EQUITY RESEARCH

SILO - Result Update - 25 March 2019

CIPTADANA SEKURITAS ASIA

BUY SSiloam International Hospitals

Healthy operations to support long term growth
TP: Rp4,460 (+18.0%)

Sector Healthcare Revenue gained by 12% YoY

Siloam International Hospitals (SILO) reported Rp5.96 tn of gross revenue in 2018 (+12% YoY/
Bloomberg Ticker SILO IJ
+1% QoQ). In-patient revenue rose by 11% YoY/ -0.4% QoQ, while the outpatient gained by 14%
Share Price Performance
YoY / +4% QoQ. Gross profit increased by 17% YoY/ -2% QoQ to Rp1.93 tn in 2018, which led
GPM to expand by 120bps YoY, as COGS increased by 10% YoY. Under operating line, operating
Last price (Rp) 3,780 profit fell by 13% YoY / -7% QoQ, as opex grew at faster rate of 20% YoY, mostly due to rise in
Avg. daily T/O (Rpbn/USDmn) 1.9/0.1 other office expense (+62% YoY), which led operating margin to shrink by 90bps YoY. EBITDA
improved by 6.4% YoY to Rp715 bn in 2018. On the bottom line, net profit dropped by 83% YoY /
3m 6m 12m
-53% QoQ to Rp16 bn in 2018 and Rp13 bn in 4Q18 on the brink of higher tax expense (+45%
Absolute (%) 3.6 26.0 -52.8 YoY / +14% QoQ), which translated to 150 bps decline on NPM in FY18. Overall, we see that the
Relative to JCI (%) -2.3 14.9 -58.2 operational of SILO was improving. Hence, we believe this positive trend to continue in 2019, as
there will be more supports from the new hospitals.
52w High/Low price (Rp) 8,500/2,290
Improvement on the operational
9,000 10% During 2018, both impatient admission and outpatient visits grew by 11% and 8% respectively
8,000 0% to 205 thousand for impatient and 2.39 mn for outpatient. Impatient revenue per day improved
7,000 -10% by 3% YoY to Rp 4.93mn, while ALOS lower by 3% YoY to 3.46 days. Outpatient revenue per visit
6,000
5,000
-20% rose by 4% YoY to Rp850 th, mostly due to increment from BPJS segment (+16% YoY) and
-30% mature west hospitals (+7% YoY). Impatient and outpatient margins were improved by 80 bps
4,000
-40% YoY and 185 bps YoY. In 2018, SILO’s operational beds increased by 13% to 3,513 operational
3,000
2,000 -50% beds, the 4 new hospitals contributed 126 beds to the total. Hence, BOR grew to 56% from 53%
1,000 -60% in 2017. We expect BOR to expand, mainly driven from ramping up of SILO’s newly open
0 -70% hospitals. As in 2018, New and Developing hospitals contributed 11% and 10% to impatient and
outpatient volume growth respectively.
Dec-18

