Insights Universal Healthcare Boon For Hospitals

Indonesia Industry Focus
Indonesia Healthcare Sector

Refer to important disclosures at the end of this report
DBS Group Research . Equity
The pulse is on for hospitals
Grand entrance of COB scheme?
Further upside from strong healthcare spending
Universal healthcare coverage a game changer for

the industry
Prefer hospitals over pharmaceutical players

Coordination of Benefits (COB) scheme a grand
entrance? BPJS Health finally issued the long awaited
circular to roll-out the COB scheme pilot project in Aug
2015, which allows private insurance companies to
supplement JKN using a top-up scheme. This (if
implemented successfully) will be the catalyst for both
non-BPJS-affiliated hospitals (boost in patient volumes)
and BPJS-affiliated hospitals (margin improvement given
the higher segment target).
Healthcare spending to continue to grow.
According to the recent 2016 state budget plan,
healthcare budget is expected to increase by 43% y-o-y
to Rp106.1tn (or 5% of total budget). This allocation is
the highest ever and includes coverage of 92m poor &
near-poor population under the JKN programme.
Overall, Indonesias healthcare expenditure is expected
to grow at a 12% CAGR for the next five years due to
current low-base spending (lowest in the region),
universal coverage and rising middle class.
Universal healthcare coverage - the game changer.
As of Nov 2015, there were c.155m BPJS Health
members, equivalent to 65% of the total population,
from 142m at the end of 2014. In terms of membership,
the progress has been good so far, but this programme
remains underfunded (with Rp6tn deficit expected in
2015) as we had predicted. Therefore, we can expect
some tweaking to the programmes which will have an
impact to the hospital and pharmaceutical industries.
Switching preference to hospitals. Considering the
progress of the JKN programme, we now prefer the
hospital players over pharmaceuticals' due to more
stable earnings outlook despite their rich valuations. The
volatility in USD/IDR and regulatory issues are the current
major risks for the pharmaceutical sector. Our preferred
pick in this sector is Mitra Keluarga Karyasehat (MIKA IJ).
We also upgraded Kalbe Farma (KLBF IJ) to BUY mainly
on valuation and potential recovery in its stock price.
www.dbsvickers.com
ed-JS / sa- MA
26 Nov 2015
JCI : 4,585.55
Analyst
Edward Ariadi Tanuwijaya +6221 3003 4932
edward.tanuwijaya@id.dbsvickers.com
Maynard P. Arif +6221 3003 4930
maynard.arif@id.dbsvickers.com
STOCKS
Price
Rp
Mitra Keluarga
Siloam International
Kalbe Farma
2,505
9,775
1,350
Mkt Cap Target Price Performance (%)

3 mth
12 mth
US$m
Rp
2,666
827
4,628
2,900
10,000
1,600
(8.4)
(29.1)
(15.7)
N.A
(31.3)
(24.6)
Rating
BUY
HOLD
BUY
Source: DBS Vickers

Mitra Keluarga Karyasehat : MIKA is Indonesia's largest private
hospital operator by market cap with 12 hospitals in both Greater
Jakarta and Surabaya under its portfolio
Siloam International Hospitals : SILO is Indonesia's largest private
hospital operator with 20 hospitals nationwide and many new
hospitals in the pipeline for the next five years.
Kalbe Farma : Kalbe Farma manufactures and distributes
pharmaceutical, consumer health, and nutritional products. It
commands the highest market share within Indonesian pharmaceutical
and OTC drugs market.
Universal Healthcare Coverage (JKN) roadmap
(2019)
(Aug2015)
270m
150m
100% coverage
63% coverage
(2012)
(2014)
142m
56% coverage
76.4m
30% coverage
Source: Roadmap to National Health Insurance 2012-2019, DBS

Vickers
Industry Focus
The healthcare reform - fair progress with more

challenges ahead
BPJS Health (or BPJS Kesehatan) is the social security agency
acting as facilitator with main functions of pooling members
premiums and making payments to healthcare providers for
services provided to members under the universal healthcare
scheme (JKN).
The progress towards full coverage by 2019 is encouraging
(refer to the chart on page 1). According to some sources, as of
Nov 2015, there were c.155m BPJS Health members, equivalent
to 65% of the total population vs. 142m in 2014.
Monitoring the membership growth
Despite the encouraging growth in BPJS Health memberships,
we will continue to monitor the progress of membership growth
next year. We believe that the current surge in memberships
was mostly due to low hanging fruit memberships : 1)
conversion from previous scheme (i.e. ASKES public sector
workers); and 2) participation from formal/regular employees.
Going forward, it would be a challenge to secure more
membership from difficult-to-track informal employees
(including casual employees), which form 62% of the total
working employment in Indonesia.
On the funding side, as we had predicted in our previous report
on 24 Jun 2014 titled Long road to good health, JKN is
underfunded. BPJS Health experienced a Rp3.3tn deficit in 2014
and according to estimates by BPJS officials, the deficit in 2016
may widen to about three times the amount in 2014.
Indonesias working population and unemployment
rate
116
7.5%
Working population (LHS)

Unemployment rate (RHS)
m population
114
7.0%
112
110
6.5%
108
6.0%
106
104
5.5%
2010
2011
2012
Source: Statistics Indonesia (BPS), DBS Vickers
Page 2
2013
2014
Regular vs informal employees in working population

120
m population
Regular employees
Informal employees
100
80
62.4
60.4
60.4
59.7
37.8
40.9
41.1
43.4
2011
2012
2013
2014
60
40
20
0

Note: Informal employees include casual employees.
Indonesias labour force - latest breakdown

Unemployed
5.9%
Regular
employees
35.6%
Informal
employees
49.0%
Casual
employees
9.4%
In order to prevent the deficit from ballooning in the future, the

government issued regulation no. 48/2015, and will inject
Rp3.46tn into BPJS Health, to be taken from the state budget
2015. In addition, the premium for BPJS is reviewed once every
two years, according to Presidential decree no. 111/2013. The
premium payable is up for evaluation in 2016 and careful
consideration may improve the underfunded status.
Is the long-awaited Coordination of Benefits (COB)
scheme here and running?
BPJS Health has issued a circular for rolling-out the Coordination
of Benefits (COB) scheme pilot project in Aug 2015. This is a copayment scheme that allows private insurance companies to
supplement JKN.
Industry Focus
However, despite the issue of the circular and the expanded list
of private insurers and non-BPJS hospitals participating in this
COB scheme, we have not seen the finer details on the
implementation of COB, which has been the main issue
between BPJS and private insurers for the past few years.
Indonesias healthcare spending

350
Rp tr
Myanmar
Laos
Brunei
Indonesia
ASEAN
Source: CIA World Factbook
Private remains the driver of healthcare expenditure

400
Rptr
Government
Private
350
300
250
216
170
192
109
119
131
2013
2014
2015F
200
Growing healthcare spending starting from low base...

Indonesias healthcare expenditure at 2.9% of GDP is one of the
lowest in the region and below ASEAN countries average of
4%, despite growing at 14% CAGR for the last five years.
According to Business Monitor International, Indonesias
healthcare expenditure is expected to continue to grow at 12%
CAGR for the next five years (slightly higher-than-expected
nominal GDP growth), primarily driven by private expenditure
(which currently contributes c.62% of total healthcare
expenditure) rather than government spending; despite the
progress on much heralded JKN implementation.
Malaysia
India
Thailand
Philippines
More subscribers for private insurance companies. The

industry is still very much underpenetrated, with only
an estimated 8m subscribers or just around 3% of total
population.
China
2.9%
Singapore
Margin improvement for BPJS-affiliated private

hospitals such as Siloam Hospitals (SILO IJ), mainly from
upgrades from standard JKN fees and services.
% of GDP
Vietnam
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
Cambodia
Improvement in patient volumes for hospitals that are

not BPJS-affiliated like Mitra Keluarga (MIKA IJ).
Without the COB scheme, patients (who want to tap
on the JKN programme) are restricted to public
hospitals and BPJS-affiliated private hospitals.
South Korea
Indonesia is among the lowest healthcare spender
Japan
The implications from the effective roll-out of the pilot COB

scheme are:
150
132
96
100
50
151 14.8%
CAGR
117
64
66
81
2009
2010
2011
99 13.3%
CAGR
2012
Source: WHO, DBS Vickers.
... with increasing commitment from government

Recent 2016 state budget draft has allocated Rp106.1tn
healthcare budget (or 5% of total budget), a staggering 43% yo-y increase. This allocation on healthcare matters is the highest
ever and includes coverage of 92m poor & near-poor
population under the JKN programme.
311
14.2% CAGR
300
Healthcare budget trend
279
250
250
120
Rp tr
183
200
5.5%
Healthcare budget (LHS)

As % of total budget (RHS)
212
5.0%
100
5.0%
160
150
4.5%
80
4.0%
100
60
106.1
50
40
2009
2010
2011
2012
Source: WHO, Business Monitor International (BMI)
2013
2014
3.5%
3.0%
20
2.5%
2.0%
2010
2011
2012
2013
2014
2015
2016
Source: Ministry of Finance, State-budget (APBN), DBS Vickers
Page 3
Industry Focus
HOSPITAL SECTORS
Stronger growth in private hospitals to serve healthcare
needs
According to data from the Ministry of Health, there are a total
of 2,457 hospitals in Indonesia currently. The increase in private
hospitals; both profit and non-profit; (19.1% CAGR in the past
three years) has grown faster and now outnumber the number
of public hospitals with 61% market share.
There has been a staggering increase in the number of hospital

beds (20.6% CAGR in the past four years) into the healthcare
sector in Indonesia. Investment into this sector is seen as
attractive, given that the number of beds of 12.2 per 10,000
population is still below ASEANs average of 15.8 per 10,000
population.
Number of hospitals (private vs public)
Hospitals beds grew at 20.6% CAGR (in four years)
3,000
Public
350,000
Private
2,244
2,083
12.2
300,000
1,721
1,500
1,510
1,337
1,195
9.0
200,000
7.0
19.1% CAGR
1,000
947
907
888
4.6% CAGR
6.0
170,656
5.0
144,410
4.0
100,000
0
2012
2013
2014
2010
2015-YTD
2011
2012
2013
2014
Source: Ministry of Health, DBS Vickers
Breakdown of public and private hospitals
Beds per 10,000 population regional comparison
100%
30
90%
25
80%
70%
52%
57%
60%
61%
28
27
22
20
21
18
15.8
60%
15
50%
12.2
10
10
40%
30%
20%
8.0
7.0
273,762
238,373
6.0
150,000
828
10.0
9.7
250,000
12.0
11.0
10.9
305,744
893
500
13.0
Beds / 10,000 population (RHS)
2,457
2,500
2,000
Beds (LHS)
48%
5
43%
40%
39%
10%
0%
2012
2013
Public
2014
2015-YTD
Private
Indonesia hospitals - breakdown by ownership

Ministry of
Health & other
ministries
1.7%
Gov't
(provincial,
district,
municipal)
28.7%
Private
61.4%
Military & Police
6.8%
State-owned
2.6%
Page 4
Out-of-pocket expenditure is the highest portion

Government
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Private - out of pocket
Private - other source
17% 16% 16% 14% 13% 12% 11% 12% 15% 16% 15% 15% 15%
48% 48%
45% 44% 45% 54% 52% 49%
48% 50% 45% 46% 46%
38% 40% 40% 32% 35% 40% 40% 40% 36% 34% 40% 39% 38%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: Worldbank data, DBS Vickers
Industry Focus
PHARMACEUTICAL SECTOR
Prescription drugs remain the driver for pharmaceuticals
Pharmaceutical sales rose by respectable 9% CAGR in the past
five years to Rp70.4tn and contributed 23% of total healthcare
expenditure. The strong growth is mainly driven by prescription
drugs, including patented and generic drugs with 11.8% and
11.2% CAGR, respectively for the same period; offset by slower
growth in OTC market (only 5.8% CAGR in past five years).
OTC products are regarded as preventive medicines.
Therefore, these are popular in Indonesia given the low
purchasing power and limited availability of prescription drugs.
However, the roll-out of JKN programme could further increase
the contribution of prescription drugs especially generic ones
when all Indonesians are covered in 2019.
Declining contribution from OTC drug sales
Patented drug
Generic drug
According IMS Health, generic drug sales in Indonesia grew by

11.2% CAGR from 2011 to 2015 and reached Rp60.5tn in
2015. The growth is pretty much driven by volume given that
there have been no price adjustments on generic drugs since
2012.
Pharmaceutical companies must adapt to changing
landscape.
While the roll-out of JKN provides volume growth opportunities,
pharmaceutical companies must cope with the changing
landscape on the industry, i.e. the shift toward more generic
drugs (especially unbranded generic ones).
Major impact on pharmaceutical sector from the roll-out of JKN
programme:
OTC
100%
90%
80%
44.8%
43.1%
42.1%
41.1%
39.7%
38.5%
37.5%
70%
60%
50%
40%
30%
37.7%
39.4%
40.0%
40.5%
41.1%
41.6%
42.1%
17.5%
17.5%
17.9%
18.4%
19.3%
19.9%
20.4%
2009
2010
2011
2012
2013
2014
2015F
20%
10%
0%
Source: Roadmap to National Health Insurance 2012-2019
JKN to drive growth especially generic drugs The

progressive roll-out of JKN is expected to further boost the sales
volume of generic drugs (albeit lower sales value) from 2015
onwards as the coverage is expected to expand from c.155m
now (65% of total population) to full coverage of over 250m
population in 2019.
Growth in generic drug market
70
Rptr
Unbranded
Ethical
11.2% CAGR
50
24.3
22.8
21.0
18.3
30
15.7
20
10
0
21.1
23.6
26.0
As such, pharmaceutical companies with large production

capacities and networks hold advantages as benefits from
economies of scale would enable them to have better control
over costs, and hence be in a better position to win
procurement tenders conducted by the government for the
supply of generic medicines.
Free sales
60
40
Compulsory use of generic drugs, whenever possible.

