Equity Research Monday, March 02, 2015 Danareksa Sekuritas – Equity Research FROM RESEARCH Astra International: Time for a change (ASII IJ. Rp 7,850. HOLD. TP Rp 8,300) Following the announcement of its 2014 results, ASII held its analyst meeting to outline the company’s strategy. In our view, this strategy, which focuses on protecting its market share against Honda’s more aggressive forays, still lacks clarity. At the meeting, ASII’s management also explained that its decision on coal assets impairment highlights its transparency, whilst stating that infrastructure would be the next key driver for the company. Mitra Keluarga: Set to go public Mitra Keluarga, one of the largest hospital chains in Indonesia, held a public expose in relation to its plans to go public in the first quarter of this year. Mitra Keluarga is Indonesia’s largest hospital chain in terms of patient numbers. In total, Mitra Keluarga operates 11 hospitals with total bed capacity of 1,953 beds located in Greater Jakarta, Tegal and Surabaya. From the Initial Public Offering the company expects to raise around IDR3.8tn – IDR4.7tn (around USD293-USD364mn). The company will offer 18% of its shares to the public priced between IDR14,500 to IDR18,000. MARKET NEWS *Analysts’ comment inside BTN Speed Up Bond Emissions Worth Rp6tn(BI) BI Estimate February Deflation at 0.2% (ID) Jasa Marga Plan to Issue Rp1.7tn Bonds (ID) National Heavy Equipment Production Expected to Reach 6,000 Units (ID) IDX ANNOUNCEMENT Cash Announcement Code Ex-Date Date Payable Amount (Rp) ADRO 05-Jan-2014 16-Jan-2014 US$ 0.00094 AISA 05-Jan-2014 14-Jan-2014 8.5 Source: KSEI MORNING HIGHLIGHT Key Index Close Chg Ytd Vol (%) (%) (US$ m) Asean - 5 Indonesia 5,450 (0.0) 4.3 422 Thailand 1,587 (0.4) 6.0 1,760 Philippines 7,731 (0.4) 6.9 275 Malaysia 1,821 0.0 3.4 560 Singapore 3,403 (0.7) 1.1 1,033 Regional China 3,310 0.4 2.3 53,393 Hong Kong 24,823 (0.3) 5.2 9,934 Japan 18,886 0.5 8.2 1,300 Korea 1,995 0.5 4.1 5,134 Taiwan 9,622 (0.8) 3.4 3,020 India 29,362 0.5 6.8 705 NASDAQ 4,964 (0.5) 4.8 74,481 Dow Jones 18,133 (0.4) 1.7 7,690 Currency and Interest Rate Rate w-w m-m ytd (%) (%) (%) Rupiah (Rp/1US$) 12,932 (0.8) (3.7) (4.4) SBI rate (%) 6.67 (0.3) (0.3) (0.6) 10-y Govt Indo bond 7.06 (0.1) (0.2) (0.7) Hard Commodities Unit Price d-d m-m ytd (%) (%) (%) Coal US$/ton 62 n/a (0.6) (27.0) Gold US$/toz 1,215 0.1 (4.7) 2.5 Nickel US$/mt.ton 14,037 (2.0) (4.7) (6.9) Tin US$/mt.ton 17,914 (0.9) (7.0) (7.8) Soft Commodities Unit Price d-d m-m ytd (%) (%) (%) Cocoa US$/mt.ton 3,017 0.5 7.7 5.5 Corn US$/mt.ton 144 1.4 2.8 (9.5) Crude Oil US$/barrel 62 (0.6) 13.6 8.5 Palm oil MYR/mt.ton 2,277 0.8 3.2 (11.5) Rubber USd/kg 144 (0.7) 2.6 (5.4) Pulp US$/tonne 900 n/a (3.3) (0.7) Coffee US$/60kgbag 133 (0.4) 1.9 35.1 Sugar US$/MT 372 (1.2) (5.6) (5.0) Wheat US$/mt.ton 188 2.5 (1.9) (13.7) Source: Bloomberg
Transcript
Equity Research
Monday, March 02, 2015
Danareksa Sekuritas – Equity Research
FROM RESEARCH
Astra International: Time for a change (ASII IJ. Rp 7,850. HOLD. TP Rp 8,300)
Following the announcement of its 2014 results, ASII held its analyst meeting to outline the company’s strategy. In our view, this strategy, which focuses on protecting its market share against Honda’s more aggressive forays, still lacks clarity. At the meeting, ASII’s management also explained that its decision on coal assets impairment highlights its transparency, whilst stating that infrastructure would be the next key driver for the company.