Feb-19
Oct-18
Sep-18

Nov-18
Aug-18
Mar-18

Mar-19
Jul-18
May-18
Apr-18

Jan-19
Jun-18

SILO expansion updates

SILO 1yr Rel. to JCI (RHS) In 2018 SILO opened 4 new hospitals in Lubuk Linggau, Jember, Semarang, and Palangkaraya,
in total, SILO operated 35 hospitals in 2018. In the beginning of 2019, SILO opened 2 new
Outstanding shrs (mn) 1,156
hospitals, located in Kelapa Dua and Tegalrejo. According to the company’s pipeline, the
Mkt. Cap (Rpbn/USDmn) 4,370/309 company plans to open 3 to 5 more hospitals in 2019, which located in Ambon, Pasar Baru,
Estimated free float (%) 21.2 Banjarmasin, Batu Malang, and Tulungagung. Most of the projects in 2019 will be a multiyears
projects or the finalization of last year’s projects. The company still relies on using internal
Major shareholders
fund, as they allocate Rp200 bn for capex in 2019.
Lippo Karawaci Tbk 78.9%
Blackrock 4.1% BUY with TP of Rp4,460/share
Following the improvements on SILO’s operational and safe cash position, we have a BUY
recommendation for SILO with TP of Rp4,460/sh, Our TP implies 9x EV/EBITDA multiples, at the
moment, the stock trades at undemanding valuation of 5.1x 2019F EV/EBITDA, vs MIKA’s of
EPS Consensus
27.1x and HEAL’s of 22.2x based on consensus estimates . Furthermore, our TP offers potential
Ciptadana Cons. % Diff upside 18% from current price. We believe new hospitals build in the previous years will start to
2019F 26.1 34.8 -25.2 generate more revenue to support the company’s top line figure. This report marks transfer
coverage of SILO to Robert Sebastian.
2020F 28.1 42.6 -34.0
2021F 29.7 52.5 -43.4 Exhibit 1 : Financial Highlights
Year to 31 Dec 2017A 2018A 2019F 2020F 2021F
Revenue (Rpbn) 5,306 5,965 6,840 7,862 9,166
Operating profit (Rpbn) 219 192 216 235 251
Net profit (Rpbn) 94 16 30 33 34
EPS (Rp) 80.9 13.9 26.1 28.1 29.7
EPS growth (%) 8.9 -82.8 87.1 8.0 5.5

Robert Sebastian EV/EBITDA (x) 5.1 6.1 5.1 4.7 4.5

+62 21 2557 4800 ext.760 PER (x) 46.7 271.3 145.0 134.3 127.2

sebastianrobert@ciptadana.com PBV (x) 0.7 0.7 0.7 0.7 0.7

Dividend yield (%) 0.0 0.0 0.0 0.0 0.0
http://www.ciptadana.com ROE (%) 1.5 0.3 0.5 0.5 0.5
Source : SILO, Ciptadana Estimates

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 EQUITY RESEARCH
SILO - Result Update - 25 March 2019
CIPTADANA SEKURITAS ASIA

Exhibit 2: Revenue Exhibit 3: Gross Profit

Exhibit 4: Operating Profit Exhibit 5: EBITDA

Exhibit 6: Net Profit Exhibit 7: Profitability

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 EQUITY RESEARCH
SILO - Result Update - 25 March 2019
CIPTADANA SEKURITAS ASIA

Exhibit 8: FY18 Results

Rp bn FY2018 FY2017 yoy 4Q18 3Q18 qoq

Sales 5,965 5,306 12% 1,569 1,548 1%

In-patient 3,523 3,166 11% 910 914 -0.4%
Out-patient 2,442 2,140 14% 659 633 4%

COGS -4,036 -3,655 10% -1,045 -1,011 3%

Gross profit 1,929 1,651 17% 524 536 -2%
Gross margin (%) 32.3 31.1 1.2 33.4 34.6 -1.3

Operating expenses -1,630 -1,354 20% -427 -422 1%

Others -106.9 -78 38% -26 -38 -32%
Operating profit 192 219 -13% 71 76 -7%
Operating margin (%) 3.2 4.1 -0.9 4.5 4.9 -0.4

Interest income 16 20 -23% 2 4 -60%

Interest expense -41 -41 1% -11 -10 8%
Total other income -26 -20 25% -9 -6 56%

Pre-tax profit 166 199 -17% 61 70 -13%

Tax -140 -97 45% -45 -39 14%

Profit before Minority 26 102 -74% 17 31 -46%

Minority interest -10 -10 3% -4 -3 21%
Net profit 16 92 -83% 13 28 -53%
Net profit margin (%) 0.3 1.7 -1.5 0.8 1.8 -1.0

Exhibit 9: Historical data and our assumptions

(in Rp bn) 16A 17A 18A 19F 20F 21F

Num of Hospital 23 31 35 42 46 50

Inpatient
Bed Capacity 5,102 6,318 7,130 7,843 8,235 8,647
Num of Operational Bed 2,849 3,396 3,513 4,091 4,291 4,491
Num of Admission 172,468 185,768 205,000 230,625 259,453 291,885
Avg Length of Stay (days) 4.0 3.6 3.5 3.7 3.6 3.6
Bed Occupancy (%) 64.2 53.2 56.0 59.0 62.0 65.0
Avg rev/patient (Rp '000) 4,266 4,428 4,548 4,730 4,919 5,116