Patients under the JKN scheme (including COB) do not
have much choice, otherwise they will not be
reimbursed by the scheme.
The cap on ceiling prices of generic medicines have
been set under Ministry of Health Decree no.
092/MENKES/SK/11/2012, which means that
pharmaceutical companies margins are dependent on
governments pricing policies.
Shift in distribution channel, as registered hospitals and
clinics slowly take over as the main distribution
channels from physicians and pharmacies. In addition,
the introduction of e-procurement for generic drugs by
the government will aid this apparent shift too.
27.9
30.6
2.7
3.4
4.1
4.8
5.6
2011
2012
2013
2014
2015
Furthermore, pharmaceutical companies have to look for

opportunities in niche markets, where there are no generic
substitutes. For example, branded drugs used in oncology. This
niche market opportunity should offer a platform for
pharmaceutical companies to maintain their high profitability
going forward.
Source: IMS Health, Kimia Farma presentation, DBS Vickers
Page 5
Industry Focus
What to look out for in the pharmaceutical sector in 2016:
Price adjustments on generic drugs. The cap on ceiling

prices has not been revised since 2012 despite the increase
in raw material costs (due to US$ appreciation). The
International Pharmaceutical Manufacturing Group (IPMG)
has been pressuring the government to revise the Ministry
of Health Decree and there is a possibility that this issue will
be discussed and revised next year.
Impact on USD/IDR rate volatility. Note that the basic

chemical industry is still inadequate and very
underdeveloped in Indonesia. Hence, 90% of raw materials
for medicines in Indonesia are imported. Between the end
of 2012 and now, the IDR has depreciated by a staggering
40%.
IDR has been weakening against the USD

15,000
14,000
13,000
12,000
11,000
10,000
9,000
8,000
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Source: Bloomberg Finance L.P
Government policies. Changes in regulations such as

negative investment lists, patents, price ceilings and antitrusts should impact the pharmaceutical industry as a
whole.
Another risk to highlight for pharmaceutical players is the

impact from Law no. 33/2014 (effective since 17 Oct 2014) on
Halal Product assurance. This law requires all pharmaceutical
products to be halal certified by 2019. Given the nature of the
pharmaceutical industry, in which 90% of raw materials are
imported, it is virtually impossible for pharmaceutical companies
to obtain the certification. IPMG (International Pharmaceutical
Manufacturers Group) has since tried to negotiate with the
government to exempt pharmaceutical products.
Page 6
Industry Focus
Valuations are not cheap due to scarcity and liquidity

There are only a limited number of listed companies in Indonesia
in these two sectors. Hence, the stocks are trading at premium
valuations due to scarcity of options (please refer to valuation
table on APPENDIX).
Pharmaceuticals: Kalbe Farma (KLBF IJ), Kimia Farma

(KAEF IJ), Indofarma (INAF IJ), Tempo Scan Pacific
(TSPC IJ) and Sido Muncul (SIDO IJ).
Hospitals: Mitra Keluarga Karyasehat (MIKA IJ), Siloam

Hospitals (SILO IJ), Sarana Meditama Metropolitan
Omni Hospital (SAME IJ) and Sejahteraraya
Anugrahjaya - Mayapada Hospitals (SRAJ IJ).
Pharmaceutical companies are trading at 15-27x FY16 PE with

KLBF at the high end of the range due to its market leadership
and great execution history. Hospital stocks are also trading at
sky-high valuations and by far, Indonesia's hospitals are the
most expensive in the region due to growth prospects as well as
scarcity and liquidity issues.
Switch preference to hospitals despite rich valuations
its existing hospitals and new hospital in the pipeline, implying

45x EV/EBITDA on 2016 forecast. Potential upside to our
valuation will be from better-than-expected growth in the
number of patients and exceptional operational performance
from its existing and new hospitals. MIKA is an established
private hospital franchise with a track record exceeding 25
years. MIKA is focusing on building hospitals in good population
catchment areas to serve the surrounding communities. MIKA
prefers to grow organically and at a conservative pace and thus
maintain its profitability despite being in a great position to tap
into Indonesias underpenetrated healthcare sector and the
countrys rising healthcare needs.
We also upgraded KLBF to BUY from HOLD with Rp1,600 TP
(implying 18% upside from current price). Our upgrade is mainly
due to valuation as KLBF's stocks are now trading close to its 5year mean PE (at 26x FY16 EPS) with potential stock recovery.
Volatility in USD/IDR will still be a concern in 2016. However, we
believe it is largely priced-in, given that the stock has
underperformed the consumer space and the operational
suspension on some parts of its manufacturing line should be
over by 2016.
Both health services and pharmaceuticals are direct beneficiaries

of the successful implementation of the JKN programme. With
the roll-out of the JKN programme and the volatility in USD/IDR
movements, we believe hospital players with conservative
growth strategy and sustainable earnings have better
risk/reward potential than pharmaceuticals despite their lofty
valuations.
Hospital developers and operators (both BPJS-affiliated and nonBPJS-affiliated) have positioned themselves well to rake in extra
revenue from the JKN programme and the COB scheme pilot
project. Hospital players face risks such as the capital intensive
nature of their business and shortage of relevant human
resources that can limit their future growth.
On the other hand, pharmaceutical players should see a boost in
volume sales from the generic drugs segment. However, margin
pressure is inevitable as generic drugs generate low margins and
have price ceiling caps (regulated by Ministry Health Decree). In
addition, the current weakness in IDR has made it tougher for
these companies to maintain margins as raw material costs have
increased.
Our pick is MIKA over SILO for its more conservative growth,
solid margin and strong balance sheet. Together with this
report, we initiate coverage on MIKA with a BUY
recommendation and Rp2,900 TP, based on DCF valuations on
Page 7
Industry Focus
A lesson from Thailands Universal Coverage Scheme

(UCS)
There is no blueprint available on how to achieve successful
implementation of the universal healthcare coverage, however,
Thailands universal coverage experience should provide valuable
lessons for Indonesia.
Thailand launched the UCS programme in 2001 (funded with
general tax revenues) and achieved universal coverage in such
short period of time in 2002. The scheme was expanded rapidly,
by succesfully registering 47m people (75% of population) in
the new scheme and finding public resources to cover the 18m
who were previously uninsured and members of two existing
publicly subsidised schemes (i.e. Social Security Scheme and Civil
Servant Medical Benefit Scheme).
been improving but was relatively stable because of steady

growth in Thailands GDP as well (at 9% CAGR).
Healthcare expenditure as % of GDP
300
THB
Healthcare expenditure per capita - LHS
Healthcare expenditure (as % of GDP) - RHS
250
200
150
100
50
0
3
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: data.worldbank.org, DBS Vickers
Government spending made up more than 80% of

healthcare spending
100%
90%
80%
9.3
9.3
9.0
8.4
27.2
26.9
26.1
27.2
63.5
63.8
64.9
64.4
9.9
9.2
9.4
10.4
11.2
9.9
8.9
8.6
17.4
14.5
14.7
15.4
14.2
12.4
11.6
11.3
72.7
76.3
75.9
74.2
74.6
77.7
79.5
80.1
70%
60%
The number of UCS members has remained stable at 47m over

10 years since 2002, but UCSs capitation per capita budget has
more than doubled from THB 1,201.4 in 2002 to THB 2,693.5 in
2011. The increase was mainly due to rising labour and material
costs of providing medical and health services.
50%
40%
30%
Thailands UCS capitation budget per capita

3,000
THB per capita
20%
2,500
10%
0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Gov't
Private - out of pocket
Private - others
Source: data.worldbank.org, DBS Vickers
2,000
1,500
1,000
According to Health Insurance System Research Office report for

independent assessment of the first 10 years (2001-2010), the
three features that defined Thailands UCS are: 1) A taxfinanced scheme free at the point of service (initial co-payment
of just THB 30 per visit or admission; terminated in November
2006 due to budget constraint); 2) A comprehensive benefits
package with a focus on primary care; and 3) A fixed annual
budget with a cap on provider payments.
The governments commitment to support the UCS is critical
with steady increase in budget allocation. Thailands general
government expenditure on health increased from THB 84.5bn
in 2001 (when UCS was launched) to THB 116.3bn in 2002 (the
1st full year of UCS implementation) and THB 247.7bn in 2008.
The commitment is further evidenced in 2009 when GDP fell
2%, but the Thai government found a way to obtain resources
to continue funding the scheme by cutting spending at all
ministries. Total health expenditure as a percentage of GDP has
Page 8
500
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Source: NHSO, Health Insurance System Research Online (an

independent assessment of the first 10 years)
According to the same report by Health Insurance System

Research Office, there are a few challenges that need to be
sorted out for the betterment of UCS programme such as
segregation duties between NHSO and Ministry of Publich
Health (MOPH), harmonisation between UCS & two existing
public health insurances schemes and inequitable
redistribution of healthcare professionals (which are highly
concentrated in central region and large urban centres).
Industry Focus
APPENDIX
Pharmaceutical valuations - comparison among domestic peers
BB Ticker
Company name
Market
cap
US$m
PE(x)
14A
PB(x)
15F
16F
14A
15F
16F
Div. Yield
ROE
KLBF IJ
Kalbe Farma
4,509.2
30.0
29.5
26.5
7.6
6.6
5.8
1.3
25.3
KAEF IJ
Kimia Farma
402.7
22.9
21.2
17.8
3.3
NA
NA
NA
14.6
TSPC IJ
Tempo Scan Pacific
550.9
13.7
13.6
12.4
1.7
1.7
1.6
3.6
13.2
SIDO IJ
Sido Muncul
612.2
19.7
17.1
14.9
3.2
2.9
2.7
3.1
16.6
27.0
26.3
23.5
6.4
5.3
4.7
1.6
Weighted average
Source: DBS Vickers, Bloomberg Finance L.P.

