en gs defensive qualities shine through in volatile times ihh up to buy

(1)

ASEAN: Healthcare Services: Hospitals

Equity Research

Defensive qualities shine through in times of volatility; IHH up to Buy, Sell BDMS

Still positive on private healthcare spending

Amidst the recent market volatility, we remain

positive on ASEAN healthcare services and expect

private healthcare spending in USD to post 12%

CAGR (1.5X GDP) over FY15E-20E driven by rising

income levels and needs, lifestyle changes/ageing

population and indirect support from government

healthcare funding. Despite the c.15% CAGR in

healthcare spending over the past ten years,

healthcare expenditure penetration in ASEAN

remains low at c.4% of GDP (2014).

Indo poised for higher growth, Malaysia next

We expect Indonesia to be the highest growth

(17% CAGR) market for healthcare spending given

favorable demographics and higher consumer

spending, followed by Malaysia (11%), Thailand

(8%) and Singapore (6%), over FY15E-20E.

Revising earnings estimates, target prices

We update our earnings estimates for our ASEAN

hospitals coverage reflecting 1H15 results and

changes in macro assumptions. We also revise

our target prices as we roll forward the timeframe

for our EV/GCI vs. CROCI/WACC valuation

framework to 2017E (from 2016E).

IHH up to Buy on solid growth prospects

We upgrade IHH to Buy (from Neutral), with 20%

upside, as we like its dominant position in all its

home markets and believe new ventures in HK/India

will provide fresh impetus. We forecast

revenue/EBITDA CAGR (FY15E-17E) of 17%/16% and

believe valuation at 19.6X 2016E EV/EBITDA, a 15%

discount to the sector, offers an attractive entry

point. Our revised net profit estimates are 6%-7%

above Bloomberg consensus and we believe the

market is underappreciating its growth prospects.

Retain Sell on BDMS; BH, RFMD now Neutral

We maintain Sell on Bangkok Dusit as current

valuation (21X 2016E EV/EBITDA) does not seem to

factor in a slowdown in growth of 12%/10%

revenue/EBITDA CAGR (FY15E-17E) vs. 20%/20%

(past five years). We downgrade BH to Neutral

(from Buy) and upgrade RFMD to Neutral (from

Sell) post their recent share price performances.

We also retain Neutral on Siloam, a pure Indonesia

play, as valuation remains fair despite garnering

the highest DACF CAGR of 28% (FY15E-17E). We

transfer the ASEAN hospitals coverage to Shyam

Srinivasan from Miang Chuen Koh with this note.

COVERAGE SUMMARY

Source: Datastream, Goldman Sachs Global Investment Research.

RELATED RESEARCH

IHH: Underappreciated growth prospects, valuations attractive; up to Buy, September 18, 2015

Shyam Srinivasan, CFA

+91(22)6616-9346 [email protected] Goldman Sachs India SPL

Goldman Sachs does and seeks to do business with companies

covered in its research reports. As a result, investors should be aware

that the firm may have a conflict of interest that could affect the

objectivity of this report. Investors should consider this report as only a

single factor in making their investment decision. For Reg AC

certification and other important disclosures, see the Disclosure

Appendix, or go to www.gs.com/research/hedge.html. Analysts

employed by non-US affiliates are not registered/qualified as research

Miang Chuen Koh, CFA

+65-6889-2465 [email protected] Goldman Sachs (Singapore) Pte

Wieta Anton Honoris

Arthur Khoo

New Old New Old

IHHH.KL RM 5.84 Buy Neutral 7.00 5.15 20% SILO.JK Rp 13,600 Neutral Neutral 14,600 15,100 7% RAFG.SI S$ 4.51 Neutral Sell 4.76 3.75 6% BH.BK Bt 235.0 Neutral Buy 237 170 1% BDMS.BK Bt 19.30 Sell Sell 17.70 17.20 -8%

(2)

Positive on private healthcare spending in ASEAN; IHH up to Buy

Despite the c.15% CAGR in overall healthcare spending over the past 10 years, healthcare penetration in ASEAN-4 (i.e., Singapore,

Malaysia, Indonesia and Thailand) remains low at 3.9% of GDP (2014), still significantly below that of developed economies. We

remain positive on healthcare services in ASEAN and expect private healthcare spending in USD to register a 12% CAGR, at 1.5X

GDP, over FY15E-20E driven by rising income levels and needs, lifestyle changes/ageing population and indirect support from

government healthcare funding.

