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Oct 13,2017 11:59:42

  • Pendapatan bersih LPKR 1H17 mengalami penurunan 3% YoY
  • Peningkatan divisi healthcare menopang tumbuhnya recurring income
  • Masih lemahnya performa 1H17 menyebabkan kami mempertahankan rekomendasi HOLD

LPKR bukukan laba bersih Rp487 miliar pada 1H17

Pendapatan bersih LPKR meningkat 3% YoY menjadi Rp4,9 triliun pada 1H17. Sementara GPM perseroan turun dari 43,2% pada 1H16 menjadi 41,1% pada 1H17 yang disebabkan oleh meningkatnya penjualan dari divisi large scale integrated development yang memiliki margin lebih rendah dibandingkan urban developement serta adanya kenaikan beban pokok jasa tenaga ahli, gaji, dan kesejahteraan karyawan dari divisi healthcare sebesar 6,4% YoY. Sementara itu, OPM LPKR mengalami penurunan dari 17,2% pada 1H16 menjadi 12,4% pada 1H17 yang disebabkan oleh kenaikan biaya iklan dan pemasaran sebesar 59,4% YoY. Adapun pada 1H17, perseroan membukukan laba penjualan aset yang tersedia untuk dijual sebesar Rp119 miliar dan mengalami penurunan beban bunga sebesar 57,2% YoY menjadi Rp68 miliar. Untuk itu, laba bersih LPKR hanya mengalami penurunan sebesar 2,1% YoY menjadi Rp487 miliar pada 1H17

Recurring income 1H17 meningkat 8% YoY

Recurring income tumbuh 8,0% YoY menjadi Rp3,6 triliun sehingga kontribusi terhadap total pendapatan meningkat dari 65,3% pada 1H16 menjadi 73% pada 1H17. Pertumbuhan itu didukung oleh meningkatnya pendapatan divisi healthcare sebesar 7,9% YoY menjadi Rp2,8 triliun pada 1H17, yang berasal dari 31 rumah sakit yang dikelola LPKR. Pertumbuhan recurring income tersebut juga didukung oleh meningkatnya pendapatan ritel mal sebesar 16,8% YoY menjadi Rp191 miliar pada 1H17, yang ditopang oleh meningkatnya kontribusi dari Lippo Mall Puri, Baubau, dan Jambi. Hingga 1H17, LPKR mengelola 47 mal yang tersebar di seluruh Indonesia. Sementara itu, pendapatan aset managemen meningkat 9,4% YoY menjadi Rp205 miliar pada 1H17 yang didukung oleh bertambahnya aset yang dikelola serta meningkatnya fee dan pendapatan dividen. Di sisi lain, development revenue mengalami penurunan sebesar 24,7% YoY menjadi Rp1,3 triliun pada 1H17 yang disebabkan oleh turunnya pendapatan segmen urban development sebesar 41,0% YoY menjadi Rp687 miliar. Sedangkan pendapatan segmen large scale integrated development meningkat 6,2% YoY menjadi Rp648 miliar pada 1H17 yang didukung oleh peningkatan pengakuan pendapatan dari Orange County, Millenium Village, dan perkantoran Lippo Thamrin.

LPKR raih marketing sales Rp2,6 triliun

LPKR membukukan marketing sales sebesar Rp2,6 triliun pada 1H17, meningkat signifikan hingga di atas 4x lipat dari 1H16. Kenaikan ini ditopang oleh pertumbuhan yang signifikan dari segmen residensial hingga 36x menjadi Rp2,4 triliun pada 1H17. Kendati demikian, jika dibandingkan dengan target hingga akhir tahun sebesar Rp10 triliun, pencapaian marketing sales ini masih rendah, yakni sebesar 27%. Di sisi lain, perseroan telah mendapatkan persetujuan dari pemegang saham terkait akuisisi properti integrasi di Buton. Perseroan akan mengakuisisi Siloam Hospitals Buton yang menyatu dengan retail mall plaza Buton.

