDPDP), whereby doctors (especially specialists)
enjoy a range of benefits (i.e. life insurance,
medical insurance, pension program, continuing
medical education, etc). In addition, specialists get
high fees depending on exclusivity of practice
arrangement (i.e. exclusive: 94-98% of
consultation fee, non-exclusive: 93-97% of
consultation fee).
 Comprehensive 18-month management associate
program to find best management talent for both
existing and future hospitals.
 Partnership with medical science group University
Pelita Harapan Medical Services (UPHMS), which
trains more than 100 doctors and 100 nurses from
University Pelita Harapan (UPH) annually.
 Collaboration with leading regional universities,
medical and nursing schools in Indonesia.
4)
Unlocking value through a REIT
SILO develops both brownfield and greenfield hospitals.
Once the hospitals are operational and stable, SILO’s
parent company will inject the hospital’s land and
building into its Singapore-listed First REIT and lease the
buildings from the REIT. The sale-and-leaseback
agreement involves a 15-year initial lease term (with
option to renew for another 15 years) and progressive
rental rate (i.e. 1% of annual gross operating revenue
[GOR] for 1st year, 2% of GOR for 2nd year and 3% of
GOR for 3rd year onwards).

Company Focus
Siloam International Hospitals

Sale and leaseback agreement

Source: DBS Vickers

As part of the Lippo group, SILO can tap into Lippo’s
group structure and synergy for management expertise,
real estate know-how (for identifying land and building
management) and cash recycling mechanism to reduce
execution risk.
This mechanism allows SILO to raise cash for future
expansions and acquisitions at the expense of rising rental
expense. Without the sale-and-purchase mechanism to
REIT mentioned above, SILO will need to raise capital
externally (either by rights issue or loan facility) before
2016. To strengthen its balance sheet, SILO indicated that
they plan to implement a rights issue by the end of 2014.
Lippo Group

Source: DBS Vickers, Companies

Page 5

SILO’s rental term & leases agreement
Hospital

Rental term

Lease agreement

Lippo Village
Kebon Jeruk
Surabaya
Lippo Cikarang
Jambi
Balikpapan
MRCCC
General Hospital
Manado
Makassar
Sriwijaya
Cinere
Bali
TB Simatupang
Kuta
Nusa Dua

Note 1
Note 1
Note 1
Annual rent
n/a
n/a
Note 1
Note 1
Note 1
Note 1
Note 2
Rp6.5bn p.a.
Note 1
Note 1
n/a
n/a

15 years (renewal option for another 15 years)
15 years (renewal option for another 15 years)
15 years (renewal option for another 15 years)
15 years (renewal option for another 15 years)
n/a (Self-owned)
n/a (Self-owned)
15 years (renewal option for another 15 years)
15 years (renewal option for another 15 years)
15 years (renewal option for another 15 years)
15 years (renewal option for another 15 years)
15 years (renewal option for another 15 years)
13 years (renewal option for another 5 years)
10 years (renewal option for another 10 years & 8 years)
15 years (renewal option for another 15 years)
n/a
n/a

Source: Company, DBS Vickers.
Note:1. 1% of GOR (1st yr), 2% of GOR (2nd yr), 3% of GOR (3rd yr onwards)
2. Rp3bn (year 1-3), Rp3.5bn (year 4-6) and Rp4bn (year 7-10)

Company Focus
Siloam International Hospitals

Key catalysts
 Rising healthcare needs in Indonesia
Indonesia, the 4th most populated country (~250m people),
has potential to see rising healthcare spending, given its
demographic shift and rising middle class.

Life expectancy
85

years

80
75

Healthcare expenditure grew 12% CAGR for the past four
years, but currently represents only 2.7% of GDP (one of the
lowest in the ASEAN region). Indonesia’s healthcare
expenditure is also at a paltry US$132 per capita, while its
average life expectancy of 67.8 years is at par with the
world’s average. Indonesia’s population has a median age of
28.9 years and currently, 14% of its population is above 55
years. These statistics indicate the growth potential for
Indonesia’s healthcare industry.

Source: CIA World Fact Book, United Nations (UN)

Healthcare expenditure (as % of GDP)

Median age and population portion above 55 years

6.8

Median age

40
4.6

5

4.1

4.1

4

35

3.6
2.8

3

2.7

2.5

2

2

30
25

1
20

0

US$ per capita

3,000
2,500

3,780
3,339
2,797
2,297

2,000
1,500
1,000
500

605

473

390

258

0

Source: CIA World Fact Book, United Nations (UN)

Page 6

Russia

Philippines

India

40%
35%
30%
25%
20%
15%
10%
5%
0%

Significant top-line growth to ease cashflow concerns.

Considering the potential above and the aggresive expansion
of hospitals for SILO, we believe our assumption of a 32%
CAGR growth in revenue (for both in-patient and out-patient)
until 2020 are justifiable. The successful execution of
expansion will see SILO generate its first positive cashflow in
2017.