We update our estimates post 1H15 results and now that we are closer to year-end 2015, we also roll forward our valuation

timeframe to 2017E (from 2016E) because: i) we traditionally have been using the two-year forward Director’s Cut (EV/GCI vs.

CROCI/WACC) methodology, as it produces the highest alpha based on our back-testing analysis, and ii) 2017 factors in significant

new assets for IHH Healthcare (IHH)/Raffles Medical (RFMD)/Bumrungrad Hospital (BH) which are coming online.

We

upgrade IHH to Buy

(from Neutral), with a 20% upside potential, as we like its dominant position in all its home markets and

believe its new ventures in Hong Kong/India will provide fresh impetus. We forecast revenue/EBITDA CAGR (FY15E-17E) of 17%/16%

and believe current valuation at 2016E EV/EBITDA of 19.6X, a 15% discount to the sector average, offers an attractive entry point. We

downgrade BH to Neutral

(from Buy) and

upgrade RFMD to Neutral

(from Sell) post their recent share price performances. We

retain Neutral on Siloam International Hospitals (SILO), a pure Indo play, as valuation remains fair. We also retain Sell on Bangkok

Dusit (BDMS) as current valuation does not seem to factor in a slowdown in growth going forward.

Exhibit 2:

We expect private healthcare spending to post 12% CAGR (1.5X

GDP) through 2020E

ASEAN: Private healthcare spending (US$ bn)

Exhibit 3:

2017E Director’s Cut suggests IHH is relatively undervalued

Director’s Cut: EV/GCI vs. CROCI/WACC (2017E)

Source: Euromonitor, Goldman Sachs Global Investment Research. Source: Goldman Sachs Global Investment Research.

4

9

12

2

6

9

2

5

7

5

17

37

0

10

20

30

40

50

60

70 2005

2015E

2020E

Singapore

Malaysia

Thailand

Indonesia

US$

bn

2004-14/2015E-20E CAGR

Singapore: 13%/6%

Malaysia: 11%/11%

Thailand: 7%/8%

Indonesia: 16%/17%

ASEAN-4: 13%/12%

y = 1.65x

R² = 0.80

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

0.8

1.3

1.8

2.3

2.8

3.3

3.8

201 7E EV

/G

C

I

2017E CROCI/WACC (x)

BDMS Sell

BH

RFMD

IHH Buy

(4)

We see Indonesia as the most attractive healthcare market in ASEAN, followed by Malaysia…

Indonesia:

We are constructive on the Indonesian healthcare market and expect spending to register a 17% CAGR (FY15E-20E), on

par with the momentum recorded over the past 10 years. We believe cyclical pickup in economic activity and higher consumer

spending will be the key growth drivers going forward coupled with the structural demographic/lifestyle changes. Indonesia’s BPJS

(Badan Penyelenggara Jaminan Sosial, a universal healthcare coverage launched in 2014) continues to gain traction – it now covers

about c.150mn people or about 60%, up from the 45% level in January 2014. The government continues to expect 100% coverage to

be achieved by 2019; this coupled with the coordination of benefit arrangements (i.e., private insurers devising products to enhance

the basis BPJS coverage, could lead to a moderation in growth for the private sector going forward.

Malaysia:

We are buoyant about the Malaysian healthcare market and expect spending to grow at an 11% CAGR (FY15E-20E) – a

pace which is slower than that of the past five years (FY10-14) but in line with trends seen over a 10-year period. Although the

economy is witnessing a slowdown in oil revenues from low oil prices (Malaysia is a net oil exporter), growth in consumer spending

despite the GST impact (rolled out in April 2015) remains the highest in the region. Further, a falling MYR (20% depreciation YTD),

may result in Malaysia gaining a price advantage over Singapore for medical tourism purposes.

Exhibit 4:

Our Global Macro team forecasts Indonesia to witness the fastest

GDP growth in ASEAN

Key macro, demographic indicators

Exhibit 5:

Malaysia consumer spending growth to remain high in the region,

as per our Global Macro team

Source: CEIC, Euromonitor, Goldman Sachs Global Investment Research. Source: CEIC, Euromonitor, Goldman Sachs Global Investment Research.

