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COMPANY FOCUS PT Trimegah Securities Tbk - www.trimegah.com 1
Siloam Hospitals Reduces estimates, maintain BUY
Patricia Gabriela
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 dis-
appointing 3Q result in which operating profit was down 25% YoY. Man-
agement has added more manpower costs than we previously expected
and Yogya hospital remains delayed (has been ready to open since
Apr’15 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 Aug’15).
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,
SILO’s 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.
Longer gestation period but remains optimistic on growth out-
look
We downgrade our margin forecast on SILO but remains optimistic as to
margin expansion. We expect SILO’s net margin to grow CAGR 2015-
18F 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.
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.
Siloam Hospital Group is the leader of in-
tegrated healthcare services in Indone-
sia. It operates 20 hospitals in total with
more than 3,900 bed capacity.
Share Price Rp 9,300
Sector Healthcare
Price Target Rp 12,200 (+31%)
Year end Dec 2013 2014 2015F 2016F 2017F
Net Sales (Rp bn) 1,847 2,472 3,115 4,006 5,092
EBITDA (Rp bn) 220 455 510 607 721
Net Profit (Rp bn) 50 63 82 116 156
EPS (Rp) 48 54 71 101 135
EPS Growth (%) -6% 14% 31% 42% 34%
DPS (Rp) - - 5 7 15
BVPS (Rp) 1,565 1,430 1,559 1,653 1,773
EV/EBITDA (x) 30.4 23.2 20.3 17.1 14.5
P/E (x) 195.3 171.8 131.5 92.3 68.8
Div Yield (%) 0.0 0.0 0.1 0.1 0.2
Buy Rp 12,200
Reuters Code SILO.JK
Bloomberg Code SILO.IJ
Issued Shares 1,156
Mkt Cap. (Rp bn) 10,752
Avg. Value Daily 6 Month (Rp bn)
45.8
52-Wk range 17,100 / 8,600
PT Megapratama Karya Persada 60.5%
Public 29.5%
Core EPS 16F 17F
Consensus (Rp) 112 172
TRIM vs Cons. (%) -9.6 -21.5
Company Update
Stock Data
Major Shareholders
Consensus
Stock Price
Companies Data
November 17, 2015
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15
(Rpbn)Avg. 5 Day MA Trading Value (RHS) Price (LHS)
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 2
Figure 1. 9M15 results - poor profitability
Source: TRIM Research
3Q14 2Q15 3Q15 QoQ Chg.
(%)
YoY Chg.
(%)
Net revenue 624 746 740 -0.7% 18.5%
Gross profit 236 259 290 12.1% 23.3%
Operating profit 26 56 21 -63.5% -19.8%
Net profit 8 28 8 -69.7% 2.1%
Gross margin (%) 37.7% 34.8% 39.2%
Operating margin (%) 4.1% 7.6% 2.8%
Net margin (%) 1.3% 3.7% 1.1%
FY15E
3,121
1,219
218
114
39.2%
5.9%
3.7%
9M15 /
FY15E
(%)
71.1%
70.2%
64.6%
61.8%
9M15 /
Cons.
(%)
51.1%
68.8%
60.6%
69.9%
Figure 2. SILO’s patient volume - double-digit YoY growth
Source: TRIM Research
318,706
466,421
527,025 530,463 517,095
-
100,000
200,000
300,000
400,000
500,000
600,000
3Q14 4Q14 1Q15 2Q15 3Q15
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 3
Figure 3. Forecast changes
Source: TRIM Research
Previous Current
FY15E FY16E FY15E FY16E FY15E FY16E
No of hospitals 21 25 21 25 0% 0%
Total patient volume 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%
Gross margin 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%
Changes
Figure 4. DCF calculations
Source: TRIM Research
2017F 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F
EBIT 290 409 536 730 957 1,210 1,751 2,152 2,631
EBIT (1-T) 185 261 342 466 611 773 1,118 1,374 1,680
Capex (506) (582) (536) (600) (672) (753) (843) (944) (1,057)
Changes in work-
ing capital (113) (147) (185) (242) (222) (264) (335) (381) (456)
Depreciation 431 489 543 603 670 745 830 924 1,030
FCFF (Rp bn) (3) 22 165 227 388 502 770 974 1,197
Discounted FCFF (3) 20 135 169 261 306 425 487 543
Terminal value 30,296
PV of terminal val-
ue 11,277
Total company val-
ue 14,223
Net debt 98
NAV 14,124
NAV / share 12,217
2026F
3,203
2,045
(1,184)
(546)
1,148
1,464
601
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 4
10.00
15.00
20.00
25.00
30.00
35.00
40.00
Sep-1
3
Oct
-13
Nov-1
3
Dec-
13
Jan-1
4
Feb-1
4
Mar-
14
Apr-
14
May-1
4
Jun-1
4
Jul-14
Aug-1
4
Sep-1
4
Oct
-14
Nov-1
4
Dec-
14
Jan-1
5
Feb-1
5
Mar-
15
Apr-
15
May-1
5
Jun-1
5
Jul-15
Aug-1
5
Sep-1
5
Oct
-15
Nov-1
5
+2 stdev
+1 stdev
average
-1 stdev
-2 stdev
-2.5 stdev
Figure 5. Forward EV/EBITDA band
Source: TRIM Research