Healthcare expenditure per capita

3,500

45%

Source: CIA World Fact Book, United Nations (UN)

Source: CIA World Fact Book

4,000

Indonesia

China

Thailand

Population above 55 years

Malaysia

Vietnam

United States

South Korea

United Kingdom

Canada

Singapore

Japan

years

Australia

60

45
5.7

6

67.9

65

50

8 x
7

70

180

148

132

Company Focus
Siloam International Hospitals

Key risks and concerns

SILO revenue growth
14,000

Rpbn

In-patient

Out-patient

12,000
4,992

10,000
8,000

3,774
2,786

6,000


Capital intensive and requires large and constant
funding. SILO has laid out an aggressive expansion plan for
the next few years. Therefore, it needs large capital upfront
continuously these few years. As a guidance, SILO needs
US$25m capex upfront for each 150-bed capacity greenfield
hospital project.

2,027

4,000

7,682

1,510

6,124

1,157

2,000
-

423
607

537
722

711
1,077

2010

2011

2012

963
1,541

2,126

2,848

3,812

4,860

2013 2014F 2015F 2016F 2017F 2018F 2019F

Source: Company, DBS Vickers

Free cash flow forecast
800

Rpbn
670

600

526

Initial capex breakdown for greenfield hospital

Working
capital
Rp12bn, 4%
(by SILO)

Land &
building
Rp120bn, 40%
(by LPKR)

Medical
equipment
Rp168bn, 56%
(by SILO)

400
200

112

Source: DBS Vickers.
Note that 40% of capex is land & building, and therefore will be
spent by parent company property developer Lippo Karawaci (LPKR
IJ)

0
-200
-218

-245

2014F

2015F

-161

-400

Source: DBS Vickers

2016F

2017F

2018F

2019F

In our view, SILO can have 40 operational hospitals by early
2019 (vs company’s target of 2017). Typical new greenfield
hospital cash flow scenario is shown in the next page. To
fund these expansions, SILO needs both internal cash flow
generated by its existing mature hospitals and the cash raised
from hospital sales. This also translates into execution risk for
the planned expansion.

Dependent on REIT’s ability to acquire hospitals. As
mentioned in the previous section, the source of funds for
future expansion is the sale of hospitals to First REIT and is
therefore dependent on First REIT’s ability to acquire hospital
assets and lease them back to the company.
Related party transactions. This risk potentially arises

from the sale and leaseback agreement and loans from
major shareholder (i.e. LPKR, which owns 78.2% of SILO).
On 30th April 2013, SILO entered into a master
agreement with both LPKR and Metropolis Propertindo
Utama (MPU) for 30 hospital locations for future
expansion.

Page 7

Company Focus
Siloam International Hospitals

Master agreement (signed on 30th April 2013)
Location

Bandung
Yogyakarta
Bintaro
Surabaya Manyar
Pontianak
Kemang
St. Moritz
Medan
Malang
Salemba
Sea Master Surabaya
Palembang
Kupang
Srondol Semarang
Padang
Bangka Belitung
Bogor
Jember
Bluemall Bekasi
Bekasi Grand Mall
MT Haryono
Lampung
Purwakarta
Ambon
Lubuk Linggau
Manado Kairagi
Serang
Pekanbaru
Pluit
Cempaka Putih

Party

LPKR
LPKR
LPKR
LPKR
LPKR
LPKR
LPKR
MPU
MPU
MPU
MPU
MPU
MPU
MPU
MPU
MPU
MPU
MPU
MPU
MPU
MPU
MPU
MPU
MPU
MPU
MPU
MPU
MPU
MPU
MPU

Agreement

Joint operation
Rights to build hospital
Rights to build hospital
Rights to build hospital
Rights of First Refusal
Rental agreement
Rental agreement
Sale purchase agreement
Sale purchase agreement
Sale purchase agreement
Sale purchase agreement
Sale purchase agreement
Rights to build hospital
Rights to build hospital
Rights to build hospital
Rights to build hospital
Rights to build hospital
Rights to build hospital
Rights to build hospital
Rights to build hospital
Rights to build hospital
Rights to build hospital
Rights of First Refusal
Rights of First Refusal
Rights of First Refusal
Rights of First Refusal
Rights of First Refusal
Rights of First Refusal
Rental agreement
Rental agreement

Source: Company

Also, SILO has a loan agreement with LPKR. As at Mar
2014, SILO had an outstanding Rp387bn loan balance to
related party (mostly from LPKR). This loan is interest-free
until Dec 2013. Post-2013, the loan facility can bear
interest rate as high as 12% p.a. In our forecast, we
assume no reduction in loan balance from related party
until 2017, as SILO still requires large funding for its
expansion capex.

Shortage of medical human resource. Although we
view that SILO should not have issues in obtaining and
retaining doctors or specialists, there is a dearth of
workers in this industry (at just 0.2% of the total
population).