5.9%

5.2%

2.6% 3.1%

4.9% 4.9%

2.1%

3.6%

5.5% 5.6%

2.3%

3.1%

0% 1% 2% 3% 4% 5% 6% 7%

Real GDP growth Consumer

spending growth

Population aged > 65, CAGR

Obese/overweight population, CAGR

Indonesia

2011-14 2015E 2016E-17E

5.4%

7.3%

4.9%

2.5% 4.9%

6.6%

5.2%

2.2% 4.8%

6.0%

4.9%

2.3%

0% 1% 2% 3% 4% 5% 6% 7% 8%

spending growth

Malaysia

(5)

…and expect Thailand to see a rebound, but Singapore to witness a deceleration in spending

Thailand:

We forecast Thailand private healthcare spending to improve to 8% CAGR (FY15E-20E) vs. 5% CAGR over the past five

years, as the Thai economy rebounds from 2014 levels leading to an improvement in consumer spending. We also believe that

public healthcare expenditure under the military government will likely be below historical levels leaving the private hospitals to fill

up the void. We expect the rebound in tourism (tourist arrivals YTD are up 30+% yoy) despite the August bombing to sustain over

the next few years aided by a combination of a weaker Baht vs. the S$ (key medical tourism competitor) as well as lower oil prices

which generally reduce air travel costs.

Singapore:

We expect Singapore private healthcare spending to decelerate to c.6% CAGR (FY15E-20E) vs. 12% CAGR over

2010-2014. Despite a favourable demographic trend that supports overall healthcare spending, the government’s new plans (Pioneer

generation package launched in September 2014 and Medishield Life to be launched in late 2015) could disproportionately increase

healthcare consumption in government hospitals vs. private ones. On the medical tourism front, we have seen sluggish tourist

arrivals into Singapore (flat YTD growth) with medical tourists from Indonesia shying away from Singapore hospitals given the

weak IDR and consuming healthcare either locally or in Malaysia.

Exhibit 6:

Thailand’s economy is on a slow path to recovery, as per our

Global Macro team

Exhibit 7:

Singapore to show highest growth in aged and obese/overweight

population, as per Euromonitor

Source: CEIC, Euromonitor, Goldman Sachs Global Investment Research. Source: CEIC, Euromonitor, Goldman Sachs Global Investment Research.

2.6% 2.9%

4.1%

1.9% 2.8%

2.0%

4.2%

1.9%

3.1% 3.2%

4.2%

1.4%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5%

spending growth

Thailand

2011-14 2015E 2016E-17E

3.9% 3.9%

7.0%

4.0%

2.2%

3.5%

6.2%

3.1% 2.7%

3.6%

6.4%

2.7%

0% 1% 2% 3% 4% 5% 6% 7% 8%

spending growth

Singapore

(6)

Four key charts: MYR and inflation have been on the move

Exhibit 8:

After a summer rally, crude has declined

Brent crude (US$)

Exhibit 9:

Thai tourist arrivals have been robust; Singapore sluggish

Asian tourist arrivals growth: Thailand, Singapore

Source: Bloomberg. Source: Thailand Department of Tourism, Singapore Tourism Board.

Exhibit 10:

Ringgit has depreciated by c.20% YTD followed by IDR (14%)

YTD change in Yuan and ASEAN currencies

Exhibit 11:

Malaysia has inflation pick up while Thai data has been benign

Headline inflation: ASEAN region

Source: Bloomberg. Source: CEIC, Goldman Sachs Global Investment Research.

57.3

Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15

25%

Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15

Thailand - Asian tourist growth (yoy) Singapore - Asian tourist growth (yoy)

CNY, -2.6%

Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Yuan, ASEAN currencies change (YTD)

CNY THB MYR SGD IDR

Indonesia, 7.2%

(7)

Updating estimates post 1H15 results and recent macro revisions

We update net profit estimates for our ASEAN hospitals coverage (-56% to +23%) post 1H15 results based on operating trends as

well as incorporating the latest macro expectations as our Global Macro Research team has reduced their GDP forecasts for the

region given the deceleration in China growth (see

China’s bumpy deceleration continues, pulling region along for the ride

, dated

August 31, 2015).

We raise BH estimates on the back of better-than-expected revenue intensity that was reported in 1H15 as International patients

came back strong. Thai tourist arrivals (+30% YTD) are a strong leading indicator for medical tourism revenues (66% of 2014

revenues) for BH. Further, we factor in higher margins as BH continues to focus on keeping costs under control. Separately, we raise

our estimates for IHH on better-than-expected revenue trends in 1H15 and upgrade the stock to Buy (see

IHH Healthcare Bhd

(IHHH.KL) Buy: Underappreciated growth prospects, valuations attractive; up to Buy

, dated September 18, 2015). We cut our

estimates for SILO by 1% to 56% to factor in lower guidance on three key mature hospitals as well as lackluster growth at its flagship

Lippo Village Hospital. Finally on BDMS, we cut our estimates given the soft Thai economy as well as pressure on margins from the

significant number of new hospitals. Our estimates on RFMD are unchanged.