Mitra Keluarga: Set to go public
Mitra Keluarga, one of the largest hospital chains in Indonesia, held a public expose in relation to its plans to go public in the first quarter of this year. Mitra Keluarga is Indonesia’s largest hospital chain in terms of patient numbers. In total, Mitra Keluarga operates 11 hospitals with total bed capacity of 1,953 beds located in Greater Jakarta, Tegal and Surabaya. From the Initial Public Offering the company expects to raise around IDR3.8tn – IDR4.7tn (around USD293-USD364mn). The company will offer 18% of its shares to the public priced between IDR14,500 to IDR18,000.
MARKET NEWS
*Analysts’ comment inside
BTN Speed Up Bond Emissions Worth Rp6tn(BI) BI Estimate February Deflation at 0.2% (ID) Jasa Marga Plan to Issue Rp1.7tn Bonds (ID) National Heavy Equipment Production Expected to Reach 6,000 Units
(ID)
IDX ANNOUNCEMENT
Cash Announcement
Code Ex-Date Date Payable Amount (Rp)
ADRO 05-Jan-2014 16-Jan-2014 US$ 0.00094
AISA 05-Jan-2014 14-Jan-2014 8.5
Source: KSEI
MORNING HIGHLIGHT
Key Index
Close
Chg Ytd Vol
(%) (%) (US$ m)
Asean - 5
Indonesia 5,450 (0.0) 4.3 422
Thailand 1,587 (0.4) 6.0 1,760
Philippines 7,731 (0.4) 6.9 275
Malaysia 1,821 0.0 3.4 560
Singapore 3,403 (0.7) 1.1 1,033
Regional
China 3,310 0.4 2.3 53,393
Hong Kong 24,823 (0.3) 5.2 9,934
Japan 18,886 0.5 8.2 1,300
Korea 1,995 0.5 4.1 5,134
Taiwan 9,622 (0.8) 3.4 3,020
India 29,362 0.5 6.8 705
NASDAQ 4,964 (0.5) 4.8 74,481
Dow Jones 18,133 (0.4) 1.7 7,690
Currency and Interest Rate
Rate
w-w m-m ytd
(%) (%) (%)
Rupiah (Rp/1US$) 12,932 (0.8) (3.7) (4.4)
SBI rate (%) 6.67 (0.3) (0.3) (0.6)
10-y Govt Indo bond 7.06 (0.1) (0.2) (0.7)
Hard Commodities
Unit Price
d-d m-m ytd
(%) (%) (%)
Coal US$/ton 62 n/a (0.6) (27.0)
Gold US$/toz 1,215 0.1 (4.7) 2.5
Nickel US$/mt.ton 14,037 (2.0) (4.7) (6.9)
Tin US$/mt.ton 17,914 (0.9) (7.0) (7.8)
Soft Commodities
Unit Price
d-d m-m ytd
(%) (%) (%)
Cocoa US$/mt.ton 3,017 0.5 7.7 5.5
Corn US$/mt.ton 144 1.4 2.8 (9.5)
Crude Oil US$/barrel 62 (0.6) 13.6 8.5
Palm oil MYR/mt.ton 2,277 0.8 3.2 (11.5)
Rubber USd/kg 144 (0.7) 2.6 (5.4)
Pulp US$/tonne 900 n/a (3.3) (0.7)
Coffee US$/60kgbag 133 (0.4) 1.9 35.1
Sugar US$/MT 372 (1.2) (5.6) (5.0)
Wheat US$/mt.ton 188 2.5 (1.9) (13.7)
Source: Bloomberg
Equity Research
Monday, March 02, 2015
Danareksa Sekuritas – Equity Research
PT Danareksa Sekuritas Jl. Medan Merdeka Selatan No. 14 Jakarta 10110 Indonesia Tel (62 21) 350 9777, 350 9888 Fax (62 21) 350 1709
Following the announcement of its 2014 results, ASII held its analyst meeting to outline the company’s strategy. In our view, this strategy, which focuses on protecting its market share against Honda’s more aggressive forays, still lacks clarity. At the meeting, ASII’s management also explained that its decision on coal assets impairment highlights its transparency, whilst stating that infrastructure would be the next key driver for the company.