Page 8

Physician density per 10,000 population
Australia
United Kingdom
United States
Japan
Singapore
China
Brunei
Vietnam
Philippines
India
Burma
Thailand
Cambodia
Indonesia

38.5
27.7
24.2
21.4
19.2
14.6
13.6
12.2
12
6.5
5
Density
(per 10,000
population)

3
2.3
2
0

10

20

30

40

50

Source: CIA World Fact Book, WHO, Kaiser Family Foundation

Extensively regulated industry. The healthcare sector

is exposed to extensive and dynamic government laws
and regulations. Material changes in current regulations
and laws will probably have an adverse impact on SILO’s
operations.

Example of hospital regulations
Regulation
Hospital operation
Hospital license
Doctor / healthcare worker
Doctor practice license
Foreign nationals healthcare labor

Document
Law UU No. 44/2009
Health ministry decree no. 147/MENKES/PER/I/2010
Law UU No. 29/2004
Health ministry decree no. 2052/MENKES/PER/X/2011
Health ministry decree no. 317/MENKES/PER/III/2010

Source: Ministry of Health


Litigation risk from medical and legal claims.
Hospital business is by default subject to medical and
legal claims. Currently, there are two ongoing lawsuits
with potential damage of ~Rp200bn.

Company Focus
Siloam International Hospitals

Valuation
Initiating SILO coverage with FULLY VALUED
recommendation and Rp12,750 TP.
We value the company using discounted cash flow valuation
up to year 2028 of existing and new hospitals. While SILO
offers growth and is the leader of premium hospital in
Indonesia, its valuation is still at a premium to regional
healthcare peers, even with scarcity premium argument. Our
TP implies 20xEV/EBITDA in 2015 (vs 15x regional peers’
average).
Our key assumptions for our valuation model are as follows:
 WACC of 13.9% with beta of 1.2x.
 Additional 4-5 hospitals per annum with initial capex
of US$25m per hospital with 150-bed capacity each.
 No hospital sales in SILO’s book to First REIT.

Page 9

 No repayment on the loans to related parties until
2017 and 11.5% interest expense for those facilities,
which significantly impact earnings.
 Additional loan facilities of Rp90bn per annum in 2015
& 2016 to fund expansion capex.
 New hospitals to generate positive EBITDA in 2nd year
(i.e. 8% EBITDA margin) and reach a stable 23%
EBITDA margin in 6th year.The IRR is 16% within a 10year period.
 Revenue to grow at 30% CAGR from 2013 to 2019,
with gradual improvement in EBITDA margin from
c.12% to c.20% within the same period.
 Free cash flow starts to turn positive in 2017.
 Terminal growth of 4% from 2028 onwards.
 Debt equity post-IPO (i.e. 12 Sep 2013) to stay around
0.27-0.31 range.

Company Focus
Siloam International Hospitals

Hospitals valuation
Market cap
BB Ticker

SILO IJ Equity
SAME IJ Equity
SRAJ IJ Equity
BGH TB Equity

EV/EBITDA(x)

PE(x)

PB(x)

Div. Yield

ROE

Company name

Siloam International
Hospitals
Sarana Meditama
Metropolitan *
Sejahteraraya
Anugrahjaya *
Bangkok Dusit
Medical Services