Outpatient
Num of Visit 1,890,684 2,207,062 2,390,000 2,772,400 3,077,364 3,415,874
Avg rev/consul (Rp '000) 900 900 945 1,011 1,062 1,109

Capex / new hospital (Rp bn) 120 121 122

Maintnc capex as % of rev 1.0 1.0 1.0

Total Net Capex 499 1,365 1,861 755 626 644

Bed capacity utilization 55.8% 53.8% 49.3% 52.2% 52.1% 51.9%

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 EQUITY RESEARCH
SILO - Result Update - 25 March 2019
CIPTADANA SEKURITAS ASIA

Exhibit 10: DER Exhibit 11: Number of Hospital

Exhibit 12: Revenue Breakdown Exhibit 13: Revenue Breakdown in %

Exhibit 14: Operational of Bed

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 EQUITY RESEARCH
SILO - Result Update - 25 March 2019
CIPTADANA SEKURITAS ASIA

Exhibit 15: 5-yr EV/EBITDA

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 EQUITY RESEARCH
SILO - Result Update - 25 March 2019
CIPTADANA SEKURITAS ASIA

Exhibit 16 - Income Statement

Year to 31 Dec (Rpbn) 2017A 2018A 2019F 2020F 2021F
Revenue 5,306 5,965 6,840 7,862 9,166
COGS -3,655 -4,036 -4,636 -5,311 -6,233
Gross profit 1,651 1,929 2,203 2,551 2,933
Oper. expenses -1,432 -1,737 -1,988 -2,316 -2,682
Oper. profit 219 192 216 235 251
EBITDA 672 715 838 916 987
Interest income 20 16 21 24 27
Interest expense -21 -22 -27 -31 -37
Other income (exp.) -18 -20 -21 -24 -27
Pre-tax profit 200 166 188 203 215
Income tax -97 -140 -151 -163 -172
Minority interest -10 -10 -8 -8 -9
Net profit 94 16 30 33 34

Exhibit 17 - Balance Sheet

Year to 31 Dec (Rpbn) 2017A 2018A 2019F 2020F 2021F
Cash & cash equivalent 930 216 270 289 230
Acct, receivables 924 1,209 1,397 1,606 1,872
Inventory 197 189 224 258 324
Other curr, asset 346 152 181 215 251
Total current asset 2,398 1,766 2,073 2,368 2,677
Fixed assets - net 2,631 4,080 4,236 4,245 4,221
Other non-curr.asset 2,567 1,848 1,635 1,551 1,605
Total asset 7,596 7,695 7,943 8,164 8,503

ST debt + curr. maturity 9 54 61 69 81

Acct, payable 373 336 346 358 405
Advances received 16 20 23 27 31
Other curr. liab 474 570 702 790 940
Long term debt 1 124 144 165 192
Other non-curr, liab, 409 274 311 355 406
Total liabilities 1,283 1,378 1,586 1,763 2,055
Shareholder equity 6,293 6,286 6,317 6,349 6,384
Minority interest 21 30 40 51 64
Total liab + SHE 7,596 7,695 7,943 8,164 8,503

Exhibit 18 - Per Share Data

(Rp) 2017A 2018A 2019F 2020F 2021F
EPS 80.9 13.9 26.1 28.1 29.7
BVPS 5,443.5 5,438.1 5,464.2 5,492.4 5,522.1
DPS 0.0 0.0 0.0 0.0 0.0
FCF per share -2,558.5 -610.6 -16.4 -57.4 -141.0

Source : SILO, Ciptadana Estimates

Please see analyst certification and other important disclosures at the back of this report 7
 EQUITY RESEARCH
SILO - Result Update - 25 March 2019
CIPTADANA SEKURITAS ASIA

Exhibit 19 - Cash Flow

Year to 31 Dec (Rpbn) 2017A 2018A 2019F 2020F 2021F
Net income 94 16 30 33 34
Depreciation 453 523 622 681 735
Chg in working cap. -107 -310 -210 -227 -281
Other 172 91 102 54 114
CF-Oper activities 612 320 545 540 603