Exhibit 12:

We raise our estimates for IHH and BH, but lower our estimates for SILO and BDMS

Summary of changes

Source: Bloomberg, Goldman Sachs Global Investment Research.

2015E

2016E

2017E

2015E

2016E

2017E

2015E

2016E

2017E

Revenue

BH

Baht mn

18,476

21,338

24,079

2%

5%

7%

2%

5%

BDMS

Baht mn

61,594

69,332

77,472

-2%

-3%

-5%

-1%

-2%

SILO

Rp bn

4,281

5,345

6,423

0%

-3%

-7%

-3%

-9%

-17%

IHH

RM mn

8,614

9,892

11,730

1%

2%

4%

0%

1%

4%

RFMD

S$ mn

414

462

530 0%

0%

-2%

-3%

EBITDA

BH

Baht mn

5,752

6,902

7,914

2%

6%

9%

3%

7%

8%

BDMS

Baht mn

13,528

15,033

16,516

-6%

-8%

-3%

-5%

-9%

SILO

Rp bn

569

759

929 0%

-6%

-14%

-5%

-8%

-19%

IHH

RM mn

2,241

2,627

3,018

2%

3%

7%

1%

2%

3%

RFMD

S$ mn

99

112

135 0%

0%

3%

-1%

0%

Net profit

BH

Baht mn

3,731

4,652

5,436

3%

7%

10%

3%

11%

12%

BDMS

Baht mn

7,766

8,945

10,133

-8%

-9%

-11%

-5%

-6%

-11%

SILO

Rp bn

87

100

117 -1%

-30%

-56%

-13%

-35%

-55%

IHH

RM mn

994 1,230

1,469

2%

5%

23%

6%

7%

6%

RFMD

S$ mn

73

80

89 0%

0%

1%

-4%

-9%

(8)

Roll forward to 2017: Two-year forward Director’s Cut valuation methodology

We also roll forward our valuation timeframe to 2017E (from 2016E) as: i) we have been using two-year forward Director’s Cut given

superior back-testing results, and ii) 2017 factors in key new assets for IHH (Gleneagles HK)/RFMD (Holland Village/Raffles

extension)/BH (Petchburi) that are coming online.

On a sector relative framework, SILO ranks the best on DACF growth given its significant exposure to the Indonesian market, but its

CROCI lies in the middle of the pack and valuations remain fair. BH ranks the best on CROCI and DACF growth is Q2, but valuations

have rerated significantly leading to limited upside potential and consequently a Neutral rating. IHH is the preferred stock idea in our

coverage universe given Q2 DACF growth/Q4 CROCI but valuations are at a significant discount to the sector. We continue to rate

BDMS a Sell given that it scores Q4 on DACF growth and Q4 on CROCI profile. Lastly, RFMD ranks in the middle of the pack on

CROCI and Q3 on DACF growth given its exposure to a slow but stable healthcare market in Singapore. Current valuations are close

to fair post its recent underperformance which prompts us to upgrade the stock to Neutral from Sell.

Exhibit 13:

Director’s Cut suggests IHH is relatively undervalued

Director’s Cut: EV/GCI vs. CROCI/WACC (2017E)

Exhibit 14:

SILO growing the fastest, IHH next; BH has best returns

DACF CAGR, Average CROCI (2015E-17E)

Source: Datastream, Goldman Sachs Global Investment Research. Source: Goldman Sachs Global Investment Research.

y = 1.65x

R² = 0.80

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

0.8

1.3

1.8

2.3

2.8

3.3

3.8

20 17E

E

V

/GC

I

2017E CROCI/WACC (x)

BDMS Sell

BH

RFMD

IHH Buy

SILO

28%

17%

12%

6%

14%

9%

25%

15%

10%

0%

5%

10%

15%

20%

25%

30%

SILO

IHH

BH

RFMD

BDMS

(9)

Exhibit 15:

Our 12-month target price derivations

Note: For GCI, implied EV, net debt and MI, and implied market cap, the currency unit is mn for all stocks, except for Siloam, which is in bn. We apply a 20% premium (unchanged) to BH valuations due to its first quartile CROCI status.