Note: Price as of 23 Nov 2015 close
Hospital valuations - comparison among regional peers

Market cap
BB Ticker
Company name
MIKA IJ Equity
Mitra Keluarga
Karyasehat
SILO IJ Equity
EV/EBITDA(x)
PE(x)
PB(x)
Div. Yield
ROE
US$m
FY15F
FY16F
FY15F
FY16F
FY15F
FY16F
2,746.4
48.4
40.2
64.8
52.4
11.7
10.5
0.8
30.1
Siloam International
Hospitals
798.3
16.8
12.1
99.4
77.6
6.2
5.8
n/a
3.8
SAME IJ Equity
Sarana Meditama
Metropolitan
213.3
20.8
17.0
51.8
56.6
12.1
10.6
0.3
26.5
SRAJ IJ Equity
Sejahteraraya
Anugrahjaya
137.5
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
BH TB Equity
Bumrungrad Hospital
4,406.7
28.1
25.1
44.8
38.9
12.4
10.5
1.1
26.2
BCH TB Equity
Bangkok Chain
566.4
18.5
16.3
42.4
36.1
4.5
4.2
1.4
11.4
RFMD SP Equity
Raffles Medical
1,696.6
24.6
23.1
33.8
31.3
4.1
3.8
1.4
13.4
IHH SP Equity
IHH Healthcare
11,821.2
24.8
21.4
56.0
46.0
2.5
2.4
0.6
4.0
KPJ MK Equity
KPJ Healthcare
1,026.0
15.3
13.6
30.1
27.4
3.2
3.0
1.7
11.2
APHS IN Equity
Apollo Hospitals
Enterprise
2,823.7
23.3
19.3
47.2
37.6
5.4
4.8
0.5
11.1
FORH IN Equity
Fortis Healthcare
1,122.0
28.2
18.0
66.6
32.5
1.7
1.6
n/a
-3.5
RHC AU Equity
Ramsay Healthcare
19,116.4
13.2
12.1
29.5
25.8
6.9
6.2
1.8
24.3
SHL AU Equity
Sonic Healthcare
11,632.2
11.9
11.0
17.9
16.6
2.4
2.3
4.0
10.9
PRY AU Equity
Primary Healthcare
2,366.8
7.3
7.0
13.9
12.7
0.7
0.7
5.2
5.7
Indonesia
38.7
31.8
68.9
55.9
10.2
9.2
0.6
23.5
Thailand
27.0
24.1
44.5
38.6
11.5
9.8
1.1
24.5
Singapore
24.7
21.6
53.2
44.2
2.7
2.6
0.7
5.2
Malaysia
15.3
13.6
30.1
27.4
3.2
3.0
1.7
11.2
India
24.7
18.9
52.7
36.2
4.3
3.9
0.3
6.9
Australia
12.3
11.3
24.3
21.6
4.9
4.4
2.8
18.3
Market weighted average
Source: DBS Vickers, Bloomberg Finance L.P.

Note: * Bloomberg consensus estimate. Price as of 23 Nov 2015 close
Page 9
Industry Focus
List of non-BPJS-affiliated private hospitals participating in COB scheme

No.
Hospital Name
Region
Mitra Keluarga Bekasi Hospital
Bekasi - East Jakarta suburb
Puri Cinere Public Hospital
Depok - South Jakarta suburb
Siloam Kebon Jeruk Hospital
West Jakarta
Mitra Kemayoran Hospital
Central Jakarta
Pondok Indah Hospital
South Jakarta
MMC Hospital
South Jakarta
Mitra International Hospital
East Jakarta
Pantai Indah Kapuk Hospital
North Jakarta
Sleman - Central Java
JIH Hospital
10
Premier Surabaya Hospital
Surabaya - East Java
11
Premier Bintaro Hospital
South Tangerang - West Jakarta suburb
12
Meilia Hospital
East Jakarta
13
Awal Bros Bekasi Hospital
Bekasi - East Jakarta suburb
14
Mitra Kelaurga Depok Hospital
Depok - South Jakarta suburb
15
St. Antonius Hospital
Pontianak - West Kalimantan
16
Santa Maria Hospital
Pekanbaru - Riau
17
Catherine Booth Hospital
Makassar - Southeast Sulawesi
18
Columbia Asia Medan Hospital
Medan - North Sumatra
19
Ciputra Hospital
Tangerang - West Jakarta suburb
20
Eka Hospital
Tangerang - West Jakarta suburb
21
JEC Menteng Hospital
Central Jakarta
22
Mata AINI Hospital
South Jakarta
23
Mayapada Hospital
South Jakarta
24
Pusat Pertamina Hospital
South Jakarta
Addition as of 1 July 2015
Source: BPJS, Ministry of Health
Page 10
Industry Focus
List of insurance companies cooperating with BPJS Health as of May 2015

No
Name of Insurance Companies
No
Name of Insurance Companies
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
PT Asuransi Sinar Mas

PT Asuransi Mitra Maparya Tbk
PT Lippo General Insurance
PT Arthagraha General Insurance
PT Asuransi Astra Buana
PT Asuransi Umum Mega
PT Asuransi Bina Dana Arta Tbk
PT Tugu Pratama Indonesia
PT Asuransi Multi Artha Guna Tbk
PT Asuransi Central Asia
PT Bosowa Asuransi
PT Asuransi Indraputra
PT Asuransi Bintang Tbk
PT Asuransi Jasa Indonesia (Persero)
PT Asuransi Bangun Askrida
PT Asuransi Axa Indonesia
PT Citra International Underwriters
PT Asuransi Reliance Indonesia
PT Asuransi Dayin Mitra Tbk
PT Asuransi Adira Dinamika
PT Pan Pacific Insurance
PT Asuransi Samsung Tugu
PT Asuransi Umum Bumi Putera Muda 1967
PT Victoria Insurance
PT Asuransi Ramayana
PT AJB Bumi Putera 1912
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
PT Asuransi Jiwa Inhealth Indonesia

PT Asuransi Jiwa Tugu Mandiri
PT AXA Financial Indonesia
PT AXA Mandiri Financial Service
PT Avrist Assurance
PT Asuransi Jiwa Central Asia Raya
PT Asuransi Takaful Keluarga
PT Asuransi Jiwasraya (Persero)
PT Asuransi Jiwa Sinarmas MSIG
PT Asuransi Jiwa Generali Indonesia
PT AIA Financial
PT Asuransi Jiwa Recapital
PT Asuransi Allianz Life Indonesia
PT Astra Aviva Life
Pt Asuransi Jiwa Bringin Jiwa Sejahtera
PT Equity Life Indonesia
PT Great Eastern Life Indonesia
PT MNC Life Assurance
PT Asuransi Jiwa Adisarana Wanaartha
PT Tokio Marine Life Insurance Indonesia
PT Asuransi Jiwa Manulife Indonesia
PT ACE Life Insurance
PT Hanwa Life Insurance Indonesia
PT Kresna Life
PT BNI Life Insurance
PT Asuransi Jiwa Sequis Financial
Source: BPJS, Ministry of Health
Page 11
Industry Focus
Regulations for pharmaceutical sector

Regulation
Health Ministry regulation no.

1799/MENKES/PER/XII/2010
Regarding
Important points
Remarks
Pharmacy Industry
1. Pharmaceutical company has to obtain license from Health

Minister to produce drugs and/or drug ingredients.
2. Pharmaceutical company has the following functions:
manufacturing; educating and training; research and
development.
3. A licensed pharmaceutical company has to be a limited
company and have at least 3 pharmacists (Indonesia citizens)
for quality assurance, production and quality control.
4. A licensed pharmaceutical company must produce report
activities (including production volume and value) every 6
months.
Revision of Health Ministry

regulation no.
1010/MENKES/PER/XI/2008

1120/MENKES/PER/XI/2008
Drug registration
1. Every drug circulated in Indonesia must be registered and

licensed for marketing (valid and renewable every 5 years).
2. Locally produced drug can only be registered by a licensed
pharmaceutical company. (Pharmaceutical company is
licensed by Health Minister)
3. Imported drug registration can be registered by local
pharmaceutical company which has written approval from
foreign pharmaceutical.
4. Pharmaceutical company has to market the registered
drugs within 1 year of approval date.
5. Penalties & suspensions for violating regulations.
Health Ministry decree no.

312/MENKES/SK/IX/2013
National essential
drugs list
Contains a list of national essential drugs with guidance on

usage and management

decree no.
2500/MENKES/SK/XII/2011
Health Ministry decree no.

436/MENKES/SK/XI/2013
Generic drug price
Contains a list of generic drug in Indonesia together with

retail price ceiling

decree no.
092/MENKES/SK/II/2012
Presidential decree no. 39/2014
Negative investment
list (DNI)
Maximum foreign ownership increased to 85% from 75%

previously
Revision of Presidential decree

no. 36/2010
Law no 33/2014
Halal Product
Assurance
Pharmaceutical products must be Halal certified by 2019
Page 12
Industry Focus
Regulations for hospital sector

Regulation
Regarding
Important points
1. Defining hospitals duties and functions.
2. Infrastructure and facility requirements of operational hospitals.
3. Classification of hospitals based on type of services and management. (Refer to
previous table of hospital classification).
4. Each hospital has to have construction permit (for a period of 2 years and
extendable for another 1 year) and operational license (valid & renewable every 5
years). Both can be revoked during period of validity.
5. National tariff scheme is set by Health Ministry.
6. Penalties for violating regulations
Law no. 44 / 2009
Hospital operation

147/MENKES/PER/I/2010
Hospital license
Law no. 29 / 2004
Medical practitioner

2052/MENKES/PER/X/2011
Medical practitioner license

317/MENKES/PER/III/2010
Foreign nationals health

personnels

69/2013
Standard tariff rates for

healthcare services (first-level
and advanced) in national
health insurance program
List of standard tariff for each category of healthcare service
Presidential decree no. 39/2014
Negative investment list (DNI)
1. Maximum foreign ownership is 67% for all over Indonesia.

2. Maximum foreign (only ASEAN countries) ownership is 70% for investment in East
Indonesia capital cities, except for Makassar and Manado.
1. Valid registration for medical practice is issued by Indonesia medical council.

2. Doctor and dentist registration letter and license to practice is valid, renewable
every 5 years and can be revoked during period of validity.
3. Each doctor and dentist is granted licenses to practice maximum in three places
(including gov't, private and individual practice).
4. Defining medical practitioner obligations, patient rights and obligations
5. Foreign graduates who intend to have medical practice in Indonesia should possess
work permit, proficient in Bahasa Indonesia and passed Indonesia medical council
evaluation.
6. Foreign medical practitioner can only practice as a means of knowledge and
technology transfer and is prohibited to practice independently.
7. Foreign medical practitioner license to practice is valid, renewable every 1 year and
can be revoked during period of validity.
8. Foreign medical practitioner can only practice on either class A or B hospitals.
9. Penalties for violating regulations
Page 13
Industry Focus
Stock Profiles
Page 14
Indonesia Company Guide
Mitra Keluarga Karyasehat

Edition 1 Version 1 | Bloomberg: MIKA | Reuters: MIKA.JK
26 Nov 2015
BUY
Steady And Reliable In the Long Run
Last Traded Price: Rp2,505 (JCI : 4,585.55)

Price Target : Rp2,900 (16% upside)
Initiate coverage with BUY call and Rp2,900 TP. Our TP is based
on DCF valuation of existing and new hospitals in the pipeline
Potential Catalyst: Potential higher patient volume from Coordination of and implies 45x EV/EBITDA (expensive as compared to regional
Benefits (COB) scheme implementation
peers), mostly due to commanding scarcity premium. Potential
Where we differ: Premium valuation and better earnings growth than
upside to our valuation will be from the better-than-expected
company guidance
patient volume growth and exceptional operational
performance from its existing and new hospitals.
Analyst
Largest private hospital operator by market cap with sustainable

growth. MIKA currently operates 12 hospitals (with 1,726
operational beds out of c.2,100 bed capacity) under its portfolio
and plans to grow organically and steadily with six new
hospitals in the pipeline until 2020. MIKA has a market cap of
Rp36tn, more than triple the 2nd largest listed private hospital
chain in Indonesia.
Price Relative
Rp
Relative Index
249
3,130.0
229
2,930.0
Solid business model with focus on profitability . MIKA will

continue to concentrate on Greater Jakarta and Surabaya cities
for further expansion. In addition, its emphasis on cost
efficiency rather than aggressive expansion going forward
should see MIKA maintain and even improve on its operational
margins, already one of the highest among peers.
209
2,730.0
189
2,530.0
169
2,330.0
2,130.0
149
1,930.0
129
1,730.0
109
89
1,530.0
Mar-15
Jun-15
Mitra Keluarga Karyasehat (LHS)
Forecasts and Valuation

FY Dec (Rp bn)
Revenue
EBITDA
Pre-tax Profit
Net Profit
Net Pft (Pre Ex.)
Net Pft (ex. BA gains)
EPS (Rp)
EPS Pre Ex. (Rp)
EPS Gth (%)
EPS Gth Pre Ex (%)
Diluted EPS (Rp)
Net DPS (Rp)
BV Per Share (Rp)
PE (X)
PE Pre Ex. (X)
P/Cash Flow (X)
EV/EBITDA (X)
Net Div Yield (%)
P/Book Value (X)
Net Debt/Equity (X)
ROAE (%)
Sep-15
Relative JCI INDEX (RHS)
2014A
1,946
615
667
517
517
N/A
37
37
(87)
(87)
37
34
126
67.0
67.0
52.9
54.9
1.4
19.9
CASH
30.1
Earnings Rev (%):

