Siloam International Hospitals’ 1Q26 revenue came in softer then we expected due to seasonal weakness from an earlier Eid holiday. However, Siloam’s private segment revenue (+11% y-y) and corporate/insurance segment (+9% y-y) remained strong, which helped offset the weakened BPJS segment performance (flat y-y), a trend similarly seen at Mitra Keluarga (MIKA IJ, Buy). As a result, Siloam’s EBITDA margin and net profit slightly contracted in 1Q26 versus 4Q25. Nevertheless, we expect patient volumes to recover in 2Q26F, which should support an improvement in overall profitability margin.
Corporate restructuring to strengthen governance
The past 2–3 years have been a busy period for Siloam, which has completed and planned several corporate actions (Fig. 1). Over time, we believe these initiatives should improve Siloam’s governance profile and remove overhangs related to: 1) ownership of assets held outside the listed entity, and 2) lease payments to affiliated parties. Improved governance could support a valuation rerating, especially as Siloam remains the largest privately-listed hospital operator in Indonesia, with relatively healthy profitability margins, while still trading at a lower valuation to both domestic and regional peers (Fig. 2). Although the acquisition of 14 hospitals from First REIT (FIRT SP, Not rated) is likely to pressure near- to medium-term earnings due to higher interest expenses (Fig. 3), we believe the company’s strong EBITDA generation is sufficient to absorb the additional financing costs.
Maintain Buy, with TP lowered to IDR3,140 (30.8% implied upside)
We revise 2026F/2027F EBITDA forecasts by -3%/+7% and earnings forecasts by -37%/-48%. The sharp earnings downgrade is mainly driven by expectations of higher interest expenses associated with the acquisition of hospitals from First REIT. Consequently, we lower our TP to IDR 3,140 (from IDR 3,300), based on 11.4x 2026F EV/EBITDA (previously 12.7x, +2SD of its five-year average), in line with +1SD of its five-year average. Given the defensive nature of the hospital business model and Siloam’s high exposure to private patients, we expect the company to deliver relatively resilient earnings against a challenging macro backdrop. In addition, Siloam’s structural reforms should serve as a positive long-term catalyst for valuation rerating. Currently, Siloam trades at 9.5x 2026F EV/EBITDA, equivalent to +0.5 SD of its five-year average.
Company profilePT Siloam International Hospitals Tbk or Siloam Hospitals is a chain of healthcare facilities in Indonesia founded in 2008 by PT. Lippo Karawaci Tbk. As the largest hospital chain in Indonesia, SILO operates 40 Siloam hospitals and 30 Siloam clinics (6 in Papua).
Valuation MethodologyOur TP of IDR3,140 is derived from 11.4x 2026F EV/EBITDA (equivalent to +1SD of its five-year average). The benchmark index for the stock is JCI.
Risks that may impede the achievement of the target priceKey downside risk include less favorable acquisition terms in its ongoing negotiations with First REIT.
ESGSILO is committed to always implementing ESG. The Company's focus areas are: 1) properly storing medical materials and equipment to avoid natural chemical reactions 2) recycling both medical and non-medical waste 3) educational programs for children in rurals areas 4) gender equality.
INVESTMENT RATINGS A rating of ‘Buy’, indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of ‘Neutral’, indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of ‘Reduce’, indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of ‘Suspended’, indicates that the rating, target price, and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies that are labelled as ‘Not Rated’ or ‘No Rating’ are not in regular research coverage. Benchmark is Indonesia Composite Index (‘IDX Composite’). A ‘Target Price’, if discussed, indicates the analyst’s forecast for the share price with a 12-month time horizon, reflecting in part of the analyst’s estimates for the company’s earnings, and may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market in general.
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