Source: Company data, Datastream, Goldman Sachs Global Investment Research.

Exhibit 16:

Valuation summary

Source: Datastream, Company data, Goldman Sachs Global Investment Research.

2017E

Bumrungrad

Bangkok Dusit

IHH

Raffles Medical

Siloam

Sector EV/GCI vs. CROCI/WACC (X)

1.65

1.65 Premium / (discount) applied (%)

20%

0%

CROCI/WACC (X)

3.1

1.3

2.1

1.6 Implied EV/GCI (X)

6.7

2.2

2.1

3.5

2.4 GCI

30,710

138,438

28,543

735 7,814

Implied EV

205,391

301,155

59,721

2,606

18,465

Net debt and MI

1,734

26,768

2,606

-75

1,599

Implied market cap

203,658

274,386

57,115

2,681

16,866

Number of shares (mn)

867 15,491

8,193

566 1,156

Currency

Baht

RM

S$

Rp

Target price

237

17.7

7.00

4.76 14,600

Current price

235

19.3

5.84

4.51 13,600

Upside/downside to target price

1%

-8%

20%

6%

7%

Rating

Neutral

Sell

Buy

Neutral

Implied 2016 EV/EBITDA (X)

29.8X

20.0X

22.7X

23.2X

24.3X

Implied 2017 EV/EBITDA (X)

26.0X

18.2X

19.8X

19.4X

19.9X

Historical +/- 1 STD

13X - 20X

18X - 23X

19X - 23X

17X - 23X

26X - 33X

15E 16E 17E 15E 16E 17E 15E 16E 17E 15E 16E 17E Sales EBITDA EPS Siloam International SILO.JK Neutral 1,088 Rp 13,600 29.0 22.5 18.6 179.9 157.8 134.5 14% 14% 13% 5% 6% 6% 22% 28% 16%

Indonesia Average 29.0 22.5 18.6 179.9 157.8 134.5 14% 14% 13% 5% 6% 6% 22% 28% 16%

IHH Healthcare Bhd IHHH.KL Buy 11,027 RM 5.84 22.9 19.4 16.6 48.0 38.8 32.5 8% 9% 10% 5% 5% 6% 17% 16% 22%

Malaysia Average 22.9 19.4 16.6 48.0 38.8 32.5 8% 9% 10% 5% 5% 6% 17% 16% 22%

Bumrungrad Hospital BH.BK Neutral 4,752 Bt 235.0 29.5 24.8 21.9 45.9 36.8 31.5 26% 26% 24% 30% 32% 31% 14% 17% 21% Bangkok Dusit BDMS.BK Sell 8,298 Bt 19.30 24.3 21.8 19.7 38.5 33.4 29.5 10% 10% 11% 15% 16% 16% 12% 10% 14%

Thailand Average 26.9 23.3 20.8 42.2 35.1 30.5 18% 18% 17% 23% 24% 24% 13% 14% 17%

Raffles Medical RAFG.SI Neutral 1,821 S$ 4.51 25.2 22.6 18.3 34.6 31.5 28.2 16% 14% 16% 13% 13% 14% 13% 17% 11%

Singapore Average 25.2 22.6 18.3 34.6 31.5 28.2 16% 14% 16% 13% 13% 14% 13% 17% 11%

ASEAN Average 26.2 22.2 19.0 69.4 59.7 51.2 15% 15% 15% 14% 14% 15% 16% 18% 17%

2015E-2017E CAGR Company name Ticker Rating

Market cap (US$mn)

Price as of 16-Sep-2014

(10)

Bumrungrad Hospital (BH.BK): Down to Neutral post share price outperformance

What happened

We downgrade Bumrungrad Hospital, Thailand’s leading premium hospital, to Neutral from Buy given its solid

share price outperformance: since we added the stock to our Buy list on January 15, 2015, it has risen 69% vs. the

SET Index’s -9%.

Current view

We raise our 2015-16 EPS estimates by 3%-7% based on: 1) steady recovery in economic growth in 2015E-16E, 2)

improving 2015E tourist arrivals (+30% YTD), and 3) 2Q15 results that demonstrated strong revenue intensity and

margin expansion on the back of cost control measures. For 2015E-17E, we are 3%-8% above Bloomberg

consensus estimates on EBITDA and 3%-12% above on EPS. We now expect 2015E-17E EPS CAGR of 21% (vs.

18% over 2010-14) and an improvement in average CROCI to 25% (vs. 20.7% over 2009-14).