Consensus EPS (Rp):
Other Broker Recs:
2015F
2,280
731
844
582
582
N/A
40
40
7
7
40
21
222
62.7
62.7
49.5
46.7
0.9
11.3
CASH
23.4
2016F
2,667
881
1,031
719
719
N/A
49
49
24
24
49
24
247
50.7
50.7
53.5
38.8
1.0
10.1
CASH
21.1
2017F
3,155
1,046
1,172
812
812
N/A
56
56
13
13
56
30
273
44.9
44.9
39.3
32.7
1.2
9.2
CASH
21.5
N/A
B: 6
N/A
S: 0
N/A
H: 2
Source of all data: Company, DBS Vickers, Bloomberg Finance L.P
ASIAN INSIGHTS
www.dbsvickers.com
ed: TH / sa: MA
Valuation:
MIKA is currently trading at 40x 2016 EV/EBITDA (expensive vs
regional peers average). We value the company using DCF
valuation for each of its existing and new hospitals and WACC
assumption of 10.5% to arrive at our Rp2,900 TP.
Key Risks to Our View:
Slower expansion than expected. The availability of land in
good locations is getting limited (especially in big cities like
Greater Jakarta and Surabaya). In addition, dearth of medical
human resources in this industry (at just 0.2% of the total
population) may impact MIKAs ability to recruit and retain
medical professionals and execute its expansion plan.
At A Glance
Issued Capital (m shrs)
14,551
Mkt. Cap (Rpbn/US$m)
36,450 / 2,666
Major Shareholders
Lion Investments (%)
49.7
Griyainsani Cakrasad (%)
32.3
Free Float (%)
18.0
3m Avg. Daily Val (US$m)
5.5
ICB Industry : Health Care / Health Care Equipment & Services
VICKERS SECURITIES
Company Guide
Hospital expansion projection
CRITICAL DATA POINTS TO WATCH
20
no. of hospitals
18
18
Earnings Drivers:
Steady and sustainable growth in Net Operating Revenue
MIKA now operates 12 hospitals concentrated in both
Greater Jakarta and Surabaya with a bed capacity of c.2,100.
MIKA is set to add six hospitals in the next five years and has
so far secured four sites for its new hospitals.
17
16
15
14
14
13
12
12
10
10
9
8
8
6
6
3
2
We project existing hospitals' in-patient and out-patient

admissions to grow at 6.6% and 4.8% CAGR respectively
between 2014 and 2019, and average revenue to grow at
8.1% and 9.4% CAGR within the same period.
11
Sold equity interest

in 2 hospitals
Operational beds and bed capacity

3,000
Operational beds
Bed capacity
2,500
Considering that and new hospital rollouts, we project Net

Operating Revenue (NOR) to increase by a 17.1% CAGR
between 2014 and 2019. Revenue contribution from existing
hospitals is still high at more than 90%.
2,000
1,500
1,000
Stable and improving EBITDA margins

MIKAs EBITDA margins of 27-31% between 2011 and 2014
were among the highest in the region. As MIKA still focuses
on cost efficiency, we believe that EBITDA margin is
sustainable and has room for further improvement going
forward.
MIKAs new typical greenfield hospital has a 200-bed
capacity, in which the number of operational beds will be
increased gradually and require an initial capex of US$15m. It
is expected to generate positive EBITDA after six months of
operation and generate an estimated 21.3% IRR.
Strong free cash flow enables internally funded capex
expansion
Given the mature hospitals in its portfolio and efficient
operational management, MIKA has consistently and will
continue to generate high free cash flows despite its
expansion plan (i.e. one additional new hospital annually).
500
2011
2012
2013
2014
2015F
2016F
2017F
2018F
Net Operating Revenue Trend

Rp m
30.0%
3,000,000
2,500,000
25.0%
2,000,000
20.0%
1,500,000
1,000,000
15.0%
500,000
10.0%
0
2013A
2014A
Total Revenue
2015F
2016F
2017F
Revenue Growth (%) (YoY)
Profitability Trend
Rp m
1,098,596
998,596
898,596
798,596
COMPANY BACKGROUND
Largest private hospital chain by market cap in Indonesia.
Mitra Keluarga Karyasehat (MIKA) currently operates 12
private hospitals in Indonesia with a total bed capacity of
2,100 as of Oct 2015. MIKA focuses its operations on
Greater Jakarta and Surabaya. The company began
operating its first hospital in 1989 and has expanded
organically with consistent and sustainable growth. MIKA
was listed on the Indonesia Stock Exchange (IDX) on 24 Mar
2015 and is currently the largest listed private hospital
company in Indonesia by market cap.
698,596
598,596
498,596
398,596
2013A
2014A
Operating EBIT
2015F
Pre tax Profit
2016F
2017F
Net Profit
Margins Trend
31.0%
29.0%
27.0%
25.0%
23.0%
21.0%
2013A
2014A
Operating Margin %
2015F
2016F
2017F
Net Income Margin %
Source: Company, DBS Vickers
ASIAN INSIGHTS
Page 16
VICKERS SECURITIES
Company Guide
Balance Sheet:
Healthy balance sheet
MIKA is expected to have zero interest-bearing debt and a
significant cash position. The company's strong free cash flow
generation should allow it to internally fund its expansion
capex.
Expansion capex to ramp up in the next few years
We forecast an average annual capex of Rp368bn between
2015 and 2018 for four new hospitals.
Leverage & Asset Turnover (x)

1.0
0.14
1.0
0.12
0.9
0.10
0.9
0.08
0.8
0.06
0.8
0.04
0.7
0.02
0.7
0.00
0.6
2013A
2014A
2015F
2016F
Gross Debt to Equity (LHS)
2017F
Asset Turnover (RHS)
Capital Expenditure
Share Price Drivers:

Execution of expansion plan for both existing and new
hospitals
MIKA generates stable and sustainable earnings from the
mature hospitals in its portfolio, while leaning on new
hospitals for additional growth going forward. Better
performance from both maturing and new hospitals should
accelerate earnings growth and subsequently its share price.
Rp
600,000.0
500,000.0
400,000.0
300,000.0
200,000.0
100,000.0
0.0
2013A
Successful implementation of Coordination of Benefits (COB)

scheme.
This will allow private insurance and corporates to top up the
price difference from standardised INA-CBG prices and could
potentially improve overall patient volumes.
2014A
2015F
2016F
2017F
Capital Expenditure (-)
ROE (%)
30.0%
25.0%
20.0%
15.0%
Key Risks:
Shortage of medical professionals. Dearth of medical human
resources in this industry (at just 0.2% of the total
population) may impact MIKAs ability to recruit and retain
medical professionals and execute its expansion plan.
10.0%
5.0%
0.0%
2013A
2014A
2015F
2016F
2017F
Forward PE Band (x)
Extensively regulated industry. The healthcare sector is

subjected to extensive and dynamic government laws and
regulations. Material changes in current laws and
regulations may have adverse impacts on MIKAs business.
(x)
66.3
+2sd:63.2x
+1sd:60x
Avg:56.7x
1sd:53.5x
2sd:50.3x
61.3
56.3
51.3
Litigation risk from medical and legal claims. By nature, the

hospital business is exposed to medical and legal claims.
Ability to secure sites for future growth. The availability of
land in good locations is becoming limited (especially in big
cities like Greater Jakarta and Surabaya). This may restrict
MIKAs ability to expand further in the future.
46.3
41.3
36.3
Mar-15
Jun-15
Sep-15
PB Band (x)
(x)
18.3
17.3
Potential decline in patient volume. The lower-cost

alternatives for healthcare services as laid out by the muchheralded universal healthcare programme (JKN) may result in
lower-than-expected patient volumes in MIKAs hospitals.
16.3
+2sd:16.44x
15.3
+1sd:15.42x
14.3
Avg:14.39x
13.3
1sd:13.37x
12.3
2sd:12.35x
11.3
10.3
Mar-15
Jun-15
Sep-15
ASIAN INSIGHTS
VICKERS SECURITIES
Page 17
Company Guide
Segmental Breakdown
FY Dec
Revenues (Rp bn)
IP-Medical services
IP-Medical supplies
IP-Room
OP-Medical services
OP-Medical supplies
Total
Gross profit (Rp bn)
IP-Medical services
IP-Medical supplies
IP-Room
OP-Medical services
OP-Medical supplies
2013A
2014A
2015F
2016F
2017F
417
558
198
319
250
474
585
222
375
290
547
684
251
456
342
640
800
293
533
400
757
947
347
631
473
1,742
1,946
2,280
2,667
3,155
182
160
82
215
99
211
163
106
247
138
243
205
94
294
182
284
240
131
344
213
336
284
145
407
252
Total
Gross profit Margins (%)
IP-Medical services
IP-Medical supplies
IP-Room
OP-Medical services
OP-Medical supplies
737
865
1,018
1,212
1,425
43.6
28.6
41.4
67.4
39.4
44.4
27.9
47.8
65.7
47.7
44.4
30.0
37.4
64.5
53.3
44.4
30.0
44.5
64.5
53.3
44.4
30.0
41.7
64.5
53.3
Total
42.3
44.4
44.7
45.5
45.2
2013A
2014A
2015F
2016F
2017F
1,742
(1,005)
737
(267)
470
12
0
48
0
530
(118)
(13)
0
399
399
543
1,946
(1,081)
865
(319)
545
41
0
80
0
667
(133)
(17)
0
517
517
615
2,280
(1,261)
1,018
(360)
658
59
0
127
0
844
(235)
(27)
0
582
582
731
2,667
(1,455)
1,212
(419)
793
67
0
170
0
1,031
(278)
(33)
0
719
719
881
3,155
(1,731)
1,425
(488)
937
78
0
158
0
1,172
(323)
(38)
0
812
812
1,046
18.1
26.5
29.3
38.1
11.7
13.3
15.9
29.7
17.2
18.9
20.7
12.5
17.0
20.5
20.5
23.6
18.3
18.8
18.1
12.9
42.3
27.0
22.9
26.7
20.9
21.6
3.8
44.4
28.0
26.6
30.1
24.1
22.7
90.9
44.7
28.9
25.5
23.4
19.6
17.5
53.3
45.5
29.7
27.0
21.1
18.0
15.6
48.5
45.2
29.7
25.7
21.5
18.1
16.3
53.1
Income Statement (Rp bn)

FY Dec
Revenue
Cost of Goods Sold
Gross Profit
Other Opng (Exp)/Inc
Operating Profit
Other Non Opg (Exp)/Inc
Associates & JV Inc
Net Interest (Exp)/Inc
Exceptional Gain/(Loss)
Pre-tax Profit
Tax
Minority Interest
Preference Dividend
Net Profit
Net Profit before Except.
EBITDA
Growth
Revenue Gth (%)
EBITDA Gth (%)
Opg Profit Gth (%)
Net Profit Gth (%)
Margins & Ratio
Gross Margins (%)
Opg Profit Margin (%)
Net Profit Margin (%)
ROAE (%)
ROA (%)
ROCE (%)
Div Payout Ratio (%)
Sustainable and high

margins
Decent and sustainable

revenue growth
ASIAN INSIGHTS
Page 18
VICKERS SECURITIES
Company Guide
Quarterly / Interim Income Statement (Rpbn)

FY Dec
3Q2014
4Q2014
Revenue
Cost of Goods Sold
Gross Profit
Other Oper. (Exp)/Inc
Operating Profit
Associates & JV Inc
Pre-tax Profit
Tax
Minority Interest
Net Profit
Net profit bef Except.
EBITDA
1Q2015
2Q2015
3Q2015
467
(275)
192
(74)
117
2
0
29
0
148
(20)
(3)
125
125
117
478
(253)
225
(82)
143
3
0
15
0
161
(33)
(5)
124
124
143
541
(294)
248
(82)
166
5
0
23
0
193
(42)
(6)
145
145
166
561
(302)
258
(90)
168
4
0
36
0
209
(38)
(6)
165
165
168
500
(277)
223
(93)
130
4
0
36
0
171
(37)
(5)
130
130
130
(7.9)
(11.8)
(11.8)
(12.0)
2.4
21.8
21.8
(1.3)
13.2
15.8
15.8
17.4
3.6
1.7
1.7
13.5
(10.8)
(22.6)
(22.6)
(21.2)
41.0
25.1
26.8
47.1
29.9
25.8
45.7
30.6
26.8
46.0
30.0
29.4
44.6
26.1
26.0
Balance Sheet (Rp bn)