Capital expenditure -1,365 -1,861 -755 -626 -644

Others -2,205 835 191 20 -122
CF-Investing activities -3,569 -1,026 -564 -607 -766

Net change in debt -7 -9 26 30 39

Net change in equity 3,071 -13 0 0 0
Dividend payment 0 0 0 0 0
Other financing 84 14 47 55 64
CF-Financing activities 3,147 -8 73 85 103

Net cash flow 190 -714 54 19 -60

Cash - begin of the year 740 930 216 270 289
Cash - end of the year 930 216 270 289 230

Exhibit 20 - Key Ratios

Year to 31 Dec 2017A 2018A 2019F 2020F 2021F
Growth
Revenue (%) 2.7 12.4 14.7 14.9 16.6
Operating profit (%) -1.1 -12.6 12.5 8.9 7.0
Net profit (%) 8.9 -82.8 87.1 8.0 5.5
Profitability Ratios
Gross margin (%) 31.1 32.3 32.2 32.4 32.0
Operating margin (%) 4.1 3.2 3.2 3.0 2.7
EBITDA margin (%) 12.7 12.0 12.3 11.7 10.8
Net margin (%) 1.8 0.3 0.4 0.4 0.4
ROA (%) 1.2 0.2 0.4 0.4 0.4
ROE (%) 1.5 0.3 0.5 0.5 0.5
Liquidity Ratios
Current ratio (x) 2.7 1.8 1.8 1.9 1.8
Quick ratio (x) 2.5 1.6 1.6 1.7 1.6
Cash conversion cycle (days) 54.6 60.7 69.0 71.1 0.0
Activity Ratio
Inventory turnover (days) 19.7 17.1 17.7 17.7 0.0
Receivable turnover (days) 58.5 65.3 69.5 69.7 0.0
Payable turnover (days) 23.6 21.7 18.2 16.3 0.0
Solvency Ratio
Interest cover (x) 31.6 32.9 30.6 29.1 26.9
Debt to equity ratio (x) 0.0 0.0 0.0 0.0 0.0
Net debt to equity (x) Net Cash Net Cash Net Cash Net Cash 0.0

Source : SILO, Ciptadana Estimates

Please see analyst certification and other important disclosures at the back of this report 8
 EQUITY RESEARCH
SILO - Result Update - 25 March 2019
CIPTADANA SEKURITAS ASIA

EQUITY RESEARCH

HEAD OF RESEARCH ANALYST ANALYST

Arief Budiman Erni Marsella Siahaan, CFA Yasmin Soulisa
Strategy, Automotive, Heavy Equipment, Banking Property, Plantations
Construction, Oil & Gas T +62 21 2557 4800 ext 919 T +62 21 2557 4800 ext 799
T +62 21 2557 4800 ext 819 E siahaanerni@ciptadana.com E soulisayasmin@ciptadana.com
E budimanarief@ciptadana.com

ECONOMIST ANALYST ANALYST

Imanuel Reinaldo Fahressi Fahalmesta Stella Amelinda
T +62 21 2557 4800 ext 820 Cement, Toll Road, Poultry Consumer, Cigarette
E reinaldoimanuel@ciptadana.com T +62 21 2557 4800 ext 735 T +62 21 2557 4800 ext 740
E fahalmestafahressi@ciptadana.com E amelindastella@ciptadana.com

ANALYST ANALYST ANALYST

Robert Sebastian Thomas Radityo Gani
Retail, Healthcare Coal, Metal Mining Telco, Tower, Media
T +62 21 2557 4800 ext 760 T +62 21 2557 4800 ext 739 T +62 21 2557 4800 ext 734
E sebastianrobert@ciptadana.com E radityothomas@ciptadana.com E gani@ciptadana.com

TECHNICAL ANALYST RESEARCH ASSISTANT

Trevor Gasman Sumarni
T +62 21 2557 4800 ext 934 T +62 21 2557 4800 ext 920
E gasmantrevor@ciptadana.com E sumarni@ciptadana.com