Kami memberikan rekomendasi HOLD dengan target harga 800/saham

Kendati mengalami peningkatan yang signifikan, pencapaian marketing sales LPKR hingga 1H17 masih jauh dari target 2017. Di samping itu, performa segmen urban development juga masih membukukan pelemahan sehingga menghambat pemulihan kinerja LPKR. Untuk itu, kami menurunkan target harga dari Rp865/saham menjadi Rp800/saham. Positifnya, perseroan masih diuntungkan oleh model bisnisnya yang mayoritas dikontribusikan oleh recurring income, yang terutama berasal dari segmen healthcare. Kami juga berharap adanya aksi penjualan aset ke REIT yang dapat memberikan dana segar bagi perseroan. Untuk itu, kami tetap mempertahankan rekomendasi HOLD atas saham LPKR.


Feb 22,2017 11:24:38

Indonesia market update: Here comes the rain
Ahok, floods & stocks

Bad news for Ahok in the lead-up to the Jakarta Governor race: In spite of efforts by Jakarta’s governor, Basuki “Ahok” Tjahaja Purnama, to prepare for and prevent flooding, 54 areas around the capital were paralyzed as water prevented travel (exhibit 3-4) given the water depth of up to two and a half meters in some places on the back of around 180mm rain intensity (2016: 157mm) in the past 24 hours. The weather bureau (BMKG) predicts the peak intensity of La Nina to stay until March 2017.  
2nd round Jakarta Governor campaign has started early: Dressed in a red parka (exhibit 2), Anies, Ahok’s competitor in the final round of the Jakarta Governor race, has managed to capitalize on the floods to raise his popularity ahead of the planned campaign scheduled for 6-15 April 2017.

Demonstration still took place despite flooding: The Jakarta floods did not deter an estimated 10,000 protestors (although much lower than the 100k participants previously forecast) from turning up in front of the parliament (exhibit 1), asking the government to remove Ahok from his Governor post. The rally was reportedly headed by Muslim forum FUI.    

Positively affected stocks: While all distribution channels are adversely affected by the floods, we believe there are sectors and stocks that could perform better than others under these conditions. Siloam Hospitals ($SILO) should see increased traffic as people get sick while the pharmaceutical sector is also likely to see some uptick from higher purchases of medicine to treat wide-ranging illnesses such as flu and skin diseases, benefiting Kalbe ($KLBF) and Sido Muncul ($SIDO). Additionally, during floodings, households and evacuation centers typically stock up on staple foods such as noodles, which would benefit Indofood Consumer Branded Products ($ICBP). During these times, smokers also have the propensity to smoke more, so we could see increased stick sales for Sampoerna ($HMSP). Within the commodities space, assuming continued downpours at Sumatra’s plantation estates, higher CPO prices might occur due to decreased output. This would benefit our favored plantation plays: Eagle High ($BWPT) and Tunas Baru ($TBLA).  

Adversely affected stocks: With the rains, cement, construction and coal companies could face operational delays. We also expect bread maker Nippon Indosari ($ROTI) to suffer (c.70% of sales in Greater Jakarta), as spoilage may be an issue due to the fresh nature of its products. Retailers could also be affected by the reduced traffic, particularly Ramayana ($RALS) whose low-end target customers lack cars for commuting. Traffic jams caused by flooding should spell bad news for transportation, adversely affecting both Blue Bird ($BIRD) and Express ($TAXI), as well as Garuda Indonesia ($GIAA), as flights may be delayed or cancelled.   

Nov 15,2016 22:38:24

Indonesia Healthcare: CoB rescue

Coordination of Benefits + JKN = An industry game changer
At this stage, on the back of the government’s new National Healthcare Insurance Program (JKN) created by the Social Security Agency-Health (BPJS-Health), the Coordination of Benefits (CoB) is changing Indonesia’s healthcare landscape. While the COB is not new, its ability to now be combined with JKN (exhibit 21) and private insurers (exhibit 22) should benefit the industry. By subscribing to JKN, private insurance premiums can fall by up to 40%, creating a game changer, in our view. Hence, we upgrade our sector rating to OVERWEIGHT, from NEUTRAL.