US$m

FY14F

FY15F

FY14F

FY15F

FY14F

FY15F

%

%

1,388.5

27.2

19.1

175.8

122.2

8.2

7.7

0.0

5.4

271.1

n/a

n/a

n/a

n/a

n/a

n/a

0.0

42.8

152.0

n/a

n/a

n/a

n/a

n/a

n/a

0.0

-5.8

8,022.2

2.7

2.1

3.1

2.7

0.5

0.4

13.1

17.5

2,537.9

16.6

14.1

27.6

23.5

6.9

5.9

1.8

27.8

611.1

15.8

13.9

28.5

24.4

4.5

4.2

0.0

13.8

BH TB Equity

Bumrungrad Hospital

BCH TB Equity

Bangkok Chain *

RFMD SP
Equity

Raffles Medical

1,751.6

19.4

18.0

27.3

24.2

3.8

3.4

1.6

19.7

IHH SP Equity

IHH Healthcare

11,000.5

20.2

18.2

40.4

35.6

1.7

1.7

0.7

3.6

KPJ MK Equity

KPJ Healthcare *

2,769.1

16.9

14.7

30.5

27.3

2.8

2.7

0.0

9.4

APHS IN Equity

Apollo Hospitals
Enterprise *

2,226.5

17.7

14.8

34.0

27.8

4.2

3.8

0.0

11.1

FORH IN Equity

Fortis Healthcare *

927.3

23.3

15.7

127.0

46.1

1.2

1.2

0.0

3.1

RHC AU Equity

Ramsay Healthcare *

10,010.6

15.1

12.0

28.6

24.2

5.8

5.2

1.9

20.7

SHL AU Equity

Sonic Healthcare *

7,303.4

11.9

10.9

17.5

15.7

2.2

2.1

4.0

12.6

PRY AU Equity

Primary Healthcare *

2,377.4

8.3

7.7

13.5

12.1

0.8

0.8

4.7

5.9

Indonesia

27.2

19.1

175.8

122.2

8.2

7.7

0.0

10.1

Thailand

6.5

5.5

10.0

8.6

2.2

1.9

9.8

19.6

Singapore

20.1

18.2

38.6

34.0

2.0

1.9

0.9

5.8

Malaysia

16.9

14.7

30.5

27.3

2.8

2.7

0.0

9.4

India

19.4

15.1

61.3

33.2

3.3

3.0

0.0

8.7

Australia

13.1

11.1

22.7

19.6

3.8

3.5

3.0

15.9

Market weighted average

Source: DBS Vickers, Bloomberg Finance L.P. Note: * Bloomberg consensus estimate

Page 10

Company Focus
Siloam International Hospitals

SWOT Analysis
Strengths
 Largest private hospital operator in Indonesia. SILO
currently has 16 hospitals under its portfolio and plans to
expand aggresively in the next few years.
 First-mover advantage in smaller cities, with strong brand
and good network infrastucture nationwide.
 Solid business model, with “Four Pillar Foundation”
strategy that includes excellence in emergency services,
state-of-the-art medical equipment & system, digital telemedicine and doctor partnership development program.
 Value unlocking through REIT, providing avenue for cash
recycling mechanism for future expansion.
 Synergy with parent group Lippo, enabling company to
tap into management expertise and real estate knowledge.
Opportunities
 Rising healthcare needs in Indonesia, with increasing
health consciousness of urban population. Healthcare
expenditure grew 12% CAGR for the past four years. There
is no sign of slowing down in the medium term as it
represents only 2.7% of GDP (i.e. underpenetrated market).

Source: DBS Vickers

Page 11

Weakness
 Dependent on REIT for expansion. Funds for future
expansion is dependent on First REIT’s ability to acquire
hospital assets and lease them back to the company.
 Capital-intensive project requires large and constant
funding, with aggressive plan (i.e. 5-6 new hospitals p.a.)
for the next few years.
 Related party transactions. The asset-light strategy
requires asset transfers between the company and
companies within Lippo group (through property leases,
shareholder loans, etc)

Threats
 Shortage of medical human resource, with healthcare
worker-to-population ratio of only 0.2%.
 Highly subject to government’s extensive laws and
regulations. The company may face an adverse impact if
there are any material changes in the regulations.
 Litigation risk from medical and legal claims. There are
currently three ongoing lawsuits with potential damage of
approximately Rp200bn.
 Botched implementation of universal coverage.

Company Focus
Siloam International Hospitals

Company Background
in 1996 with a current capacity of 317 beds. SHLV is the first
hospital in Indonesia to be accredited (on 19 Sep 2007) and
re-accredited in triennial review (on 4 Sep 2010) by Joint
Commission International (JCI), the international arm of the
organisation that reviews and accredits hospitals. SHLV acts
as a center of excellence “hub” in cardiology, neurosciences
and orthopedics.

Largest private hospital chain in Indonesia. Siloam
International Hospitals (SILO) currently operates 16 private
hospitals in Indonesia. SILO is conglomerate Lippo group’s
healthcare arm. SILO was listed on the Indonesia Stock
Exchange (IDX) in 12 Sep 2013 and is the largest listed private
hospital company in Indonesia. Parent company LPKR remains
its largest shareholder with a 78.2% stake. Its key asset is
Siloam Hospital Lippo Village (SHLV), which was established

Sales Trend

Profitability Trend
Rp bn

Rp bn

50.0%
5,000

45.0%

4,000

40.0%

3,000

35.0%

2,000

30.0%

1,000

25.0%

249

199

149

0

99

20.0%
2012A

2013A

Total Revenue

2014F

2015F

49

2016F

2012A

Revenue Growth (%) (YoY)

2013A

2014F

Operating EBIT

2015F

Pre tax Profit

2016F
Net Profit

Source: Company, DBS Vickers

Corporate Structure
LPKR

Public

86%

14%

SILO
100%

SHLV

100%

SHKJ

100%

SHS

99.9%
Subsidiary

80%

SHLC

99.9%

MRCCC

Subsidiary

99.9%
Subsidiary

83%

SHJB

100%

RSUS

100%

SHMN

100%

SHMK

99.9%
Subsidiary

80%

88%

SHBL

SHPL

99.9%
Subsidiary

100%

100%

SHB

SHTB

80%

SHC

99.9%
Subsidiary

99.9%
Subsidiary

80%

80%

SHKU

SHND

Legend:
LPKR: Lippo Karawaci Tbk

SHS: Siloam Ho spital Surabaya

SHB L: Siloam Ho spital Balikpapan

SHP L: Silo am Ho spital Sriwijaya

SHKU: Silo am Ho spital Kuta

SILO: Silo am Internatio nal Ho spitals Tbk

SHLC: Silo am Hospital Lippo Cikarang

RSUS: Siloam Ho spital General Ho spital

SHC: Siloam Ho spital Cinere

SHND: Silo am Ho spital NusaDua

SHLV: Siloam Ho spital Lippo Village

M RCCC: M ochtar Riady Cancer Co mprehensive Center SHM N: Siloam Ho spital M anado