Seeking to protect its auto market share We believe that it is imperative for Astra to pursue a more aggressive strategy to counter Honda’s growing market share. Arguably, a major change in the company’s strategic model will be required, rather than just a facelift, especially in the highly contested Low-end MPV and Low-end SUV segments. The management has hinted that new product launches and product refreshments are in the pipeline, although there are no details concerning models or timing at this juncture. Currently, there is no urgency for Astra to further increase its capacity, especially since the current installed capacity has been running only on two shifts without overtime. If needed, longer working hours could lift production by 15%, although this is unlikely, we feel, given the intensifying competitive landscape and relatively low demand growth this year. Booking impairments on its mining assets to reflect the currently weak coal prices On the back of the currently depressed coal prices, United Tractors (UNTR) decided to report an impairment loss on its mining assets of around Rp2.7tr for 2014, with a provisioning charge on the net profits of UNTR (after minority interest) reaching Rp1.5tr. The new mining assets value after impairment is based on a coal price assumption of US$65 – 90/ton in 2014 vs. US$85 – 111/ton previously, with the previous assumption based on numbers when the company acquired those coal assets, we believe. However, when coal prices do eventually recover, it is possible that UNTR reverses the impairments on the mining properties.
Infrastructure is the next key driver Astra’s infrastructure strategy was one of the main highlights of the meeting. In our view, the scale of ASII’s operations provides the company with greater flexibility to pursue future growth opportunities, as seen in the recent acquisition of the construction company ACSET, which allows ASII to leverage on the best story in Indonesia: infrastructure development. At the same time, ACSET will also be used as the main vehicle for ASII’s construction activities, and, in this regard, the management has hinted that ASII will allocate IDR5t pa for its infrastructure business, five times larger than ACSET’s current revenues. In terms of its capex plans, ASII has earmarked IDR19tn for capex in 2015, of which 34% will be allocated to heavy equipment and mining, 24% to infrastructure, 22% for automotive and 16% for agri, while the remainder will be split proportionately among the other businesses.
Helmy Kristanto (62-21) 2955 5824 [email protected] Danareksa research reports are also available at Reuters Multex and First Call Direct and Bloomberg.
2 March 2015 Astra International
2
Acquisition of ACST: riding on the infrastructure boom With the recent acquisition of a 40% ownership in Acset Indonusa (ACST) at Rp3,250/share worth Rp650bn, UNTR has the option to acquire another 10.1% stake in ACST with the price determined in the Mandatory Tender Offer (MTO). Hence, UNTR, through its subsidiary, KSP (Karya Supra Perkasa), is expected to control a minimum 50.1% ownership in ACST. As the acquisition price was higher than the average 90 days share price of Rp3,177, the MTO price will be Rp3,250/share. Assuming the company acquires a 50.1% stake in ACST, the total acquisition value would be Rp814.3bn. While ACST’s revenues currently only amount to 2.1% of UNTR’s revenues, the management of UNTR has indicated that in the next five years the revenues contribution from ACST to UNTR would be expected to increase to 10%. This would come from: a) the new government’s plans to undertake more infrastructure projects and b) the support from the parent company, Astra International (ASII), in developing property and infrastructure projects (also involving synergy with Astratel Nusantara). Not much upside while risks loom; HOLD with a TP of IDR8,300 Following the announcement of the full year results, we downgrade Astra to HOLD given: 1. The automotive margin will stay under pressure amidst an intensifying competitive landscape, which has already pushed down the auto EBIT margin further to an historic low of 1.5% in 4Q14, and since expectations of a better margin in 4Q (as was the case last year with an EBIT margin of 4.9%) look too optimistic. 2. Astra has enjoyed strong share price performance, rallying 27% since mid-October 2014, outperforming the market by 16%. Without clarity from the management on its strategy to arrest margins compression, market disappointment would lead to a de-rating; and 3) To our TP of IDR8,300, upside is now minimal. While ASII is still seen as a core Indonesia holding and relatively safe from potential government intervention, the risk of negative government regulation still remains, in our view, especially as the government will rely more heavily on tax collection - heightening risks in the automotive business.