Beneficiaries of BPJS participation: Hospitals, insurers, insurance users   
COBs can now offer patients and companies the access to better-quality medical services through cheaper premiums, but with similar flexibility compared to normal private insurances. From the perspective of insurance users, this can pave the way for higher productivity (exhibit 25-26) by using private medical providers (ie, clinics and hospitals). From the point of view of hospitals, the CoB, combined with JKN, could raise occupancy rates and result in higher profitability stemming from increased margins and reduced receivable days by shifting towards private insurers’ faster reimbursement method (exhibit 23) from the government’s BPJS Health (JKN agency). However, this is limited to a BPJS-participating hospital. In contrast, a non-BPJS hospital might see a migration in their in-and out-patients. Separately, the CoB would also be beneficial for BPJS-participating insurance companies (ie, higher client traffic) and raise BPJS participation rates, especially from the corporate sector due to lower private insurance premiums.

Government’s commitment to ensure JKN program continuity
The rise in healthcare needs has put some pressure on Indonesia’s state budget. After 2 years of operation, BPJS-Health has suffered c.IDR20tn in total deficit, of which IDR3.3tn was in 2014, IDR5.8tn in 2015 and it expects another IDR10tn for 2016. This poor performance of BPJS-Health is due to: (1) Lack of cross subsidies, (2) Adverse selection phenomenon and (3) Discrepancy in calculating premiums and claims. Nevertheless, given Jokowi’s support towards Healthcare, especially for those at the grass-roots level, we see commitment from the government to ensure continuity of this program, given its additional contribution to fund the deficit by injecting IDR5.6tn in 2014, IDR3.5tn in 2015 and IDR6.83tn in 2016.

SILO and KLBF as beneficiaries of government healthcare program
Our top pick among the listed private hospital players is SILO ($SILO), as it has the widest hospital network in Indonesia and embraced JKN into its business model. Aside from higher revenue on rising patient volumes, SILO is set to improve margins on higher bed-occupancy rates and a shorter ramp-up period for its new hospitals to reach maturity (from 5 to 3 years). Meanwhile, we maintain our HOLD call on MIKA ($MIKA) for its conservative expansion plan and likely loss of patient market share as the government’s new CoB program prohibits patients to obtain treatment from non-BPJS hospitals. In the pharma sector, KAEF ($KAEF) should benefit from the CoB scheme as its clinics are participants of both JKN and private insurance (Inhealth Insurance). However, due to KAEF’s more demanding valuation, we prefer KLBF ($KLBF) as a turnaround play on a recovery in branded generic drug consumption due to CoB.