SHB : Siloam Ho spital B ali

SHKJ: Siloam Ho spital Kebo n Jeruk

SHJB: Silo am Hospital Jambi

SHTB: Silo am Hospital TB Simatupang

Source: Company

Page 12

SHM K: Siloam Ho spital M akassar

Company Focus
Siloam International Hospitals

SILO Milestones
Phase

Year

Hospital

Location

Remarks

Initial

1996
2002
2003
2004

Lippo Village
Lippo Cikarang
Kebon Jeruk
Surabaya

West Jakarta suburb
East Jakarta suburb
West Jakarta
East Java

Greenfield
Greenfield
Brownfield - acquired in 2000
Brownfield - acquired in 2002

MRCCC
Jambi
Balikpapan
General Hospital
Manado
Makassar
Sriwijaya
Cinere
Bali
TB Simatupang
Kuta
Nusa Dua

Central Jakarta
Central Sumatra
East Kalimantan
West Jakarta suburb
North Sulawesi
South Sulawesi
South Sumatra
West Java
Bali
South Jakarta
Bali
Bali

Greenfield
Brownfield - acquired in 2011
Brownfield - acquired in 2011
Greenfield
Greenfield
Greenfield
Greenfield
Brownfield - acquired in 2012
Greenfield
Brownfield - acquired in 2013
Brownfield - acquired in 2013
Brownfield - acquired in 2013

Consolidation

→

(Year 2004 - 2010)
2011

2012

Expansion

2013
2014 (YTD)

Source: Company, DBS Vickers

SILO’s existing portfolio – as at Mar 2014
Hospital

Year of
operation under
Siloam brand

SILO
Bed capacity
ownership
(Operational)
(%)

Snapshot

Hospital

Year of
operation under
Siloam brand

SILO
Bed capacity
ownership
(Operational)
(%)

Lippo Village *

1996

100%
(direct)

317 (251)

Manado *

2012

100%
(direct)

249 (224)

Lippo Cikarang *

2002

80%
(through
subsidiary)

108 (108)

Makassar *

2012

100%
(direct)

352 (101)

Kebon Jeruk *

2003

100%
(direct)

266 (197)

Sriwijaya

2012

88%
(through
subsidiary)

347 (99)

Surabaya *

2004

100%
(direct)

177 (160)

Cinere

2012

80%
(through
subsidiary)

21 (21)

MRCCC *

2011

100%
(direct)

336 (112)

Bali *

2013

100%
(direct)

271 (76)

Jambi

2011

83%
(through
subsidiary)

100 (97)

TB Simatupang *

2013

100%
(direct)

269 (55)

Balikpapan

2011

80%
(through
subsidiary)

212 (138)

Kuta

2014

80%
(through
subsidiary)

19 (18)

General Hospital

2012

100%
(direct)

680 (120)

Nusa Dua

2014

80%
(through
subsidiary)

31 (14)

Source: Company, DBS Vickers. Note: * for hospital under First REIT

Page 13

Snapshot

Company Focus
Siloam International Hospitals

Management Team. SILO’s management team comprises
medical professionals, healthcare administrators and industry
professionals, who have more than 20 years of experience in
the hospital sector.

On 25th April 2014, SILO announced its 1st management
reshuffle after its IPO (12th September 2013). The
management reshuffle included the promotion of Mr. Romeo
F. Lledo to President Director from CFO previously, and the
appointments of Mr. Kailas Nath Raina and Dr. Andry as CFO
and COO respectively.

Key Management Team
Name

Current appointment

Experiences

President Director

- Appointed as President Director since 2014
- Served as Accounting & Finance Director in Siloam International Hospital (2010 2013)
- Has over 11 years of experience as finance executive and 26 years of experience in
commerce and industry management
- Served as President Director at PT Mitra Kreasidharma and PT Inti Everspring
Indonesia (2008 - 2010)
- Served as President Commissioner of PT Indonox Mitra Pratama and PT Unggul
Indah Cahaya Tbk (2008 - 2010)
- Acquired the title of Certificate Public Accountant (CPA) in the Philippines (1977)
- Obtained certification from the Strategic Business Economics Program for Senior
Executives (SBEP) of the Center for Research amd Communication, Philippines (1991)
- Obtained certification from Management Development Program (MDP) of the Asian
Institute of Management, Philippines (1986)

Kailas Nath Raina

Chief Financial Officer Director

- Appointed as Director since 2014
- Senior Vice President in Citibank Indonesia (2010 - 2013) as Cards and Investment
Operations Head
- Vice President in Citigroup Philippines (2007 - 2010) as Head of Credit Operations
and Transaction Services

Dr. dr. Andry, M.M., M.H.
Kes.

