Siloam International Hospitals (SILO.IJ Rp 2,120; BUY TP Rp 3,000) Trimming Our FY25-26F Net Profit Est. by 8-13%, LT Story on Revenue Intensity Growth Remain Intact

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Siloam International Hospitals (SILO IJ)

Trimming Our FY25-26F Net Profit Est. by 8-13%, LT Story on Revenue Intensity Growth Remain Intact

4Q24 results reflected impact of fewer working days, yet SILO is still on track to increase LT intensity supported by its NextGen strategy.
Incorporating risks of weaker admissions in 1H25 impacted by multiple holidays, we trimmed our FY25/26F net profit est. by 8/13%.
Maintain our Buy rating with a slightly lower DCF-based TP of Rp3,000. Risk could come from the impact of leverage on leased assets buyback.

4Q24 Results Reflected Impact of Fewer Working-Days

SILO’s relatively modest results in 4Q24 were due to flattish revenue (-1% qoq, +5% yoy), impacted by fewer working days, as well as higher opex (+9% yoy) due to higher salary costs and consultant fee related to its NextGen strategy. Meanwhile, Inpatient (IP) revenue intensity saw -5% qoq growth, yet outpatient revenue intensity still grew 4% qoq. Overall, FY24 net profit was still recorded at Rp902bn, aligned with our estimates of Rp890bn (101%) despite coming below consensus expectations of Rp1.07tr (84%) as consensus estimated lower other expenses items. We believe the FY24 results reflect the overall weaker market demand, yet SILO is still on track with its strategy to increase long-term intensity.

Trimming Our FY25/26F Net Profit by -8%/-13%

Management sees 1H25 outlook with cautious optimism as yoy patient volume growth might still be impacted by the Ramadhan season in 1Q25 and holiday events in 2Q25. Taking this into account, along with FY24 results, we slightly lower our FY25/26F inpatient volume growth by 2%. We also raise our salary cost estimates to reflect potential impacts from the company’s four new hospital openings (Exhibit 14), resulting in a downward revision of our FY25/26F net profit forecast by 8%/13%. Meanwhile, we believe the recently announced NextGen Strategy (see Exhibit 15) — which includes: 1) A new categorization of hospitals aiming to serve all vertical segments of Indonesian patients, 2) Expansion into AI, biotech, ambulatory care, and personalized medicine — could continue support long-term revenue intensity growth story.

Maintain Buy with slightly lower DCF-based TP of Rp3,000

We maintain our Buy rating on SILO with a slightly lower DCF-based TP of Rp3,000 (implying 12.8/11.1x FY25F/26F EV/EBITDA. Downside risks could come from the impact of higher leverage from the planned buyback of hospitals under lease to FirstREITS, which our preliminary estimates (Exhibit 2) indicate downside risks to FY25/26 EBIT by ~17/14%.

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