4.96 K

$First Reit(AW9U.SI) I looked at Siloam Hospitals. The rental expenses is almost the whole of the General & Administration Expenses.

The info from morningstar tells a very grim picture. The hospital is surviving by financing via issuing shares it seem. Look a the jump of outstanding shares. This is not good, not good at all. @Sporeshare

The FCF, the net profit. GG man. Good thing is on Lippo can pay for the rent. but so dangerous hmmm

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Eh tot u vested


1st) i dont know where you got " The rental expenses is almost the whole of the General & Administration Expenses." i attach the screenshot for you...page 73 of the report. Rental is IDR233 billion vs G&A of IDR1.5 trillion. can you pls verify your statement/numbers again?

2nd) i dont get why you dont like companies with negative FCF. I think the correct question should be, is the capex spending generating profit growth in the future? is the ROA/ROE justifiable? In this case, you can see yes the capex is spent, but the revenue/Opex has grown significantly because the money was spent on new hospitals generating new revenue. Profits margins stink when hospitals are in ramping up stage; just ask Raffles Hospitals or IHH (IHH takes 2 years at least to breakeven its HK project). They opened 4 new hospitals in 2018 and 8 in 2017.
btw, also if you see their slides, siloam is increasing owning their new hospitals vs selling them to first reit => and they highlighted this is the strategy going forward.

EBITDA margins are actually much higher at 11%+ area.
But am certainly not excited by its reported ROA or ROE, which is practically below their cost of financing. the growth probably also below expectations, looking at the share price. Probably need to get the management to get hold of how the matured hospitals are doing.


Reply to @l0nEr : wow, admin assistant with such knowledge. salute !!

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but so far no change to the terms and conditions for LK to pay FR fees in Sgd. @jeremyowtaip


Reply to @IMLES : People often forget the future is always unpredictable. What if next few years Rupiah strengthens again? What if the demand for healthcare in Indonesia goes strong next few years? There can be potential negatives as well as unforeseen positives as well. The future is not a 100% straight line predictable sequence of events based on current situation or past history. If it were so easy to predict the future next few years down the road.....??

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Siloam is expanding at a breakneck speed, almost all capex is for building 4-5 new hospital per year. They are burning through capital like no tomorrow. No other hospital group, even in sg is going at that kind of speed.

Siloam is doing that to get to thier target of 50% market share for hospital. And the expansion is partly subsidized by Lippo Group. Otherwise they can never achieve the growth they envision.

Current hospital occupancy is still below 50%, because there is too many is added yearly. Only thier older hospitals are profitable.

Lippo have no choice but to rental support Siloam, otherwise they cannot afford to add so many new hospitals every year. Go to siloam website, read their english presentation and you will know better.

Thier stratergy is like Reliance Jio, burning through capital in order to increase market share, and once have enough sizing, the profits will come rolling in.


Reply to @cmlee1 : Yup. I attach the following link for some nuggets of information on the pace of expansion for PT Siloam International Hospitals. They are the largest South East Asia healthcare operator with 33 hospitals based in 24 cities in Indonesia. Just in 2017 and 2018, they built 10 hospitals in two years (almost one third of their total number of hospitals are at least in new startup phase). And these 10 new hospitals are still in ramp up stage incurring startup losses at the moment.


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