Chief Enterprises and
Operational Officer Director

Romeo Fernandez Lledo

- Appointed as Director since 2014
- Chief Executive Officer of Siloam Hospital Lippo Village
- Appointed as Director since 2007
- Chief Executive Office of Siloam Karawaci Hospital (2001 - 2007)

Dr. Grace Frelita Indradjaja,
MM

Dr. Anang Prayudi

Prof George Mathew

Group Global Quality
Development Director

Director of Strategy and
Development

Director

- Has dedicated over 25 years to the healthcare services development in Indonesia
- Introduced JCI accreditation to Indonesia (2007)
- Earned Masters of Management from the University Indonusa Esa Unggul, Jakarta
(1997)
- Earned a Bachelor of Medicine from Atma Jaya Catholic University, Jakarta (1982)
- Appointed as Director since 2011
- Has more than 25 years of experience in the healthcare industry, with Indonesian
Army (TNI-AD) and International SOS
- Served as Medical Director at International SOS (1998 - 2011)
- Obtained a Master of Occupational Medicine of the University of Indonesia, Jakarta
(2006)
- Graduated from Department of General Medicine in University of Brawijaya, Malang
(1989)
- Appointed as Director since 2011
- Currently serves as President of Mochtar Riady Institute for Nanotechnology and
President of University of Pelita Harapan (since 2011)
- Currently holds Professor & Head of General Surgery Unit III (General Surgery &
Surgery Oesophago Gastro duodenal) at Christian Medical College, India (since 1997)
- Earned Doctor of Medicine (Surgery) from University of Adelaide, Australia (1997)
- Obtained Master of Surgery from Christian Medical College Vellore, India (1984)
- Earned Medical School (MBSS) degree from Christian Medical College Vellore, India
(1975)

Source: Company

Page 14

Company Focus
Siloam International Hospitals

Segmental Breakdown
FY Dec

2011A

2012A

2013A

2014F

2015F

2016F

Revenues (Rp bn)
IP-Medical services

415

607

857

1,124

1,492

2,000

IP-Medical supplies

263

403

585

767

1,018

1,364
1,446

OP-Medical services

373

462

620

813

1,079

OP-Medical supplies

165

221

299

392

520

696

44

96

143

188

249

334

1,259

1,788

2,504

3,283

4,358

5,839

Others
Total
Gross profit (Rp bn)
IP-Medical services

104

122

200

304

403

540

IP-Medical supplies

37

85

162

207

275

368

OP-Medical services

151

154

226

296

393

526

OP-Medical supplies

34

34

25

33

44

58

8

50

46

67

89

120

334

445

659

907

1,203

1,612

IP-Medical services

24.9

20.1

23.3

27.0

27.0

27.0

IP-Medical supplies

14.2

21.0

27.7

27.0

27.0

27.0

OP-Medical services

40.5

33.5

36.4

36.4

36.4

36.4

OP-Medical supplies

20.7

15.5

8.4

8.4

8.4

8.4

Others

17.3

51.7

32.4

35.8

35.8

35.8

Total

26.5

24.9

26.3

27.6

27.6

27.6

Others
Total
Gross profit Margins (%)

Source: Company, DBS Vickers

Page 15

Company Focus
Siloam International Hospitals

Income Statement (Rp bn)
FY Dec

Margins Trend
2011A

2012A

2013A

2014F

2015F

2016F

Revenue

1,259

1,788

2,504

3,283

4,358

5,839

5.0%

Cost of Goods Sold

(926)

(1,343)

(1,845)

(2,377)

(3,155)

(4,227)

4.5%

334

445

659

907

1,203

1,612

3.5%

(245)

(368)

(583)

(751)

(993)

(1,321)

89

77

76

156

210

291

2.0%

(17)

15

3

0

0

0

1.0%

0

0

0

0

0

0

(13)

(14)

(7)

(50)

(57)

(72)

6.0%
5.5%

Gross Profit
Other Opng (Exp)/Inc
Operating Profit
Other Non Opg (Exp)/Inc
Associates & JV Inc
Net Interest (Exp)/Inc
Exceptional Gain/(Loss)
Pre-tax Profit
Tax
Minority Interest
Preference Dividend
Net Profit
Net Profit before Except.
EBITDA

0

0

0

0

0

0

58

77

72

106

153

219

(20)

(25)

(22)

(27)

(38)

(55)

6

(1)

0

(1)

(1)

(1)

0

0

0

0

0

0

44

50

50

79

114

163

44

50

50

79

114

163

179

217

304

505

730

1,040
34.0

Growth
Revenue Gth (%)