Jul 01,2016 10:41:53
Mitra Keluarga Karyasehat ($MIKA): Still not that well
Reaffirm REDUCE despite earnings upgrade
At this stage, we revise up our 2016-17F earnings by 7-9% (exhibit 5) for MIKA to reflect stronger patient flows and higher margins driven by lower drug expenses, higher number of emergency cases and price increase in 2016. MIKA has implemented a 5% price increase and grown patient volumes by 7% y-y since the beginning of 2016, helped by its hospitals in the Greater Jakarta areas. The downtrend seen in patient volume has reversed in 1Q16 but the growth has still remained relatively weak compared to Siloam (SILO IJ-BUY-IDR11,175-TP:IDR12,000), a major beneficiary of the government’s JKN program and our TOP pick within the hospital space. On our revised expectations of higher revenue and net profits for 2016-17E along with the company’s healthy balance sheet and net cash position, we raise our DCF-based (10% WACC) 12-month TP to IDR2,200 from IDR1,900. However, we expect the erosion in market-share of patient volumes to continue given no new hospital openings and conservative bed capacity expansion in its existing hospitals of only 63 beds ytd, and reaffirm our REDUCE call. Looking at the stock’s recent market outperformance (exhibit 4), we believe the upside is minimal as current 2016F EV/EBITDA of 48x is already at a 120% premium to SILO’s valuation. Risks to our call include higher patient participation in the CoB scheme and low-quality services provided by JKN providers, shifting market share from other private hospitals.
Higher occupancy, int. income and margin expansion driving growth
Due to the dengue fever outbreak in 1Q16, MIKA recorded total patient volume growth of around 7% y-y. This coupled with a higher mix of complex cases and additional 5% price increase since the beginning of the year, helped MIKA book inpatient revenue growth of 19% y-y and outpatient revenue growth of 9% y-y bringing the total sales to IDR625bn, up 15% y-y. Aside from lower cost of branded generic drugs, MIKA’s margin expansion also stemmed from its higher occupancy rate to 73% from 66% in 1Q15 and 58% in 2015. Meanwhile, MIKA was able to reduce its quarterly opex by 6% leading to a jump in operating profit (43.5% q-q) and net profit (44.3% q-q). Bottom line grew 27% y-y supported by higher interest income (66.5% y-y). Stripping out the interest income, net profit growth fell to 18% y-y. In 2Q, we expect MIKA’s profit growth to be lower than 1Q as the fever outbreak has slowed down from April.
Delay in expansion plan likely to put pressure on patient volumes
MIKA recently experienced delay in its hospital expansion this year after having some hiccups in securing construction permit from the local government in Bintaro area. Although this has temporarily allayed a margin drop concern from a new hospital opening, MIKA will face challenges in maintaining its patient volume growth (exhibit 9) relative to its closest competitor, SILO, which has been more aggressive in its expansion strategy with 2 new hospitals already having opened ytd. We believe that the window of opportunity for MIKA to capture future growth is narrowing especially from outside Java, as its portfolio are very concentrated in two big cities only, Greater Jakarta and Surabaya.
Mar 22,2016 15:29:25
Siloam International Hospitals ($SILO) targets to open 7 new hospitals in 2016. SILO will open those new hospitals in Labuan Bajo, NTT, Yogyakarta, Southeast Sulawesi, Bangka, Bogor, Sorong. SILO also targets to open 3 new Siloam Medika hospitals in 2016. Their locations will be in Bekasi (West Java), Semarang (Central Java), and Samarinda (East Kalimantan).
Mar 08,2016 08:34:48
Lippo Karawaci ($LPKR): 4Q15 results: Below our and consensus estimates

- Hurt by lower development incomes and FX losses: LPKR booked 4Q15 revenue of IDR2.2tn, up 7% q-q but down 61% y-y, and a net profit of IDR469bn (-69% y-y), bringing full-year bottom line to IDR535bn, below our (43%) and consensus (35%) estimates, dragged down by IDR155bn FX loss and lower development income (2015: 38%; 2014: 59%). However, 2015 top line of IDR8.9tn was down 23.6% y-y, in line with our projection (98%) but below the consensus forecast (89%). We believe that most of the 4Q15 revenue was contributed by its subsidiary Lippo Cikarang’s ($LPCK) successful project launches including the Orange County mega project in previous years. However, note that in 2014 LPKR booked additional revenue of IDR3.37tn from its Kemang mall sale in 4Q14.

- 2015 recurring revenue contributed 62% of total: In 2015, LPKR managed to book IDR5.5tn in recurring revenue (62% of total revenue), mostly contributed by its subsidiary Siloam International Hospitals’ ($SILO) solid 2015 top line of IDR4.14tn (+24% y-y).

- Pretax and net margins jumped in 4Q15 on IDR631bn FX gain: LPKR's 4Q15 pretax profit reached IDR760bn versus a IDR564bn loss in 3Q15, backed by its IDR631bn FX gain (3Q15 FX loss: IDR763bn) on its USD803mn bonds due to the IDR strengthening which closed at IDR13,788/USD1. This led to pretax and net margins increasing to 35.3% and 21.8% in 4Q15.