Valuations:

We adopt the Director’s Cut (EV/GCI vs. CROCI/WACC) valuation methodology to derive our target

price. We roll forward our valuation timeframe to 2017E (from 2016E) and apply an unchanged 20% premium

given BH’s first quartile CROCI status. We mark to market our sector cash return multiple to 1.65X (1.53X prior),

as ASEAN hospital valuations continue to re-rate. Our 12-month target price rises to Bt237 (from Bt170) as a

result of our earnings estimate revisions and the valuation roll forward. Our new target price implies a 2016E/17E

EV/EBITDA of 30X/26X (+/-1 std since 2006: 13X-20X) and P/E of 44X/38X (+/-1 std since 2006: 20X-32X). While

these multiples appear high vs. the sector average, we believe they are justified given BH’s strong 2015E-17E

CROCI.

Key upside/downside risks:

(1) Better-/weaker- than-expected macro growth and tourism recovery, (2)

lower-/higher-than-expected competition, and (3) better-/weaker- than-expected cost control.

Growth

Returns *

Multiple

Volatility Volatility

Multiple Returns * Growth

Investment Profile

Low High

Percentile 20th 40th 60th 80th 100th

* Returns = Return on Capital For a complete description of the investment profile measures please refer to the disclosure section of this document. Bumrungrad Hospital (BH.BK)

Asia Pacific Consumer Peer Group Average

Key data Current

Price (Bt) 235.00

12 month price target (Bt) 237.00

Market cap (Bt mn / US$ mn) 171,219.4 / 4,756.0

Foreign ownership (%)

--12/14 12/15E 12/16E 12/17E

EPS (Bt) 3.68 5.12 6.39 7.46

EPS growth (%) 8.8 39.1 24.7 16.8

EPS (diluted) (Bt) 3.09 4.30 5.36 6.27

EPS (basic pre-ex) (Bt) 3.74 5.12 6.39 7.46

P/E (X) 31.2 45.9 36.8 31.5

P/B (X) 8.1 13.7 11.4 9.6

EV/EBITDA (X) 18.5 29.5 24.8 21.9

Dividend yield (%) 1.7 1.1 1.4 1.7

ROE (%) 26.2 31.2 32.6 32.0

CROCI (%) 25.3 25.8 25.6 23.6

1,300 1,350 1,400 1,450 1,500 1,550 1,600 1,650

120 140 160 180 200 220 240 260

Sep-14 Dec-14 Mar-15 Jul-15 Price performance chart

Bumrungrad Hospital (L) Bangkok S.E.T. - Price Index (R)

Share price performance (%) 3 month 6 month 12 month

Absolute 29.5 64.3 85.8

Rel. to Bangkok S.E.T. - Price Index 40.9 80.2 110.5

(11)

Bumrungrad Hospital: Summary financials

Profit model (Bt mn) 12/14 12/15E 12/16E 12/17E Balance sheet (Bt mn) 12/14 12/15E 12/16E 12/17E

Total revenue 15,571.5 18,476.0 21,338.1 24,079.0 Cash & equivalents 6,597.7 6,951.5 5,862.3 3,814.2

Cost of goods sold (9,495.6) (10,632.2) (11,859.9) (13,125.1) Accounts receivable 1,525.2 1,855.9 2,196.7 2,539.1

SG&A (2,805.9) (3,329.3) (3,845.0) (4,338.9) Inventory 291.9 369.5 426.8 481.6

R&D -- -- -- -- Other current assets 84.6 84.6 84.6 84.6

Other operating profit/(expense) 155.0 183.9 212.4 239.7 Total current assets 8,499.4 9,261.5 8,570.4 6,919.5

EBITDA 4,469.7 5,752.2 6,902.0 7,913.9 Net PP&E 9,948.4 11,497.5 14,874.6 19,547.7

Depreciation & amortization (1,044.8) (1,053.7) (1,056.4) (1,059.1) Net intangibles 258.3 242.5 224.0 202.8

EBIT 3,425.0 4,698.5 5,845.5 6,854.7 Total investments 234.9 239.9 244.9 249.9

Interest income 137.8 155.2 163.5 137.9 Other long-term assets 203.7 203.7 203.7 203.7

Interest expense (186.0) (186.1) (186.1) (186.1) Total assets 19,144.7 21,445.1 24,117.6 27,123.5