22.2

42.0

40.0

31.2

32.7

EBITDA Gth (%)

78.0

21.3

39.8

66.1

44.6

42.5

Opg Profit Gth (%)

(12.1)

(13.1)

(1.3)

105.3

34.8

38.5

Net Profit Gth (%)

(35.2)

15.4

(1.2)

58.6

43.9

43.5
27.6

Margins & Ratio
Gross Margins (%)

26.5

24.9

26.3

27.6

27.6

Opg Profit Margin (%)

7.0

4.3

3.0

4.7

4.8

5.0

Net Profit Margin (%)

3.5

2.8

2.0

2.4

2.6

2.8

ROAE (%)

27.2

24.3

5.4

4.8

6.5

8.7

ROA (%)

4.6

3.7

2.4

3.0

3.9

5.0

ROCE (%)

7.6

4.6

2.9

4.9

6.2

7.9

Div Payout Ratio (%)

0.0

0.0

0.0

0.0

0.0

0.0

Net Interest Cover (x)

6.6

5.3

11.0

3.1

3.7

4.0

Source: Company, DBS Vickers

Page 16

4.0%
3.0%
2.5%
1.5%
2012A

2013A

Operating Margin %

2014F

2015F

2016F

Net Income Margin %

Company Focus
Siloam International Hospitals

Balance Sheet (Rp bn)
FY Dec

Net Fixed Assets

Asset Breakdown (2014)
2011A

2012A

2013A

2014F

2015F

2016F

552

865

1,402

1,649

1,931

0

0

0

0

0

0

Other LT Assets

202

264

291

367

412

474

Cash & ST Invts

147

169

515

295

143

23

44

75

95

110

146

195

124

187

271

300

399

534

43

26

26

32

38

46

1,112

1,586

2,601

2,754

3,068

3,446

Invts in Associates & JVs

Inventory
Debtors
Other Current Assets
Total Assets
ST Debt
Other Current Liab
LT Debt

2,174

12

16

17

20

20

14

195

252

279

326

426

563

66

55

43

60

150

216

Other LT Liabilities

660

1,019

623

630

640

655

Shareholder’s Equity

183

233

1,611

1,690

1,804

1,968

Minority Interests

(4)

11

28

28

29

30

Total Cap. & Liab.

1,112

1,586

2,601

2,754

3,068

3,446

Non-Cash Wkg. Capital

17

36

113

116

157

212

Net Cash/(Debt)

68

98

456

216

(26)

(207)

Debtors Turn (avg days)

28.7

31.8

33.4

31.7

29.3

29.1

Creditors Turn (avg days)

44.2

40.8

36.1

33.3

33.2

33.5

Inventory Turn (avg days)

17.9

16.5

18.1

19.2

18.4

17.7

Asset Turnover (x)

1.3

1.3

1.2

1.2

1.5

1.8

Current Ratio (x)

1.7

1.7

3.1

2.1

1.6

1.4

Quick Ratio (x)

1.3

1.3

2.7

1.7

1.2

1.0

Net Debt/Equity (X)

CASH

CASH

CASH

CASH

0.0

0.1

Net Debt/Equity ex MI (X)

CASH

CASH

CASH

CASH

0.0

0.1

Capex to Debt (%)

521.5

640.2

1,280.0

748.1

472.1

431.0

10.9

8.0

11.8

11.3

10.0

9.1

Z-Score (X)

Source: Company, DBS Vickers

Page 17

Debtors 12.8%

Net Fixed
Assets 70.0%

Assocs'/JVs 0.0%
Inventory 4.7%

Bank, Cash
and Liquid
Assets 12.5%

Company Focus
Siloam International Hospitals

Cash Flow Statement (Rp bn)
FY Dec

Capital Expenditure
2011A

2012A

2013A

2014F

2015F

2016F

Pre-Tax Profit

77

72

106

153

219

1000

Dep. & Amort.

140

228

349

520

749

800

Tax Paid

(25)

(22)

(27)

(38)

(55)

600

0

0

0

0

0

400

405

(580)

16

(19)

(28)

200

(1)

0

(1)

(1)

(1)

Net Operating CF

596

(302)

444

615

884

Capital Exp.(net)

(453)

(764)

(596)

(801)

(992)

1200

Assoc. & JV Inc/(loss)
Chg in Wkg.Cap.
Other Operating CF

Other Invts.(net)

0

0

0

0

0

Invts in Assoc. & JV

0

0

0

0

0

Div from Assoc & JV

0

0

0

0

0

Other Investing CF

(128)

80

(89)

(57)

(74)

Net Investing CF

(581)

(684)

(685)

(858)

(1,066)

0

0

0

0

0

(8)

(11)

20

90

61

Div Paid
Chg in Gross Debt
Capital Issues

0

1,328

0

0

0

15

16

1

1

1

Net Financing CF

8

1,333

21

91

62

Currency Adjustments

0

0

0

0

0

22

348

(220)