FY Dec
2013A
2014A
2015F
2016F
2017F
Net Fixed Assets

Invts in Associates & JVs
Other LT Assets
Cash & ST Invts
Inventory
Debtors
Other Current Assets
Total Assets
598
0
125
1,108
40
114
149
2,134
771
0
196
970
39
131
50
2,157
914
0
190
2,419
53
157
57
3,790
1,202
0
288
2,407
53
180
71
4,200
1,596
0
370
2,439
73
218
83
4,780
ST Debt
Creditor
Other Current Liab
LT Debt
Other LT Liabilities
Shareholders Equity
Minority Interests
Total Cap. & Liab.
50
56
175
0
118
1,689
45
2,134
0
47
158
0
145
1,743
63
2,157
0
73
228
0
174
3,224
91
3,790
0
66
208
0
209
3,595
124
4,200
0
99
293
0
251
3,975
162
4,780
Non-Cash Wkg. Capital

Net Cash/(Debt)
Debtors Turn (avg days)
Creditors Turn (avg days)
Inventory Turn (avg days)
Asset Turnover (x)
Current Ratio (x)
Quick Ratio (x)
Net Debt/Equity (X)
Net Debt/Equity ex MI (X)
Capex to Debt (%)
72
1,058
24.3
21.1
16.1
0.9
5.0
4.4
CASH
CASH
320.4
14
970
23.1
18.5
14.2
0.9
5.8
5.4
CASH
CASH
N/A
(34)
2,419
23.1
18.4
14.1
0.8
8.9
8.6
CASH
CASH
N/A
31
2,407
23.1
18.4
14.1
0.7
9.9
9.5
CASH
CASH
N/A
(18)
2,439
23.1
18.5
14.2
0.7
7.2
6.8
CASH
CASH
N/A
Growth
Revenue Gth (%)
EBITDA Gth (%)
Opg Profit Gth (%)
Net Profit Gth (%)
Margins
Gross Margins (%)
Opg Margins (%)
Net Profit Margins (%)
Zero interest-bearing debt
Significant net cash

position
ASIAN INSIGHTS
VICKERS SECURITIES
Page 19
Company Guide
Cash Flow Statement (Rp bn)

FY Dec
Pre-Tax Profit
Dep. & Amort.
Tax Paid
Assoc. & JV Inc/(loss)
Chg in Wkg.Cap.
Other Operating CF
Net Operating CF
Capital Exp.(net)
Other Invts.(net)
Invts in Assoc. & JV
Div from Assoc & JV
Other Investing CF
Net Investing CF
Div Paid
Chg in Gross Debt
Capital Issues
Other Financing CF
Net Financing CF
Currency Adjustments
Chg in Cash
Opg CFPS (Rp)
Free CFPS (Rp)
2013A
2014A
2015F
2016F
2017F
530
73
(118)
0
(32)
(5)
447
(160)
0
0
0
30
(130)
(15)
(5)
(1)
(3)
(24)
0
293
347
208
667
70
(133)
0
58
(7)
655
(243)
0
0
0
(26)
(269)
(470)
(50)
0
(3)
(523)
0
(138)
43
30
844
73
(235)
0
81
(27)
736
(216)
0
0
0
29
(187)
(310)
0
1,210
0
900
0
1,449
45
36
1,031
87
(278)
0
(125)
(33)
682
(376)
0
0
0
31
(345)
(349)
0
0
0
(349)
0
(12)
55
21
1,172
109
(323)
0
7
(38)
929
(504)
0
0
0
39
(465)
(432)
0
0
0
(432)
0
32
63
29
ASIAN INSIGHTS
Page 20
High operating cash

flow to fund expansion
VICKERS SECURITIES
Siloam International Hospitals

Edition 1 Version 2 | Bloomberg: SILO IJ | Reuters: SILO.JK
26 Nov 2015
HOLD
Warming Up For Next Year

Price Target : Rp10,000 (2% upside) (Prev Rp17,000)
Potential Catalyst: Better expansion and performance from new
hospitals
Where we differ: Predict slower expansion than companys aggressive
guidance
Likely to come up short of expansion plan this year. SILO

targeted to open 10 new hospitals (full-fledged and Siloam
Medika) this year. However, to date, not a single new hospital
has been opened and SILO has cited difficulties in finalising
licences and administration as the main reason behind this
delay. Realistically, as reflected in our forecast, there will be no
additional hospitals or Siloam Medikas in SILOs portfolio this
year.
Analyst
Price Relative
Rp
Relative Index
18,055.0
207
16,055.0
187
14,055.0
167
147
12,055.0
127
10,055.0
8,055.0
Sep-13
107
87
Mar-14
Sep-14
Siloam International Hospitals (LHS)
Mar-15
Sep-15

FY Dec (Rpbn)
Revenue
EBITDA
Pre-tax Profit
Net Profit
Net Pft (Pre Ex.)
EPS (Rp)
EPS Pre Ex. (Rp)
EPS Gth (%)
EPS Gth Pre Ex (%)
Diluted EPS (Rp)
Net DPS (Rp)
BV Per Share (Rp)
PE (X)
PE Pre Ex. (X)
P/Cash Flow (X)
EV/EBITDA (X)
Net Div Yield (%)
P/Book Value (X)
Net Debt/Equity (X)
ROAE (%)
2014A
2015F
2016F
2017F
3,341
487
93.5
62.6
62.6
54.1
54.1
25
25
54.1
0.0
1,426
180.6
180.6
30.8
22.7
0.0
6.9
CASH
3.8
4,013
627
148
110
110
95.4
95.4
76
76
95.4
0.0
1,521
102.5
102.5
21.8
17.4
0.0
6.4
CASH
6.5
4,991
880
190
141
141
122
122
28
28
122
0.0
1,643
80.0
80.0
15.3
12.5
0.0
5.9
CASH
7.7
6,176
1,199
263
196
196
169
169
39
39
169
12.2
1,800
57.8
57.8
10.9
9.1
0.1
5.4
CASH
9.8
(7)
82.4
B: 8
(20)
112
S: 1
(31)
172
H: 5
Earnings Rev (%):

Consensus EPS (Rp):
Other Broker Recs:
ASIAN INSIGHTS
www.dbsvickers.com
ed: TH / sa: MA
Maintain HOLD call with much lower TP. To reflect SILOs

stalled expansion this year, we slashed down our FY15/16F
revenue by 5.1%/14.2% and consequently our FY15/16F net
profit by 6.6%/20%. Considering the difficulties for expansion
(mainly in securing licences) going forward, we also tweak our
DCF assumption and all those changes resulted in a lower TP
of Rp10,000.
One of the largest private hospital operators in Indonesia, with

aggressive growth ahead. SILO currently has 20 hospitals in its
portfolio and plans to expand aggressively in the next three
years. SILO has first-mover advantage in smaller cities, strong
branding, and good knowledge of the real estate market
through parent Lippo Group. SILO is changing its expansion
model by mixing greenfield full-service hospitals (300-bed
capacity) and the compact Siloam Medika (40-bed capacity) in
retail malls. This way, SILO can leverage more on its parent
Lippo Groups expertise in retail malls.
Valuation:
SILO is currently trading at 13x 2016 EV/EBITDA (cheap vs
regional peers average) after sharp 43% correction in 3
months from early Sep2015. We value the company using DCF
valuation for each of its existing and new hospitals to arrive at
our Rp10,000 TP.
Slower expansion than expected. The extensive licensing
requirements for new hospitals could impede future growth. In
addition, given the asset-light model, the ability to recycle cash
and raise external funds for expansion is heavily dependent on
Singapore-listed First REITs ability to acquire SILOs hospital
assets and lease them back to the company.
At A Glance
Major Shareholders
Lippo Karawaci TBK (%)
Free Float (%)
ICB Industry : Health Care / Health Care Equipment & Services
1,156
11,301 / 827
70.8
29.2
3.5
VICKERS SECURITIES
Company Guide
Hospital expansion projection
60
CRITICAL DATA POINTS TO WATCH
Siloam Hospitals
Siloam Medika
50
40
Earnings Drivers:
Aggressive expansion to support high Gross Operating
Revenue (GOR) growth
SILO now operates 20 hospitals in 14 cities across Indonesia
with a total of over 4,800 beds. Our assumption that SILO
would operate 28 full-service hospitals plus 22 Siloam
Medikas by end-2019 is far more conservative than guidance.
30
20
10
0
2014
2015F
2016F
2017F
2018F
2019F
Free cash flow forecast
We project Gross Operating Revenue (GOR) to increase by a

24% CAGR between 2014 and 2019 (i.e. aggressive
expansion period). By end-2019, revenue contribution from
new hospitals (full-service and Siloam Medika) opened after
2014 will increase significantly to 25%.
350
Rpbn
300
283
250
232
2018F
2019F
150
100
50
Improving EBITDA margins as new hospitals mature

We forecast GP margins to hover at about 29% over the next
few years. But EBITDA margins will improve as the hospitals
in SILOs portfolio mature. We expect EBITDA margins to
improve by an average of 0.8ppt annually from 14.6% in
2014. We also project EBITDA to more than quadruple
between 2014 and 2019
242
200
15
0
-50
-100
-111
-150
2015F
2016F
2017F
Gross Operating Revenue Trend

Rp bn
50.0%
6,000
45.0%
5,000
Turning free-cash-flow positive in 2017

Premised on successful expansion, SILO will generate its first
positive free cash flow at the end of 2017 (excluding 2015
positive cash flow, which is more due to stalled expansion
capex). This suggests that SILO should be in a better financial
position to execute its next growth phase.
40.0%
4,000
35.0%
3,000
30.0%
25.0%
2,000
20.0%
1,000
15.0%
10.0%
2013A
2014A
Total Revenue
First-mover advantage in smaller cities to accelerate payback

period
2015F
2016F
2017F
Revenue Growth (%) (YoY)
Profitability Trend
Rp bn
With a presence in 14 cities nationwide, SILO has strong

branding, network and infrastructure. In addition, synergies
with property developer Lippo Karawaci (LPKR) gives SILO an
advantage in securing new locations to meet its expansion
plans. SILO has signed a master agreement with LPKR and
another strategic partner MPU for 30 new locations
nationwide.
299
249
199
149
99
49
Given extremely low penetration of hospital services and

rising healthcare needs in Indonesia, the new hospitals in
smaller cities can potentially generate positive EBITDA within
two years of operations.
2013A
2014A
Operating EBIT
2015F
2016F
Pre tax Profit
2017F
Net Profit
Margins Trend
6.0%
5.5%
COMPANY BACKGROUND
SILO is Indonesia's largest private hospital operator with 20
operational hospitals in its portfolio, and plenty of new
hospitals in the pipeline for the next few years.
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
2013A
2014A
Operating Margin %
2015F
2016F
2017F
Net Income Margin %
ASIAN INSIGHTS
Page 22
VICKERS SECURITIES
Company Guide
Balance Sheet:
Gearing up for aggressive expansion plan
Given its current low cash balance, high debt (both interestand non-interest-bearing debt), and aggressive expansion
plan, SILOs net gearing is expected to increase significantly
from 11% in 2014.
Recently, SILO secured an option to exercise a rights issue (of
up to 10% of its current share base) within the next two
years, in the event it needs to beef up the balance sheet.
Capex to ramp up in the next four years
We forecast annual capex to remain at Rp800900bn in the
next three years as SILO ramps up the number of hospitals
(full-fledged service and Siloam Medika).