Monday, 02 March 2015
Monday, 02 March 2015
Mitra Keluarga Set to go public Mitra Keluarga, one of the largest hospital chains in Indonesia, held a public expose in relation to its plans to go public in the first quarter of this year. Mitra Keluarga is Indonesia’s largest hospital chain in terms of patient numbers. In total, Mitra Keluarga operates 11 hospitals with total bed capacity of 1,953 beds located in Greater Jakarta, Tegal and Surabaya. From the Initial Public Offering the company expects to raise around IDR3.8tn – IDR4.7tn (around USD293-USD364mn). The company will offer 18% of its shares to the public priced between IDR14,500 to IDR18,000. A prominent name in Indonesia’s healthcare industry Mitra Keluarga is a well-known hospital chain in Indonesia. It was established in 1989 and now operates 11 hospitals- seven in Greater Jakarta, three in Surabaya and one in Tegal, Central Java – with a total bed capacity of 1,953 beds. Mitra Keluarga is the largest private multi-specialist hospital in Indonesia in terms of patient numbers according to Frost & Sullivan. As of 2013, Mitra Keluarga recorded total outpatient and inpatient numbers of 1.5 million and 105 thousand patients, respectively. This is more than 20 percent higher than the patient numbers recorded by Siloam Hospitals in 2013. Solid earnings growth over the past three years The total revenues generated by its hospitals reached IDR1.7tn in 2013 and IDR1.5tn in 9M14, implying revenues per bed capacity of IDR1.2bn/bed and IDR0.7bn/bed respectively. In FY11-13, revenues recorded growth of 20.3% CAGR underpinned by rising patient numbers and higher revenues intensity. Earnings growth has also been robust. In FY11-13, earnings recorded growth of 3-year 33.9% CAGR supported by strong operational efficiency and a higher occupancy ratio which improved to 72.4% in 2013 from 58.6% in 2011. Mature hospitals produce superior margins Mitra Keluarga’s hospital profile is dominated by mature hospitals. Of its 11 hospitals, only one is less than 4 years old. As a result, Mitra Keluarga has better profitability than its peers, enjoying an EBITDA margin of 32.1% in 2013, or higher than Siloam and Omni hospitals’ EBITDA margin of 12% and 29.7%, respectively. And at the bottom line, Mitra Keluarga’s net margin reached 23.6%, or significantly higher than the net margins of its two peers – 2% for Siloam and 13.9% for Omni hospitals – thanks to better operational efficiency and lower interest expenses. Plans for seven new hospitals and around 386 additional beds over the next five years In its expansion plans, Mitra Keluarga plans to develop seven new hospitals and add around 386 beds in the period up to 2019. The development of new hospitals will be focused in Greater Jakarta and Surabaya as the company has already secured 6.5ha of land in southern and eastern Greater Jakarta for its future expansion. In the first half of 2015, the company plans to open one hospital, RSMK Kalideres. To achieve its target to develop seven new hospitals, Mitra Keluarga will add one more hospital in 2016, two new hospitals in 2017, two hospitals in 2018 and one hospital in 2019. Offering price in the range of IDR14,500-IDR18,000 To finance its future expansion plans, Mitra Keluarga will offer a maximum of 262mn shares or 18% of the company’s total shares to the public. The shares will be offered in the price range of IDR14,500-IDR18,000. As such, total proceeds from the IPO would reach around IDR3.7tn-4.7tn. This would give the company a market cap in the range of IDR21tn-26tn.
Not Rated
MITRA KELUARGA
IPO Term
Offering price range, IDR 14,500 – 18,000
No. of shares post IPO (mn) 1,455
Max no. of shares to public (mn) 262
Max percentage of public offering 18%
Expected listing date 24-Mar-2015
Danareksa research reports are also available at Reuters Multex and First Call Direct and Bloomberg.
Estimated valuation in the range 34-42x FY15 P/E and 26-33x EV/EBITDA Even though the company used its 9M14 numbers in its prospectus and did not provide
any earnings projection for 2015, we have tried to estimate the valuation based on the
offered price range. In this regard, we did a simple back of the hand calculation to
estimate the 2015 earnings based on the data provided in the company’s prospectus.
First, we annualized its 9M14 revenues to get its FY14F earnings. Then, we assumed
revenues growth of 20.3% (based on its 3 year CAGR revenues growth). Lastly, we
estimated the EBITDA and net income figures based on its historical margins. To
estimate the margins, we simply assumed the same level of margins as the 2014 margin.
As a result, based on our simple calculations, we estimate the company’s earnings and
EBITDA of around IDR623bn and 769bn, respectively, for 2015. Using these numbers,
the offering price of IDR14,500 implies 33.9x FY15F P/E and 26.2x FY15F EV/EBITDA
(assuming unchanged cash and debt levels from 9M14). A higher offering price of
IDR18,000 implies FY15F P/E of 42x and EV/EBITDA of 32.9x.
Exhibit 1. Mitra Keluarga earnings estimates and valuation range
Source: Company, Danareksa Sekuritas
In regard to the estimated valuations above, with an offering price of IDR14,500, Mitra
Keluarga’s valuation is at a 16% discount to the regional hospitals’ FY15F P/E and 80%
discount to Siloam Hospitals’ FY15F P/E (Bloomberg consensus). However, based on an
EV/EBITDA multiples comparison, at this price, Mitra’s valuation is at a 36% premium to
regional hospitals’ FY15F EV/EBITDA and at a 19% premium to Siloam Hospitals’ FY15F
EV/EBITDA.
