Sarana Meditama Metropolitan On Track With Its Solid Expansion Plan

With the recent initial soft-launching of the third OMNI Hospital, located in Cikarang area, it is on track to double its portfolio to four hospitals by mid-2017, from just two in 2015. The existing two OMNI hospitals in Pulomas and Alam Sutera are seeing the combined bed occupancy rate increase steadily to 69.1% in 1Q16. Management is installing a combined new additional 190 beds, to be completed by early 2017, as it sees continued patient demand in those two areas. Maintain BUY with a DCF-based IDR3,300 TP (10% upside).

Excellent performance in 1Q16
The average revenue/inpatient and average revenue/outpatient increased 24.5% and 9.2% YoY, respectively, in 1Q16. Total number of inpatients and outpatients also grew 5.5% and 2.2% YoY, respectively, in 1Q16. The existing OMNI hospitals in Pulomas and Alam Sutera are adding 190 beds combined, gradually, to be completed by early 2017.

Recent soft launching of third OMNI hospital
The new OMNI hospital in Cikarang is located inside the Oasis superblock on a 15,000 sqm land. In the first stage, it will operate 55 hospital beds. The new hospital would have four centres of excellence, including orthopaedic, paediatric centre, obstetrics and gynaecology, and internal medicine centres. Management expects bed occupancy rates of c.40% for the new hospital in its first year of operation.

Building the fourth OMNI hospital
Sarana Meditama Metropolitan (Sarana Meditama) fourth 250-bed OMNI hospital would be in Balikpapan (East Kalimantan area). It is located on a 6,450 sqm land with a total investment value of USD30m.

Maintain BUY
Sarana Meditama is a well-managed emerging hospital chain operator in Indonesia with a solid track of hospital management since it brought in a team of senior professional managers in 2010 for its next growth phase. Key downside risk is the overstretched management from managing just two hospitals in 2015 to four hospitals by 2017.

Recent opening of third OMNI hospital
Sarana Meditama held a soft launching ceremony event for its third hospital, Omni Hospital Cikarang, last Thursday (28 Apr). The hospital is located inside the Oasis superblock on a 15,000 sqm land. The Cikarang hospital, in the first stage, would operate 55 hospital beds. The new hospital would have four centres of excellence, including orthopaedic, paediatric centre, obstetrics and gynaecology, and internal medicine centres. The management expects bed occupancy rates of 40% for 2016 for the new hospital in Cikarang, which is likely to be supported by a total of 50 local doctor specialists, 27 outpatient rooms, 9 ICUs, and 3 operating rooms.

Located near the industrial area, the Cikarang hospital is targeted as a trauma centre for the surrounding local companies. It has partnered with several companies around the area, such as Toyota, to serve as the preferred medical provider for these companies’ employees and expatriates. Moreover, the Cikarang hospital would provide treatment for Healthcare and Social Security Agency (BPJS), National Health Insurance (JKN), and insurance participants.

The regional government sees that the recent opening of Omni Hospital Cikarang as favourable due to the high demand for hospitals in that area. Currently, there are 3.2m citizens in the Bekasi area (+336.6% increase since 2010) while there are only 1,766 beds in local hospitals available. Omni Hospital is likely to add an additional of 250 beds that would increase Bekasi’s bed capacity to more than 2,000 beds.

Company Profile
Sarana Meditama Metropolitan (SAME IJ) operates two OMNI hospitals at Pulomas and Alam Sutera. Based on SWA Magazine’s research, OMNI ranks second in SWA’s 2015 Most Reputable Healthcare Brand for hospital category in the greater Jakarta region after including criteria such as brand equity, customer experience, and customer loyalty. It is currently building its third hospital at Cikarang and planning to build the fourth one in Balikpapan.