1.8
0.14
1.7
0.12
1.6
0.10
1.5
0.08
1.4
0.06
0.04
1.3
0.02
1.2
1.1
0.00
2013A
2014A
2015F
2016F
2017F
Capital Expenditure
Rp
1,000.0
900.0
800.0
700.0
600.0
500.0

Execution of expansion plan
SILO is a growth story that leverages on the expanding
healthcare services industry in Indonesia. SILOs growth will
depend on its ability to secure locations and the necessary
licences to open new hospitals, and to raise financing.
Successful implementation of Indonesias universal healthcare
programme
The successful implementation will be a game changer that
will shape the future of Indonesias healthcare industry, and
create positive sentiment in the sector. Healthcare service
providers are among those that will benefit from structural
changes.
400.0
300.0
200.0
100.0
0.0
2013A
2014A
2015F
2016F
2017F
ROE (%)
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
Key Risks:
Capital-intensive projects. Given the companys aggressive
plans (i.e. 10 new hospitals p.a.) for the next three years, it
will require large and constant funding.
2013A
2014A
2015F
2016F
Forward PE Band (x)

(x)
227.6
+2sd:216.1x
207.6
Related-party transactions. The asset-light model requires

asset transfers between SILO and companies within the
Lippo Group (through property leases, shareholder loans,
etc.)
187.6
+1sd:186.1x
167.6
Avg:156.1x
147.6
127.6
1sd:126.2x
107.6
2sd:96.2x
87.6
Subject to extensive laws and regulations. The company

may face an adverse impact if there are material changes to
the regulations.
2017F
67.6
Sep-13
Mar-14
Sep-14
Mar-15
Sep-15
PB Band (x)
(x)
Litigation risks from medical and legal claims. This is the

nature of the healthcare service business.
Shortage of medical human resource, with low healthcare
worker-to-population ratio, could impede growth going
forward.
12.3
11.3
+2sd:11.57x
10.3
+1sd:10.3x
9.3
Avg:9.03x
8.3
1sd:7.75x
7.3
2sd:6.48x
6.3
5.3
Sep-13
Mar-14
Sep-14
Mar-15
Sep-15
ASIAN INSIGHTS
VICKERS SECURITIES
Page 23
Company Guide
Key Assumptions
FY Dec
2013A
2014A
2015F
2016F
2017F
14.0
20.0
20.0
28.0
36.0
2013A
2014A
2015F
2016F
2017F
857
585
620
299
143
2,504
1,186
734
811
391
219
3,341
1,425
882
974
469
263
4,013
1,772
1,097
1,211
584
327
4,991
2,193
1,357
1,499
722
404
6,176
200
162
226
25.0
46.4
659
362
215
289
34.6
50.9
952
427
265
355
51.6
64.5
1,163
532
329
441
64.2
80.2
1,446
658
407
546
79.5
99.2
1,790
23.3
27.7
36.4
8.4
32.4
26.3
30.5
29.3
35.7
8.8
23.3
28.5
30.0
30.0
36.4
11.0
24.6
29.0
30.0
30.0
36.4
11.0
24.6
29.0
30.0
30.0
36.4
11.0
24.6
29.0
FY Dec
2013A
2014A
2015F
2016F
2017F
Revenue
Cost of Goods Sold
Gross Profit
Operating Profit
Associates & JV Inc
Pre-tax Profit
Tax
Minority Interest
Preference Dividend
Net Profit
EBITDA
Growth
Revenue Gth (%)
EBITDA Gth (%)
Opg Profit Gth (%)
Net Profit Gth (Pre-ex) (%)
Margins & Ratio
Gross Margins (%)
ROAE (%)
ROA (%)
ROCE (%)
Net Interest Cover (x)
2,504
(1,845)
659
(583)
75.9
2.75
0.0
(6.9)
0.0
71.8
(21.6)
(0.3)
0.0
49.9
49.9
303
3,341
(2,389)
952
(784)
168
(34.3)
0.0
(40.4)
0.0
93.5
(33.8)
2.86
0.0
62.6
62.6
487
4,013
(2,850)
1,163
(952)
211
0.0
0.0
(62.9)
0.0
148
(37.0)
(0.7)
0.0
110
110
627
4,991
(3,545)
1,446
(1,180)
266
0.0
0.0
(76.0)
0.0
190
(47.4)
(1.0)
0.0
141
141
880
6,176
(4,387)
1,790
(1,455)
335
0.0
0.0
(72.4)
0.0
263
(65.7)
(1.3)
0.0
196
196
1,199
40.0
39.3
(1.3)
(1.2)
33.4
60.7
121.4
25.5
20.1
28.7
25.4
76.2
24.4
40.4
26.0
28.1
23.8
36.3
26.2
38.5
26.3
3.0
2.0
5.4
2.4
2.9
0.0
11.0
28.5
5.0
1.9
3.8
2.3
4.6
0.0
4.2
29.0
5.3
2.7
6.5
3.7
6.3
0.0
3.4
29.0
5.3
2.8
7.7
4.5
7.4
0.0
3.5
29.0
5.4
3.2
9.8
5.7
8.8
7.2
4.6
No. of hospitals in portfolio
Segmental Breakdown
FY Dec
Revenues (Rpbn)
IP-Medical services
IP-Medical supplies
OP-Medical services
OP-Medical supplies
Others
Total
Gross profit (Rpbn)
IP-Medical services
IP-Medical supplies
OP-Medical services
OP-Medical supplies
Others
Total
Gross profit Margins (%)
IP-Medical services
IP-Medical supplies
OP-Medical services
OP-Medical supplies
Others
Total
Forecast stable margins
Income Statement (Rpbn)
Expect a strong 24%

CAGR between 2014
and 2019F
Net profit margins to

remain miniscule due to
aggressive expansion
over the next four years
ASIAN INSIGHTS
Page 24
VICKERS SECURITIES
Company Guide

FY Dec
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
847
(612)
236
(202)
33.6
(8.0)
0.0
(13.9)
0.0
11.7
(4.9)
1.43
8.17
8.17
33.6
926
(641)
285
(230)
54.6
(21.3)
0.0
(4.0)
0.0
29.2
(20.8)
(0.1)
8.26
8.26
54.6
976
(669)
307
(232)
74.9
(10.8)
0.0
(12.0)
0.0
52.0
(18.4)
0.88
34.5
34.5
74.9
1,011
(751)
260
(197)
62.2
(5.4)
0.0
(12.9)
0.0
43.9
(15.3)
(0.6)
28.0
28.0
62.2
1,026
(736)
290
(265)
25.3
(4.7)
0.0
(13.0)
0.0
7.55
(1.8)
2.55
8.35
8.35
25.3
3.8
2.6
2.6
(57.6)
9.2
62.5
62.5
1.0
5.5
37.2
37.2
318.1
3.6
(17.0)
(17.0)
(18.9)
1.5
(59.4)
(59.4)
(70.2)
27.8
4.0
1.0
30.8
5.9
0.9
31.4
7.7
3.5
25.7
6.1
2.8
28.3
2.5
0.8
2013A
2014A
2015F
2016F
2017F
Net Fixed Assets

Other LT Assets
Cash & ST Invts
Inventory
Debtors
Total Assets
1,402
0.0
291
515
94.8
271
26.4
2,601
1,589
0.0
414
280
106
393
62.3
2,844
1,401
0.0
494
581
131
367
74.8
3,049
1,600
0.0
534
440
163
456
89.8
3,284
1,633
0.0
583
507
202
565
108
3,598
ST Debt
Creditor
Other Current Liab
LT Debt
Shareholders Equity
Minority Interests
Total Cap. & Liab.
16.7
164
115
43.0
623
1,611
27.6
2,601
16.0
193
269
30.5
682
1,648
5.47
2,844
13.3
247
196
134
694
1,758
6.20
3,049
10.7
307
226
124
710
1,900
7.15
3,284
10.7
380
261
124
733
2,081
8.47
3,598
113
456
33.4
36.0
19.2
1.2
3.1
2.7
CASH
CASH
1,280.0
9.3
98.7
233
36.2
31.5
17.7
1.2
1.8
1.4
CASH
CASH
1,087.7
8.0
130
433
34.5
33.0
17.8
1.4
2.5
2.1
CASH
CASH
153.9
7.7
177
305
30.1
34.5
18.4
1.6
2.1
1.7
CASH
CASH
603.9
7.5
234
372
30.2
35.6
18.9
1.8
2.1
1.6
CASH
CASH
665.4
7.4
Revenue
Cost of Goods Sold
Gross Profit
Operating Profit
Associates & JV Inc
Pre-tax Profit
Tax
Minority Interest
Net Profit
EBITDA
Growth
Revenue Gth (%)
EBITDA Gth (%)
Opg Profit Gth (%)
Margins
Gross Margins (%)
Opg Profit Margins (%)
Balance Sheet (Rpbn)

FY Dec

Net Cash/(Debt)
Asset Turnover (x)
Current Ratio (x)
Quick Ratio (x)
Net Debt/Equity (X)
Capex to Debt (%)
Z-Score (X)
Tight cash position due

to expansion
Mostly related-party loan

from parent company
ASIAN INSIGHTS
VICKERS SECURITIES
Page 25
Company Guide
Cash Flow Statement (Rpbn)

FY Dec
Pre-Tax Profit
Dep. & Amort.
Tax Paid
Chg in Wkg.Cap.
Other Operating CF
Net Operating CF
Capital Exp.(net)
Other Invts.(net)
Div from Assoc & JV
Other Investing CF
Net Investing CF
Div Paid
Chg in Gross Debt
Capital Issues
Other Financing CF
Net Financing CF
Chg in Cash
Opg CFPS (Rp)
Free CFPS (Rp)
2013A
2014A
2015F
2016F
2017F
71.8
227
(21.6)
0.0
(580)
(0.3)
(303)
(764)
0.0
0.0
0.0
80.2
(684)
0.0
(11.1)
1,328
16.2
1,333
0.0
347
239
(923)
93.5
319
(33.8)
0.0
(14.0)
2.86
367
(506)
0.0
0.0
0.0
(35.9)
(542)
0.0
(13.2)
0.0
(47.9)
(61.1)
0.0
(235)
330
(120)
148
416
(37.0)
0.0
(7.6)
(0.7)
519
(227)
0.0
0.0
0.0
(92.1)
(319)
0.0
101
0.0
0.74
102
0.0
301
455
252
190
614
(47.4)
0.0
(18.5)
(1.0)
737
(814)
0.0
0.0
0.0
(52.1)
(866)
0.0
(13.0)
0.0
0.95
(12.0)
0.0
(141)
653
(66.5)
263
864
(65.7)
0.0
(22.6)
(1.3)
1,037
(896)
0.0
0.0
0.0
(60.6)
(957)
(14.1)
0.0
0.0
1.31
(12.8)
0.0
66.7
916
121
Heavy capex
requirement for the
next four years

Target Price & Ratings History
17502
Rp
16502
15502
14502
2
13502
T arget
Rat ing
Pric e
Dat e
1:
02 F eb 15
13500
12750
HOLD
2:
30 Mar 15
13425
12750
HOLD
3:
23 Apr 15
13525
12750
HOLD
4:
10 Aug 15
16850
17000
HOLD
5:
02 Nov 15
10300
17000
HOLD
12502
Closing
Pric e
S.No.
11502
10502
9502
8502
Nov-14
Mar-15
Jul-15
Nov-15
Not e : Share price and Target price are adjusted for corporate actions.
Source: DBS Vickers
ASIAN INSIGHTS
Page 26
VICKERS SECURITIES
Kalbe Farma
Edition 1 Version 1 | Bloomberg: KLBF IJ | Reuters: KLBF.JK
26 Nov 2015
BUY (Upgrade from HOLD)
On the Path to Recovery

Price Target : Rp1,600 (19% upside) (Prev Rp1,900)
Potential Catalyst: Valuation and stable USD/IDR
Where we differ: We expect more positive outlook for 2016 and
potential upside from pharma business
Upgrade to Buy. We upgraded Kalbe to Buy from Hold (19%

upside to our TP) as the stock has underperformed JCI and the
valuation is more attractive, trading at 5-year mean PE of 26x.
Moreover, we believe Kalbe is on the path to recovery after a
difficult year in 2015.
Multiple headwinds in 2015. Kalbe was hit with a few glitches
in 2015 including product recall, suspension in production line
and slower demand overall. Hence, we revised down our
FY15/16 EPS by 6%/4% respectively after lowering our
FY15/16 revenue estimates by c.2%. The weak performance in
2015 is also reflected in the share price to-date.
Analyst
Maynard P. Arif +6221 3003 4930
maynard.arif@id.dbsvickers.com
Price Relative
Rp
Relative Index
1,998.5
221
1,798.5
201
1,598.5
181
1,398.5
161
1,198.5
141
998.5
121
798.5
101
Recovery in 2016. We believe most of the issues in 2015

should be resolved in 2016. The suspension of manufacturing
line 6 should be lifted by 2016 and the distribution business is
expected to stabilize. Moreover, healthcare spending is
expected to grow at 12% CAGR in the next five years with the
introduction of universal healthcare (BPJS Health). This will be
the driver for long term growth in the healthcare industry
including Kalbe Farma.
81
598.5
Nov-11
Nov-12
Kalbe Farma (LHS)

FY Dec (Rpbn)
Revenue
EBITDA
Pre-tax Profit
Net Profit
Net Pft (Pre Ex.)
EPS (Rp)
EPS Pre Ex. (Rp)
EPS Gth (%)
EPS Gth Pre Ex (%)
Diluted EPS (Rp)
Net DPS (Rp)
BV Per Share (Rp)
PE (X)
PE Pre Ex. (X)
P/Cash Flow (X)
EV/EBITDA (X)
Net Div Yield (%)
P/Book Value (X)
Net Debt/Equity (X)
ROAE (%)
Nov-13
Nov-14
Nov-15
2014A
17,369
3,093
2,764
2,065
2,065
44.0
44.0
8
8
44.0
17.0
200
30.7
30.7
27.2
20.1
1.3
6.7
CASH
23.6
Earnings Rev (%):