At an offering price of IDR18,000, Mitra Keluarga’s valuation is at a 4.1% premium to the
regional hospitals’ FY15F P/E and a 75% discount to Siloam Hospitals’ FY15F P/E
(Bloomberg consensus). Meanwhile, based on an EV/EBITDA comparison, at this price,
Mitra’s valuation is at a 70.3% premium to regional hospitals’ FY15F EV/EBITDA and at a
SARANA MEDITAMA SAME IJ 261 58.6 67.0 29.2 23.8 (12.5) 22.9 29.7 23.4
P/E (x) EV/EBITDA (x)Company Name Ticker
68% 67% 67%
32%
33%
33%
IDR355bn
IDR445bn
IDR558bn
IDR229bn
IDR299bn
IDR412bn
0
100
200
300
400
500
600
0
500
1,000
1,500
2,000
2011 2012 2013
Inpatient Revenue Outpatient Revenue
EBITDA (RHS) Net Income (RHS)IDR bn IDR bn
Operational Data 2011 2012 2013 9M2014
Hospita ls 10 10 10 11
Bed Capacity 1,552 1,543 1,547 1,953
Operational Beds 1,484 1,489 1,484 1,647
Inpatient
Inpatient Admiss ion 87,536 96,062 105,604 80,968
Patient days 317,295 350,757 392,408 293,439
Occupancy rate 58.60% 64.40% 72.40% 65.30%
ALOS 3.6 3.7 3.7 3.6
Revenue per inpatient admiss ion 9,347 10,327 11,106 11,832
Revenue per inpatient days 2,579 2,828 2,989 3,265
Outpatient
Patient vis i t 1,314,163 1,476,149 1,571,744 1,214,663
Revenue per patient vis i t 293 327 362 419
2 March 2015 ALERT
4
Exhibit 5. Mitra Keluarga’s current structure of ownership and subsidiaries
Source: Company
Equity Research
Monday, March 02, 2015
Danareksa Sekuritas – Equity Research
BTN Speed Up Bond Emissions Worth Rp6tn(BI)
BBTN plans to issue bonds worth Rp6tn in 1H15F to support the expansion of credit growth of 19% this year, higher than the industry average growth submitted to OJK at 16.46%. In addition, the company also plans to publish KIK-EBA worth Rp3tn this year. The Company explains, the mortgage will be aggressive in the subsidized and non-subsidized mortgage’s segments. In the subsidized segment, BBTN provide advance credit facilities of 1% for the low-income communities. BI Estimate February Deflation at 0.2% (ID)
Bank Indonesia estimates deflation of 0.2%m-m in February 2015 although the increase of rice price in several cities in
Indonesia. The deflation mainly derived from lower transportation costs in many cities. Hence, the central bank predicted the
annual inflation in February 2015 could be below 6.5%. Meanwhile, the harvesting period in March is expected to help the rice
stocks supply availability going forward. BI still targets annual inflation can be controlled at below 4% by December 2015.
Jasa Marga Plan to Issue Rp1.7tn Bonds (ID)
JSMR will issue bonds amounting Rp1.7tn this year which will be allocated to finance business expansion in 2015. The issuance is
part of the shelf-registered bonds worth Rp5.9tn. The bond proceeds will be used for capital expenditure in 2015 amounted to
Rp4tn. In addition to bonds, JSMR also plans to do rights issue, scheduled in 2016. The company targets to raise up to Rp6tn, of
which Rp4.2tn will come from government’s capital injection through the 2016 state budget.
National Heavy Equipment Production Expected to Reach 6,000 Units (ID)
National heavy equipment production is expected to reach 6,000 units in 2015, +16% YoY, on the back of rising demand from
construction sector. According to Pratjojo Dewo, Advisor of Indonesian Heavy Equipment Association (Hinabi), if the demand
from construction sector is below expectation, then the production is estimated to reach only 5,000 units. Pratjojo added that
this year's production will be dominated by excavators and bulldozers, while production of mining dump trucks will be reduced.
Kimia Farma KAEF 1,430 1,445 (1.0) 10.4 7.5 (2.4) BUY
Sources: Bloomberg
COVERAGE PERFORMANCE
Equity Research
Monday, March 02, 2015
Danareksa Sekuritas – Equity Research
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