EQUITY SALES

Co HEAD OF INSTITUTIONAL SALES Co HEAD OF INSTITUTIONAL SALES

Dadang Mulyana The Fei Ming
Plaza ASIA Office Park unit 2 Plaza ASIA Office Park unit 2
Jl. Jend. Sudirman Kav. 59 Jl. Jend. Sudirman Kav. 59
Jakarta - 12190 Jakarta - 12190
T +62 21 2557 4800 ext 838 T +62 21 2557 4800 ext 807
F +62 21 2557 4900 F +62 21 2557 4900
E mulyanadadang@ciptadana.com E thefeiming@ciptadana.com

SURABAYA
BRANCH OFFICES

JAKARTA - MANGGA DUA JAKARTA - PURI KENCANA SURABAYA

Komplek Harco Mangga Dua Perkantoran Puri Niaga III Intiland Tower Surabaya
Rukan Blok C No.10 Jl. Puri Kencana Blok M8 No.2E Ground Floor Suite 5 & 6
Jl. Mangga Dua Raya Kembangan Jl. Panglima Sudirman 101-103
Jakarta - 10730 Jakarta - 11610 Surabaya - 60271
T +62 21 600 2850 T +62 21 5830 3450 T +62 31 534 3938
F +62 21 612 1049 F +62 21 5830 3449 F +62 31 534 3886

Please see analyst certification and other important disclosures at the back of this report 9
 EQUITY RESEARCH
SILO - Result Update - 25 March 2019
CIPTADANA SEKURITAS ASIA

Analyst Certification

Each contributor to this report hereby certifies that all the views expressed accurately reflect his or her personal views about the
companies, securities and all pertinent variables. It is also certified that the views and recommendations contained in this report are not
and will not be influenced by any part or all of his or her compensation.

Disclaimer

This report does not constitute an offer to buy or sell any security/instrument, invitation to offer or recommendation to enter into any
transaction. Nor are we acting in any other capacity as a fiduciary to you. When making and investment decision, you should determine,
without reliance upon us or our affiliates, the economic risks and merits (and independently determine that you are able to assume these
risks) as well as the legal, tax and accounting characterizations and consequences of any such transaction. In this regard, by accepting this
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(b) there may be legal, tax or accounting risks associated with any transaction, (c) you should receive (and rely on) separate and qualified
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advice (and any risks associated with any transaction and our disclaimer as to these matters.

The information contained in this report is based on material we believe to be reliable; however, we do not represent that it is accurate,
current, complete, or error free. Assumptions, estimates and opinions contained in this report constitute our judgment as of the date of the
document and are subject to change without notice. Any projections are based on a number of assumptions as to market conditions and
there can be no guarantee that any projected results will be achieved. Past performance is not a guarantee of future results. PT
CIPTADANA SEKURITAS ASIA AND ITS AFFILIATES SPECIFICALLY DISCLAIMS ALL LIABILITY FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL
OR OTHER LOSSES OR DAMAGES INCLUDING LOSS OF PROFITS INCURRED BY YOU OR ANY THIRD PARTY THAT MAY ARISE FROM ANY
RELIANCE ON THIS REPORT OR FOR THE RELIABILITY, ACCURACY, COMPLETENESS OR TIMELINESS THEREOF.

Disclaimer: This document is not intended to be an offer, or a solicitation of an offer, to buy or sell relevant securities (i.e. securities
mentioned herein or of the same issuer and options, warrants or rights to or interest in any such securities). The information and opinions
contained in this document have been compiled from or arrived at in good faith from sources believed to be reliable. No representation or
warranty, expressed or implied, is made by PT CIPTADANA SEKURITAS ASIA or any other member of the Ciptadana Capital, including any
other member of the Ciptadana Group of Companies from whom this document may be received, as to the accuracy or completeness of the
information contained herein. All opinions and estimates in this report constitute our judgment as of this date and there can be no
assurance that future results or events will be consistent with any such opinions, forecasts or estimates. The information in this document
is subject to change without notice; its accuracy is not guaranteed; and it may be incomplete or condensed.

Please see analyst certification and other important disclosures at the back of this report 10