Outlook: Downward earnings revisions on pre-sales adjustments
Despite LPCK’s successful residential and commercial project launches in Cikarang in 2015, we reduce our 2016-17 top line assumptions by 1-9% given lower-than-expected 2015 pre-sales of IDR3.6tn (Bahana: IDR3.8tn); our 2016 marketing sales of IDR4.8tn is much lower than LPKR’s pre-sales guidance of IDR6.7tn. On the bottom line, we cut our 2016-17 EPS estimates by 9-11% (exhibit 5). Separately, LPKR plans to launch IDR1.7tn REIT this year.

Recommendation: Retain HOLD with unchanged 12-M TP of IDR1,100
Despite LPKR’s share price underperformance (exhibit 4) partly due to the negative sentiment stemming from its 2015 performance, we retain our HOLD rating given its unsuccessful project launches. Thus, we retain our NAV-based TP of IDR1,100 (unchanged 60% NAV discount, exhibit 7). Nevertheless, we see upside risks for LPKR in the form of: stronger IDR (due to USD814mn debt), rising recurring incomes, higher-than-expected 2016 guidance and a likely REIT issuance in 2016. On the flip side, downside risks are lower-than-expected marketing sales and unsuccessful REIT issuance.

Source: Daiwa Research
Mar 07,2016 08:48:18
SILO: 4Q15 results: Solid top-line, unexciting bottom line

New hospital opening and higher patient volumes to support growth
On the top line, SILO reported 4Q15 sales of IDR1.1tn (103% of our estimate), up 10.2% q-q and 22.2% y-y, due to a combination of higher outpatient visits to 502k (12% q-q, 21% y-y) and inpatient admissions to 39k (13% q-q, 23% y-y). However, the company’s average length of stay (ALOS) declined to 3.91 days in 4Q15 from 3.93 days in 3Q15 but improved from 3.87 days in 4Q14, leading to higher inpatient days of 151k (12% q-q, 25% y-y). This resulted in 2015 revenue of IDR4.1tn (101% of our and consensus estimates), improving 24% y-y on higher volumes of both outpatients (+24% y-y) and inpatients (+27% y-y). That said, we maintain our 2016-17F revenue on SILO’s solid top-line growth in 2015 and factor in additional sales stemming from the newly opened Labuhan Bajo Nusa Tenggara Timur hospital branch in January 2016.

Net earnings below consensus on higher opex & below the line charges
SILO recorded a minor net loss of IDR1.2mn in 4Q15, bringing 2015 net profit to IDR70bn (-2% y-y), partly hurt by increased salary (+27% y-y) and rental (+58% y-y) expenses, resulting in higher operating costs (+25% y-y). Additionally, below the line, SILO’s performance was weighed down by a jump in net interest expense (+30% y-y), higher other charges (+55% y-y) and tax rate hike to 42% from 35% in 2014. Full-year performance was significantly below expectations, at 75% of our forecast and 83% of consensus.

Lower 2016-17F earnings; Growth support from mature hospitals
Due to the disappointing results, we have cut our 2016-17F earnings by 23-31% on potential start-up losses from the Labuhan Bajo hospital and other upcoming new hospitals. However, going forward, growth support will come from capacity expansions at two of its mature hospitals (Lippo Village and MRCCC Semanggi). Furthermore, we expect to see higher outpatient and inpatient admissions and improving margins, as hospitals opened in 2011-14 are due to reach maturity over the next two years.

Retain BUY with lower TP of IDR12,400
SILO is currently trading at a 2016F EV/EBITDA of 13.3x, a 53% discount to regional peers (exhibit 6) and a 68% discount to MIKA (MIKA IJ-REDUCE-IDR2,160-TP:IDR1,900) following the recent share-price underperformance (exhibit 4). At this stage, although we retain our BUY recommendation, we decrease our 12-month TP to IDR12,400 (from IDR14,700), based on an 18x 2016F EV/EBITDA, nearly a 60% discount to MIKA’s valuation and 10-year DCF valuation, which we believe is sufficient to account for SILO’s poor 2015 results. Risks include delays in expansions due to difficulties in acquiring licenses to operate new hospitals, which could slow growth while at the same time raise operating expenses for the company.