(152)

(120)

Opg CFPS (Rp)

191

240

370

548

789

Free CFPS (Rp)

142

(922)

(131)

(161)

(94)

Other Financing CF

Chg in Cash

Source: Company, DBS Vickers

Page 18

0
2012A

2013A

2014F

2015F

Capital Expenditure (-)

2016F

Company Focus
Siloam International Hospitals
DBSV recommendations are based an Absolute Total Return* Rating system, defined as follows:
STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)
BUY (>15% total return over the next 12 months for small caps, >10% for large caps)
HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FULLY VALUED (negative total return i.e. > -10% over the next 12 months)
SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)

* Share price appreciation + dividends
GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by PT. DBS Vickers Securities Indonesia ("DBSVI"), a direct wholly-owned subsidiary of DBS Vickers Securities Holdings Pte
Ltd ("DBSVH"). This report is intended for clients of DBSV Group only and no part of this document may be (i) copied, photocopied or duplicated
in any form or by any means or (ii) redistributed without the prior written consent of DBSVR.
The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBSVI
and/or DBSVH) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to
change without notice. This document is prepared for general circulation. Any recommendation contained in this document does not have regard
to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of
addressees only and is not to be taken in substitution for the exercise of judgment by addressees, who should obtain separate independent legal or
financial advice. DBSVI accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising
from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be
construed as an offer or a solicitation of an offer to buy or sell any securities. DBSVH is a wholly-owned subsidiary of DBS Bank Ltd. DBS Bank Ltd
along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this
document. DBSVI, DBS Bank Ltd and their associates, their directors, and/or employees may have positions in, and may effect transactions in
securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies.
Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can
be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments.
The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may
not contain all material information concerning the company (or companies) referred to in this report.
The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and
assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which
the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual results.
Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a
representation and/or warranty by DBSVI and/or DBSVH (and/or any persons associated with the aforesaid entities), that:
(a)
(b)

such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and
there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk
assessments stated therein.

Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies)
mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the
commodity referred to in this report.
DBS Vickers Securities (USA) Inc ("DBSVUSA")"), a U.S.-registered broker-dealer, does not have its own investment banking or research department,
nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months.
ANALYST CERTIFICATION
The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies
and their securities expressed in this report accurately reflect his/her personal views. The analyst also certifies that no part of his/her compensation
was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of the date the report is
published, the analyst and his / her spouse and/or relatives who are financially dependent on the analyst, do not hold interests in the securities
recommended in this report (“interest” includes direct or indirect ownership of securities, directorships and trustee positions).
COMPANY-SPECIFIC / REGULATORY DISCLOSURES
1.
PT. DBS Vickers Securities Indonesia ("DBSVI") has no proprietary position in the company recommended in this report as of 24 June
2014.
2.

Page 19

DBSVI, DBSVS, DBS Bank Ltd and/or other affiliates of DBS Vickers Securities (USA) Inc ("DBSVUSA"), a U.S.-registered broker-dealer,
may beneficially own a total of 1% or more of any class of common equity securities of as of 25 June 2014.

Company Focus
Siloam International Hospitals
3. Compensation for investment banking services:
DBSVI, DBSVS, DBS Bank Ltd and/or other affiliates of DBSVUSA may have received compensation, within the past 12 months, and
within the next 3 months may receive or intends to seek compensation for investment banking services from the subject companies.
DBSVUSA does not have its own investment banking or research department, nor has it participated in any investment banking
transaction as a manager or co-manager in the past twelve months. Any US persons wishing to obtain further information, including
any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact
DBSVUSA exclusively.
RESTRICTIONS ON DISTRIBUTION
General
This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or
located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be
contrary to law or regulation.
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This report is not for distribution into Australia.

Hong Kong

This report is being distributed in Hong Kong by DBS Vickers (Hong Kong) Limited which is licensed and regulated by the
Hong Kong Securities and Futures Commission.

Indonesia

This report is being distributed in Indonesia by PT DBS Vickers Securities Indonesia.

Malaysia

This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR") (formerly known as HwangDBS Vickers
Research Sdn Bhd). Recipients of this report, received from ADBSR are to contact the undersigned at 603-2604 3333 in
respect of any matters arising from or in connection with this report. In addition to the General Disclosure/Disclaimer found
at the preceding page, recipients of this report are advised that ADBSR (the preparer of this report), its holding company
Alliance Investment Bank Berhad, their respective connected and associated corporations, affiliates, their directors, officers,
employees, agents and parties related or associated with any of them may have positions in, and may effect transactions in
the securities mentioned herein and may also perform or seek to perform broking, investment banking/corporate advisory
and other services for the subject companies. They may also have received compensation and/or seek to obtain compensation
for broking, investment banking/corporate advisory and other services from the subject companies.

Wong Ming Tek, Executive Director, ADBSR
Singapore

This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No.
198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the
Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produce