COMPANY FOCUS PT Trimegah Securities Tbk - www.trimegah.com 1

Siloam Hospitals Reduces estimates, maintain BUY

Patricia Gabriela

(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 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

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