Income/(loss) from uncons. subs. (2.7) 5.0 5.0 5.0

Others 46.3 0.0 0.0 0.0 Accounts payable 860.2 1,033.3 1,161.9 1,291.8

Pretax profits 3,420.3 4,672.5 5,827.9 6,811.5 Short-term debt 0.0 0.0 0.0 0.0

Income tax (685.4) (933.5) (1,164.6) (1,361.3) Other current liabilities 1,465.8 1,465.8 1,465.8 1,465.8

Minorities (4.5) (5.0) (7.4) (10.3) Total current liabilities 2,326.0 2,499.1 2,627.7 2,757.6

Long-term debt 5,148.4 5,148.4 5,148.4 5,148.4

Net income pre-preferred dividends 2,730.3 3,734.0 4,656.0 5,439.9 Other long-term liabilities 410.3 410.3 410.3 410.3

Preferred dividends (2.8) (3.3) (3.8) (4.3) Total long-term liabilities 5,558.7 5,558.7 5,558.7 5,558.7

Net income (pre-exceptionals) 2,727.5 3,730.6 4,652.1 5,435.5 Total liabilities 7,884.7 8,057.8 8,186.4 8,316.3

Post-tax exceptionals (46.3) 0.0 0.0 0.0

Net income 2,681.2 3,730.6 4,652.1 5,435.5 Preferred shares 1.5 1.5 1.5 1.5 Total common equity 10,881.8 13,004.1 15,540.5 18,406.3

EPS (basic, pre-except) (Bt) 3.74 5.12 6.39 7.46 Minority interest 376.7 381.8 389.2 399.4

EPS (basic, post-except) (Bt) 3.68 5.12 6.39 7.46

EPS (diluted, post-except) (Bt) 3.09 4.30 5.36 6.27 Total liabilities & equity 19,144.7 21,445.1 24,117.6 27,123.5

DPS (Bt) 1.95 2.67 3.33 3.89

Dividend payout ratio (%) 53.0 52.1 52.1 52.1 BVPS (Bt) 14.18 17.09 20.57 24.51

Free cash flow yield (%) 2.7 1.1 0.6 0.3

Growth & margins (%) 12/14 12/15E 12/16E 12/17E Ratios 12/14 12/15E 12/16E 12/17E

Sales growth 9.3 18.7 15.5 12.8 CROCI (%) 25.3 25.8 25.6 23.6

EBITDA growth 12.8 28.7 20.0 14.7 ROE (%) 26.2 31.2 32.6 32.0

EBIT growth 11.2 37.2 24.4 17.3 ROA (%) 14.7 18.4 20.4 21.2

Net income growth 8.8 39.1 24.7 16.8 ROACE (%) 29.6 35.2 34.9 31.0

EPS growth 8.8 39.1 24.7 16.8 Inventory days 11.5 11.4 12.3 12.6

Gross margin 39.0 42.5 44.4 45.5 Receivables days 33.2 33.4 34.7 35.9

EBITDA margin 28.7 31.1 32.3 32.9 Payable days 33.0 32.5 33.8 34.1

EBIT margin 22.0 25.4 27.4 28.5 Net debt/equity (%) (12.9) (13.5) (4.5) 7.1

Interest cover - EBIT (X) 71.0 151.9 258.5 142.1

Cash flow statement (Bt mn) 12/14 12/15E 12/16E 12/17E Valuation 12/14 12/15E 12/16E 12/17E

Net income pre-preferred dividends 2,730.3 3,734.0 4,656.0 5,439.9

D&A add-back 1,044.8 1,053.7 1,056.4 1,059.1 P/E (analyst) (X) 31.2 45.9 36.8 31.5

Minorities interests add-back 4.5 5.0 7.4 10.3 P/B (X) 8.1 13.7 11.4 9.6

Net (inc)/dec working capital (204.2) (235.2) (269.5) (267.3) EV/EBITDA (X) 18.5 29.5 24.8 21.9

Other operating cash flow 315.0 (5.0) (5.0) (5.0) EV/GCI (X) 4.8 8.5 6.9 5.6

Cash flow from operations 3,890.3 4,552.5 5,445.3 6,237.0 Dividend yield (%) 1.7 1.1 1.4 1.7

Capital expenditures (1,607.9) (2,587.0) (4,415.0) (5,711.0)

Acquisitions (85.7) 0.0 0.0 0.0

Divestitures 0.0 0.0 0.0 0.0

Others 141.7 0.0 0.0 0.0

Cash flow from investments (1,551.9) (2,587.0) (4,415.0) (5,711.0)

Dividends paid (common & pref) (1,385.2) (1,611.7) (2,119.5) (2,574.2)

Inc/(dec) in debt (176.6) 0.0 0.0 0.0

Common stock issuance (repurchase) 0.0 0.0 0.0 0.0

Other financing cash flows (36.1) 0.0 0.0 0.0

Cash flow from financing (1,597.9) (1,611.7) (2,119.5) (2,574.2)

Total cash flow 740.5 353.8 (1,089.2) (2,048.2) Note: Last actual year may include reported and estimated data.