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 5
Income Statement (Rpbn)
Year end Dec 2013 2014 2015F 2016F 2017F
Net Revenue 1,847 2,472 3,115 4,006 5,092
Revenue Growth
(%)
45.0% 33.9% 26.0% 28.6% 27.1%
Gross Profit 659 952 1,202 1,563 1,995
Opr. Profit 79 134 173 227 290
EBITDA 306 453 510 607 721
EBITDA Growth (%) 48.1% 12.7% 19.1% 18.7%
Net Int Inc/(Exp) (7) (40) (50) (49) (50)
Gain/(loss) Forex - - - - -
Other Inc/(Exp) 3 (34) (48) (62) (75)
Pre-tax Profit 72 94 124 178 240
Tax (22) (34) (45) (64) (87)
Minority Int. 0 (3) (3) (3) (3)
Extra. Items - - - - -
Reported Net Profit 50 60 79 114 153
Core Net Profit 50 63 82 116 156
Growth (%) -1.2% 25.5% 30.7% 42.4% 34.1%
Dividend per share - - 5 7 15
growth (%) - - - 30.7% 113.6%
Dividend payout
ratio
- - 10% 10% 15%
Balance Sheet (Rpbn)
Year end Dec 2013 2014 2015F 2016F 2017F
Cash and equivalents 515 280 445 401 352
Other curr asset 392 561 607 761 950
Net fixed asset 1,402 1,589 1,567 1,627 1,702
Other asset 291 414 404 404 404
Total asset 2,601 2,844 3,023 3,193 3,408
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
Minority interest 28 5 79 79 79
Total Liabilities 962 1,190 1,221 1,282 1,359
Shareholders Equity 1,639 1,654 1,803 1,911 2,050
Net debt / (cash) (69) 182 17 62 111
Total cap employed 2,305 2,366 2,515 2,623 2,762
Net Working capital 612 363 543 592 655
Debt 447 462 462 462 462
Cash Flow (Rpbn)
Year end Dec 2013 2014 2015F 2016F 2017F
Net Profit 50 63 82 116 156
Depr / Amort 142 321 336 381 431
Chg in Working Cap (2) (100) (16) (93) (113)
Others 43 (157) - - -
CF's from oprs 189 284 403 404 475
Capex (386) (331) (314) (440) (506)
Dividend - - (6) (8) (17)
Others (375) (179) - (0) -
CF’s from investing (761) (511) (321) (448) (524)
CF’s from financing 904 (8) - - -
Net cash flow 418 (236) 82 (44) (49)
Cash at BoY 169 601 363 445 401
Cash at EoY 601 363 445 401 352
Free Cashflow 227 319 336 381 431
Key Ratio Analysis
Year end Dec 2013 2014 2015F 2016F 2017F
Profitability
Gross Margin (%) 35.7% 38.5% 38.6% 39.0% 39.2%
Opr Margin (%) 4.3% 5.4% 5.6% 5.7% 5.7%
EBITDA Margin (%) 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%
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
Interest Coverage (x) 4.0 3.0 4.0 5.3 6.6
Efficiency A/P (days) 48 43 39 37 38
A/R (days) 45 49 47 44 44
Inventory (days) 26 24 22 21 22
Interim Result (Rpbn)
3Q14 4Q14 1Q15 2Q15
Sales 624 926 732 746
Gross Profit 236 285 307 259
EBITDA 147 106 145 140
Opr. Profit 26 33 64 56
Net profit 7 8 34 28
Core profit 8 8 35 28
Gross Margins (%) 37.7% 30.8% 41.9% 34.8%
EBITDA Margins (%) 23.5% 11.5% 19.8% 18.8%
Opr Margins (%) 4.1% 4.9% 8.7% 7.6%
Net Margins (%) 1.1% 0.9% 4.6% 3.8%
Core Margins (%) 1.3% 0.9% 4.7% 3.7%
3Q15
740
290
104
21
6
8
39.2%
14.1%
2.8%
0.8%
1.1%
Capital History
Date
12-Sept-13 IPO@Rp9,000
PT Trimegah Securities Tbk
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
DISCLAIMER
This report has been prepared by PT Trimegah Securities Tbk on behalf of itself and its affiliated companies and is provided for information
purposes only. Under no circumstances is it to be used or considered as an offer to sell, or a solicitation of any offer to buy. This report has
been produced independently and the forecasts, opinions and expectations contained herein are entirely those of Trimegah Securities.
While all reasonable care has been taken to ensure that information contained herein is not untrue or misleading at the time of publication,
Trimegah Securities makes no representation as to its accuracy or completeness and it should not be relied upon as such. This report is
provided solely for the information of clients of Trimegah Securities who are expected to make their own investment decisions without reliance
on this report. Neither Trimegah Securities nor any officer or employee of Trimegah Securities accept any liability whatsoever for any direct or
consequential loss arising from any use of this report or its contents. Trimegah Securities and/or persons connected with it may have acted
upon or used the information herein contained, or the research or analysis on which it is based, before publication. Trimegah Securities may in
future participate in an offering of the company’s equity securities.