Consensus EPS (Rp):
Other Broker Recs:
2015F
17,937
3,052
2,695
1,976
1,976
42.2
42.2
(4)
(4)
42.2
16.3
226
32.0
32.0
26.1
20.2
1.2
6.0
CASH
19.8
2016F
19,468
3,478
3,043
2,234
2,234
47.7
47.7
13
13
47.7
18.4
255
28.3
28.3
26.0
17.5
1.4
5.3
CASH
19.8
2017F
22,317
4,213
3,717
2,733
2,733
58.3
58.3
22
22
58.3
22.5
291
23.2
23.2
23.2
14.3
1.7
4.6
CASH
21.3
(6)
46.3
B: 12
(4)
53.2
S: 4
N/A
60.7
H: 11
ASIAN INSIGHTS
www.dbsvickers.com
sa: YM
Valuation:
Kalbe's shares have corrected by c.20% since 2H15 vs. 8% for
JCI while the valuation is now at 5-year mean PE (26x FY16
EPS). Our new TP is Rp1,600 (previously Rp1,900) or 33x FY16
EPS, pegged at 25% discount to UNVR's multiple.
Weak consumer spending and regulatory risk. Further
slowdown in the economy could dampen consumer spending,
which will lead to slower than expected growth for Kalbe. In
addition, regulatory risks such as price control, relaxation on
foreign investment and license may have negative impact on
Kalbe's performance.
At A Glance
46,875
63,281 / 4,628
Major Shareholders
Gira Sole Prima (%)
9.8
Santa Seha Sanadi (%)
9.3
Diptanala Bahana (%)
9.5
Free Float (%)
47.2
4.7
ICB Industry : Health Care / Pharmaceuticals & Biotechnolog
VICKERS SECURITIES
Company Guide
Kalbe Farma
Pharma revenue and GM
Rpbn
20,000
Earnings Drivers:
Recovery in pharma business. Pharma accounted for c.25% of
Kalbe's business and it faced some headwinds in 2015: i) the
Buvanest case, ii) suspension of manufacturing line 6 and iii)
forex volatility. As such, the growth in pharma business is
expected to be below average this year (we expect 5-6% vs.
12-18% between 2012-14). We expect some improvement in
2016 as the suspension on line 6 should be lifted before the
growth resumes to be in line with the industry at c.12% in
2017, driven by healthcare spending and BPJS Health.
49.0%
48.5%
17,500
48.0%
15,000
47.5%
12,500
47.0%
10,000
46.5%
13
14
15F
Revenue (LHS)
16F
Gross Margin (RHS)
Nutritional revenue and GM

Rpbn
5,500
Growth in nutritionals. Nutritional has been one of the

strongest growth contributors in the last three years for Kalbe
and accounted for c.28% of sales in 9M15. While demand has
slowed this year, nutritionals still recorded double digit growth
this year and is expected to grow at 15% CAGR between
2014-2017.
61.0%
60.0%
4,500
59.0%
3,500
58.0%
2,500
57.0%
1,500
56.0%
500
In addition, Kalbe is ranked #4 in the powdered milk market

with a market share of 11%, and is expanding into new
segment, liquid milk. The company is not going to compete in
the general liquid market but rather in a niche segment such
as diabetic to leverage on the existing brand name.
55.0%
13
14
15F
Revenue (LHS)
16F
Gross Margin (RHS)
Revenue mix
Rpbn
25,000
20,000
USD/IDR fluctuation. Most of Kalbe's raw materials are

imported (c.70-75%) and hence, the fluctuation in USD/IDR
will have an impact on margin. Based on our analysis, a 10%
change in USD/IDR could change profit by up to 3% but the
company will normally offset it with price adjustment. Kalbe
typically adjusts its prices by 3-5%, depending on the products
and competition.
15,000
We projected gross margin in 2015 and 2016 to decline to

47.5% and 48% respectively vs. 48.8% in 2014 and 48.0% in
2013 on weaker Rupiah. Rupiah has depreciated by 9% YTD
against USD, and our FX strategist expects pressures on IDR to
continue with the expected Fed rate hike.
Rpbn
10,000
5,000
0
13
Pharmaceuticals
14
15F
Consumer Health
16F
Nutritionals
Distribution
Revenue and earnings trend
New products and M&A. In terms of new products, Kalbe

plans to add between 3 to 5 products each year. So far, Kalbe
has added liquid milk, Extra Joss + Milk and Lo Han Kuo Komix
in the consumer and nutritional segment. New products will be
important to support the long term growth in consumer health
segment.
Furthermore, Kalbe has a strong balance sheet with c.Rp1.7tr
in net cash position. The company is continuously looking for
M&A as part of its growth strategy. Any sizable acquisition will
have an impact on the earnings growth of Kalbe.
20000
15000
10000
5000
0
13
14
15F
16F
Revenue
Earnings
Gross margin vs. USD/IDR

15000
49.0%
14000
48.5%
13000
48.0%
12000
47.5%
11000
47.0%
10000
46.5%
13
14
USD/IDR
15F
16F
Gross Margin
ASIAN INSIGHTS
Page 28
VICKERS SECURITIES
Company Guide
Kalbe Farma
Balance Sheet:
Healthy balance sheet. Kalbe's balance sheet is healthy with
over Rp1.7tr in cash and almost zero in LT debt.. Moreover,
we expect positive operating cash flow generation in excess
of Rp1.7tr annually between 2015-2017.

1.6
0.14
1.6
0.12
1.5
0.10
0.08
1.5
0.06
1.4
Capex to support new products. As part of the expansion

strategy, Kalbe expects to spend c.5% of revenue for capex
annually. This translates to c.Rp1-1.2tr of capex to support
plant expansion, joint ventures for new products and
distribution. We believe Kalbe has sufficient cash flow from
operation to fund its regular capex plan.
0.04

Kalbe's revenue and earnings outlook. 2015 is a challenging
year on multiple fronts and Kalbe is expected to record
negative earnings growth, the first time since GFC crisis.
Demand recovery and improvement in distribution business
will lead to better earnings growth.
1,000.0
1.4
0.02
1.3
0.00
2013A
2014A
Key Risks:
Exposure to USD. Most of the materials for pharmaceutical
products are imported, and hence, Kalbe is affected by the
weak rupiah. Further weakness in the rupiah will hurt
Kalbe's margins and earnings because there is a time-lag in
adjusting prices.
2016F
2017F
Capital Expenditure
Rp
1,200.0
800.0
600.0
400.0
200.0
0.0
2013A
Successful implementation of BPJS Health and increase in

healthcare spending. The government intends to increase
BPJS participation from c.150mn this year to all Indonesians
(250mn) by 2019. Successful implementation will boost
healthcare spending in Indonesia, from a low 2.9% of GDP
currently to a target 3.5 % of GDP in the next four years.
2015F
2014A
2015F
2016F
2017F
ROE (%)
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
2013A
2014A
2015F
2016F
2017F
Forward PE Band (x)

(x)
Litigation risk and product recall. Kalbe is subjected to

medical claim and product recall, which could have an
impact on the company's performance.
Regulatory risks. The pharmaceutical industry is regulated
and subjected to government's laws such as price cap and
manufacturing process. In addition, there is a restriction on
foreign investment. Material changes in the regulation could
have an adverse impact on Kalbe's business.
Company Background
KLBF is a leading pharmaceutical company in Indonesia. The
company offers prescription and non-prescription drugs, as
well as nutritional and consumer health products. In
addition, the company has distribution and logistics
operations under PT Enseval Putera Megatrading.
+2 stdev
40.0
+1 stdev
33.0
Average
26.0
19.0
-1 stdev
12.0
-2 stdev
5.0
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
PB Band (x)
(x)
10.3
+2sd:10.18x
9.3
+1sd:8.84x
8.3
7.3
Avg:7.5x
6.3
1sd:6.16x
5.3
2sd:4.82x
4.3
Nov-11
Nov-12
Nov-13
Nov-14
Nov-15
ASIAN INSIGHTS
VICKERS SECURITIES
Page 29
Company Guide
Kalbe Farma
Segmental Breakdown
FY Dec
2013A
2014A
2015F
2016F
2017F
Revenues (Rpbn)
Prescription
Consumer Health
Nutritionals
Distribution & Logistics
3,869
2,505
3,792
5,836
4,329
2,924
4,581
5,534
4,566
3,212
5,039
5,120
4,885
3,665
5,761
5,156
5,457
4,266
6,956
5,637
16,002
17,369
17,937
19,468
22,317
2,353
1,335
2,287
1,704
2,609
1,550
2,748
1,569
2,639
1,638
2,872
1,357
2,785
1,869
3,284
1,366
3,080
2,219
4,000
1,522
7,679
8,476
8,506
9,304
10,821
60.8
53.3
60.3
29.2
60.3
53.0
60.0
28.3
57.8
51.0
57.0
26.5
57.0
51.0
57.0
26.5
56.4
52.0
57.5
27.0
48.0
48.8
47.4
47.8
48.5
2013A
2014A
2015F
2016F
2017F
16,002
(8,323)
7,679
(5,130)
2,549
1.82
0.0
21.8
0.0
2,573
(602)
(50.9)
0.0
1,920
1,920
2,828
17,369
(8,893)
8,476
(5,715)
2,761
(8.7)
0.0
11.4
0.0
2,764
(643)
(56.4)
0.0
2,065
2,065
3,093
17,937
(9,431)
8,506
(5,847)
2,659
6.06
0.0
29.9
0.0
2,695
(660)
(58.3)
0.0
1,976
1,976
3,052
19,468
(10,164)
9,304
(6,288)
3,016
5.63
0.0
21.3
0.0
3,043
(745)
(63.2)
0.0
2,234
2,234
3,478
22,317
(11,496)
10,821
(7,141)
3,679
5.50
0.0
31.2
0.0
3,717
(910)
(72.5)
0.0
2,733
2,733
4,213
17.3
13.9
14.9
10.7
8.5
9.4
8.3
7.6
3.3
(1.3)
(3.7)
(4.3)
8.5
14.0
13.4
13.0
14.6
21.1
22.0
22.3
48.0
15.9
12.0
25.3
18.5
23.0
46.4
NM
48.8
15.9
11.9
23.6
17.4
21.7
38.6
NM
47.4
14.8
11.0
19.8
15.0
18.4
38.6
NM
47.8
15.5
11.5
19.8
15.3
18.5
38.6
NM
48.5
16.5
12.2
21.3
16.7
20.0
38.6
NM
Total
Gross Profit (Rpbn)
Prescription
Consumer Health
Nutritionals
Total
Gross Profit Margins (%)
Prescription
Consumer Health
Nutritionals
Total
Income Statement (Rpbn)
FY Dec
Revenue
Cost of Goods Sold
Gross Profit
Operating Profit
Associates & JV Inc
Pre-tax Profit
Tax
Minority Interest
Preference Dividend
Net Profit
EBITDA
Growth
Revenue Gth (%)
EBITDA Gth (%)
Opg Profit Gth (%)
Margins & Ratio
Gross Margins (%)
ROAE (%)
ROA (%)
ROCE (%)
Net Interest Cover (x)
Distribution declined due to

3rd party customers
Lower margin due to

USD/IDR fluctuation
ASIAN INSIGHTS
Page 30
VICKERS SECURITIES
Company Guide
Kalbe Farma

FY Dec
3Q2014
4Q2014
Revenue
Cost of Goods Sold
Gross Profit
Operating Profit
Associates & JV Inc
Pre-tax Profit
Tax
Minority Interest
Net Profit
EBITDA
1Q2015
2Q2015
3Q2015
4,379
(2,260)
2,119
(1,450)
669
(1.2)
0.0
(4.7)
0.0
663
(156)
(13.1)
494
494
753
4,610
(2,265)
2,345
(1,581)
764
1.99
0.0
9.82
0.0
776
(181)
(17.1)
578
578
766
4,247
(2,145)
2,102
(1,418)
684
(0.8)
(1.0)
18.7
0.0
701
(163)
(9.0)
528
528
773
4,473
(2,277)
2,196
(1,503)
692
11.2
(0.1)
13.2
0.0
717
(170)
(12.3)
535
535
776
4,408
(2,295)
2,113
(1,513)
600
(6.5)
0.16
4.83
0.0
598
(148)
(13.7)
436
436
675
1.5
(2.2)
(2.4)
(1.2)
5.3
1.7
14.3
17.0
(7.9)
0.9
(10.5)
(8.6)
5.3
0.4
1.3
1.2
(1.5)
(13.0)
(13.4)
(18.4)
48.4
15.3
11.3
50.9
16.6
12.5
49.5
16.1
12.4
49.1
15.5
12.0
47.9
13.6
9.9
Balance Sheet (Rpbn)

FY Dec
2013A
2014A
2015F
2016F
2017F
Net Fixed Assets

Other LT Assets
Cash & ST Invts
Inventory
Debtors
Total Assets
2,926
42.4
850
1,614
3,053
2,145
684
11,315
3,404
24.3
875
1,895
3,091
2,347
789
12,425
4,035
24.3
858
2,552
3,272
2,392
739
13,873
4,595
24.3
841
3,113
3,540
2,562
739
15,415
5,086
24.3
824
3,775
4,008
2,898
739
17,352
ST Debt
Creditor
Other Current Liab
LT Debt
Shareholders Equity
Minority Interests
Total Cap. & Liab.
584
1,152
905
0.0
175
8,108
392
11,315
252
1,133
1,001
44.2
177
9,382
435
12,425
252
1,309
1,001
44.2
177
10,596
494
13,873
252
1,416
1,001
44.2
177
11,967
557
15,415
252
1,603
1,001
44.2
177
13,646
629
17,352
3,826
1,030
45.1
44.5
117.3
1.5
2.8
1.4
CASH
CASH
165.4
17.9
4,092
1,598
47.2
48.8
131.1
1.5
3.4
1.8
CASH
CASH
239.9
19.1
4,093
2,256
48.2
49.3
128.4
1.4
3.5
1.9
CASH
CASH
337.7
17.9
4,423
2,817
46.4
51.2
128.1
1.3
3.7
2.1
CASH
CASH
337.7
17.4
5,041
3,479
44.6
50.2
125.6
1.4
4.0
2.3
CASH
CASH
337.7
17.4
Growth
Revenue Gth (%)
EBITDA Gth (%)
Opg Profit Gth (%)
Margins
Gross Margins (%)
Opg Profit Margins (%)

Net Cash/(Debt)
Asset Turnover (x)
Current Ratio (x)
Quick Ratio (x)
Net Debt/Equity (X)
Capex to Debt (%)
Z-Score (X)
Margin decline due to

currency and revenue mix
Healthy balance sheet

to support M&A
ASIAN INSIGHTS
VICKERS SECURITIES
Page 31
Company Guide
Kalbe Farma
Cash Flow Statement (Rpbn)

FY Dec
2013A
2014A
2015F
2016F
2017F
Pre-Tax Profit
Dep. & Amort.
Tax Paid
Chg in Wkg.Cap.
Other Operating CF
Net Operating CF
Capital Exp.(net)
Other Invts.(net)
Div from Assoc & JV
Other Investing CF
Net Investing CF
Div Paid
Chg in Gross Debt
Capital Issues
Other Financing CF
Net Financing CF
Chg in Cash
Opg CFPS (Rp)
2,573
284
(646)
0.0
0.0
(1,277)
933
(966)
81.6
0.0
2.12
0.0
(882)
(901)
287
0.0
0.0
(613)
95.5
(467)
19.9
2,764
348
(643)
0.0
(263)
118
2,323
(710)
(28.1)
0.0
0.53
61.5
(677)
(797)
(380)
0.0
0.0
(1,177)
0.0
469
55.2
2,695
395
(660)
0.0
(0.7)
0.0
2,429
(1,000)
0.0
0.0
0.0
0.0
(1,000)
(763)
0.0
0.0
0.0
(763)
0.0
666
51.8
3,043
465
(745)
0.0
(331)
0.0
2,431
(1,000)
0.0
0.0
0.0
0.0
(1,000)
(862)
0.0
0.0
0.0
(862)
0.0
569
58.9
3,716
536
(910)
0.0
(617)
0.0
2,724
(1,000)
0.0
0.0
0.0
0.0
(1,000)
(1,055)
0.0
0.0
0.0
(1,055)
0.0
669
71.3
Target Price & Ratings History
1949
Rp
S.No.
Date
Closing Price
1:
02 Jan 15
1810
Target
Price
1900
2:
04 Feb 15
1835
1900
BUY
3:
4:
23 Feb 15
26 Mar 15
1795
1835
1900
1900
BUY
BUY
1649
5:
6:
31 Mar 15
05 May 15
1865
1825
1900
1900
BUY
HOLD
1549
7:
16 Sep 15
1510
1900
HOLD
1849
5
1
1749
1449
Rating
BUY
1349
1249
Nov-14
Mar-15
Jul-15
Nov-15
Note : Share price and Target price are adjusted for corporate actions.
Source: DBS Vickers
ASIAN INSIGHTS
Page 32
VICKERS SECURITIES
Industry Focus
DBSV recommendations are based an Absolute Total Return* Rating system, defined as follows:
STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)
BUY (>15% total return over the next 12 months for small caps, >10% for large caps)
HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FULLY VALUED (negative total return i.e. > -10% over the next 12 months)
SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)
* Share price appreciation + dividends

GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by PT. DBS Vickers Securities Indonesia ("DBSVI"). This report is solely intended for the clients of DBS Bank Ltd and DBS Vickers
Securities (Singapore) Pte Ltd, its respective connected and associated corporations and affiliates (collectively, the DBS Vickers Group) only and no part
of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBS
Bank Ltd.
The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS Bank
Ltd., its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the DBS
Group)) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to change without
notice. This document is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific
investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is
not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. The DBS
Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of
and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be construed as an offer or
a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons associated with any of them may from time to
time have interests in the securities mentioned in this document. The DBS Group may have positions in, and may effect transactions in securities
mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies.
Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can be no
assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments. The
information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not
contain all material information concerning the company (or companies) referred to in this report.
The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and
assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which the
valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual results. Therefore,
the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation
and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that:
(a)
(b)
such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and
there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk
assessments stated therein.
Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned
herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity
referred to in this report.
DBS Vickers Securities (USA) Inc ("DBSVUSA")"), a U.S.-registered broker-dealer, does not have its own investment banking or research department, has
not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months
and does not engage in market-making.
ANALYST CERTIFICATION
The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and
their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her compensation was, is, or
will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of 26 November 2015, the analyst(s) and his/her
spouse and/or relatives who are financially dependent on the analyst(s), do not hold interests in the securities recommended in this report (interest
includes direct or indirect ownership of securities).
COMPANY-SPECIFIC / REGULATORY DISCLOSURES
1.
PT. DBS Vickers Securities Indonesia ("DBSVI") has a proprietary position in Kalbe Farma and Mitra Keluarga Karyasehat
recommended in this report as of 25 November 2015.
2.
Compensation for investment banking services:

DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of
Page 33
Industry Focus
securities as a manager or co-manager or in any other investment banking transaction in the past twelve months. Any US
persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a
transaction in any security discussed in this document should contact DBSVUSA exclusively.
RESTRICTIONS ON DISTRIBUTION
General
This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident
of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use
would be contrary to law or regulation.
Australia
This report is being distributed in Australia by DBS Bank Ltd. (DBS) or DBS Vickers Securities (Singapore) Pte Ltd
(DBSVS), both of which are exempted from the requirement to hold an Australian Financial Services Licence under
the Corporation Act 2001 (CA) in respect of financial services provided to the recipients. Both DBS and DBSVS are
regulated by the Monetary Authority of Singapore under the laws of Singapore, which differ from Australian laws.
Distribution of this report is intended only for wholesale investors within the meaning of the CA.
Hong Kong
This report is being distributed in Hong Kong by DBS Vickers (Hong Kong) Limited which is licensed and regulated by
the Hong Kong Securities and Futures Commission.
Indonesia
This report is being distributed in Indonesia by PT DBS Vickers Securities Indonesia.
Malaysia
This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received
from ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection
with this report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report
are advised that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their
respective connected and associated corporations, affiliates, their directors, officers, employees, agents and parties
related or associated with any of them may have positions in, and may effect transactions in the securities mentioned
herein and may also perform or seek to perform broking, investment banking/corporate advisory and other services
for the subject companies. They may also have received compensation and/or seek to obtain compensation for
broking, investment banking/corporate advisory and other services from the subject companies.
Wong Ming Tek, Executive Director, ADBSR

Singapore
This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn
No. 198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated
by the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its
respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation
32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an
Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the
contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS
Bank Ltd at 6327 2288 for matters arising from, or in connection with the report.
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This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. Research reports distributed are
only intended for institutional clients only and no other person may act upon it.
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This report is being distributed in the UK by DBS Vickers Securities (UK) Ltd, who is an authorised person in the
meaning of the Financial Services and Markets Act and is regulated by The Financial Conduct Authority. Research
distributed in the UK is intended only for institutional clients.
Dubai
This research report is being distributed in The Dubai International Financial Centre (DIFC) by DBS Bank Ltd., (DIFC
rd
Branch) having its office at PO Box 506538, 3 Floor, Building 3, East Wing, Gate Precinct, Dubai International
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This report was prepared by DBS Vickers Securities Indonesia (DBSVI). DBSVUSA did not participate in its
preparation. The research analyst(s) named on this report are not registered as research analysts with FINRA and are
not associated persons of DBSVUSA. The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst
compensation, communications with a subject company, public appearances and trading securities held by a research
analyst. This report is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents.
This report may only be distributed to Major U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such
other institutional investors and qualified persons as DBSVUSA may authorize. Any U.S. person receiving this report
who wishes to effect transactions in any securities referred to herein should contact DBSVUSA directly and not its
affiliate.
Other
jurisdictions
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qualified, professional, institutional or sophisticated investors as defined in the laws and regulations of such
jurisdictions.
PT. DBS Vickers Securities Indonesia
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Jl. Prof. Dr. Satrio Kav. 3-5, Jakarta 12940, Indonesia
Tel. 6221-3003 4900, Fax: 6221-3003 4943
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Insights Universal Healthcare Boon For Hospitals

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Indonesia Industry Focus

Indonesia Healthcare Sector

DBS Group Research . Equity

The pulse is on for hospitals

Grand entrance of COB scheme?

Further upside from strong healthcare spending

Universal healthcare coverage a game changer for

Prefer hospitals over pharmaceutical players

Mkt Cap Target Price Performance (%)

Source: DBS Vickers

Universal Healthcare Coverage (JKN) roadmap

Source: Roadmap to National Health Insurance 2012-2019, DBS

The healthcare reform - fair progress with more

Working population (LHS)

Source: Statistics Indonesia (BPS), DBS Vickers

Regular vs informal employees in working population

Source: Statistics Indonesia (BPS), DBS Vickers

Indonesias labour force - latest breakdown

Source: Statistics Indonesia (BPS), DBS Vickers

In order to prevent the deficit from ballooning in the future, the

Indonesias healthcare spending

Source: CIA World Factbook

Private remains the driver of healthcare expenditure

Growing healthcare spending starting from low base...

More subscribers for private insurance companies. The

Margin improvement for BPJS-affiliated private

Improvement in patient volumes for hospitals that are

Indonesia is among the lowest healthcare spender

The implications from the effective roll-out of the pilot COB

Source: WHO, DBS Vickers.

... with increasing commitment from government

Healthcare budget trend

Healthcare budget (LHS)

Source: WHO, Business Monitor International (BMI)

Source: Ministry of Finance, State-budget (APBN), DBS Vickers

There has been a staggering increase in the number of hospital

Number of hospitals (private vs public)

Hospitals beds grew at 20.6% CAGR (in four years)

Source: Ministry of Health, DBS Vickers

Source: Ministry of Health, DBS Vickers

Breakdown of public and private hospitals

Beds per 10,000 population regional comparison

Beds / 10,000 population (RHS)

Source: Ministry of Health, DBS Vickers

Source: Ministry of Health, DBS Vickers

Indonesia hospitals - breakdown by ownership

Source: Ministry of Health, DBS Vickers

Out-of-pocket expenditure is the highest portion

Private - out of pocket

Private - other source

Source: Worldbank data, DBS Vickers

According IMS Health, generic drug sales in Indonesia grew by

Source: Roadmap to National Health Insurance 2012-2019

JKN to drive growth especially generic drugs The

As such, pharmaceutical companies with large production

Compulsory use of generic drugs, whenever possible.

Furthermore, pharmaceutical companies have to look for

Source: IMS Health, Kimia Farma presentation, DBS Vickers

What to look out for in the pharmaceutical sector in 2016:

Price adjustments on generic drugs. The cap on ceiling

Impact on USD/IDR rate volatility. Note that the basic

IDR has been weakening against the USD

Source: Bloomberg Finance L.P