(12)

Exhibit 17:

We expect solid revenue/EBITDA growth going forward…

Revenue, EBITDA trajectory

Exhibit 18:

…but valuations have expanded significantly

1-year forward: EV/EBITDA vs. EBITDA growth

Source: Company data, Goldman Sachs Global Investment Research. Source: Company data, Datastream, Goldman Sachs Global Investment Research.

Exhibit 19:

BH’s target price rises by 39% predominantly due to higher GCI

12-month target price change

Exhibit 20:

Petchburi project adds up to 9% of NAV for BH

BH: NAV calculation

Source: Goldman Sachs Global Investment Research. Source: Datastream, Company data, Goldman Sachs Global Investment Research.

0

2015E 2016E 2017E 2018E 2019E 2020E

Baht mn Baht mn

Revenue EBITDA - RHS

2010-2014 Rev. CAGR = 12% EBITDA CAGR = 17%

2015E-2020E Rev. CAGR = 14% EBITDA CAGR = 17%

0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

EBITDA growth (%) EV/EBITDA Average +1 Std dev -1 Std dev EV/EBITDA (x)

Average = 13X

-1std = 9.3X +1std = 16.6X

EBITDA growth (%)

Bumrungrad - Change in target price

Old TP New TP Change

Sector EV/GCI vs. CROCI/WACC (X) 1.5 1.7 11%

Premium / (discount) applied (%) 20% 20% 0%

BH 2016E Old 2017E New

CROCI (%) 26% 24% -7%

WACC (%) 7.5% 7.5% 0%

Implied EV/GCI (X) 6.4 6.7 5%

BH (Bt mn) 2016E Old 2017E New

GCI 22,747 30,710 35%

EV = GCI X Implied EV/GCI (X) 145,076 204,755 41%

Net debt and Minority interest -2,213 -500 -77%

Implied market cap 147,289 205,255 39%

Number of shares (mn) 866 866 0%

Target price (Bt) 170 237 39%

NAV calculation (mn baht)

2017E

% total

Exisiting BH Hospital

212,726

89%

Petchburi

21,932

9%

UBSD

1,133

0%

Net cash / (debt)

2,366

1%

Total Equity value

238,157

100%

# shares (mn) - diluted

867 NAV per share (Baht)

275 GS 12-m TP (Baht)

237 TP discount to NAV (%)

-14%

Current price

235

(13)

Raffles Medical (RAFG.SI): Upgrade to Neutral on more balanced risk-reward

What happened

RFMD’s share price has underperformed over the past 3M/YTD vs. peers: RFMD is up 1%/23% vs. the sector up

4%/40% given the slow growth that the company is reporting. As risk-reward now appears more balanced, we

upgrade the stock to Neutral (from Sell), with our revised target price indicating 6% upside potential. Since we

added the stock to our Sell list on June 5, 2014, it has risen 23% vs. the STI down 12%, as optimism over China

opportunities for RFMD took center stage, in our view.

Current view

We see a positive long-term growth outlook for RFMD on the back of its new Singapore projects – Holland Village

Medical Centre (2016E) and new hospital extension which we expect to be operational in 2017. Furthermore, we

believe RFMD has the potential to transform into a strong regional competitor given it is currently in the process

of finalizing two hospital investments in China (one in Shenzhen and one in Shanghai).

That said, we expect: (1) private healthcare spending growth to slow (+3.3% CAGR over 2016E-17E, but much

lower vs. the 12% CAGR over 2009-14) as the Singapore government has rolled out new plans (Pioneer

Generation Package and Medishield Life), which are likely to disproportionally increase healthcare consumption

in government hospitals/facilities instead, and (2) valuations appear to be pricing in the positives outlined above –

2016E/17E EV/EBITDA multiples of 22X/18X vs. the ASEAN sector average of 23X/20X.

Valuations:

We adopt the Director’s Cut (EV/GCI vs. CROCI/WACC) methodology to value RFMD. We mark to

market the sector cash return multiple (val ratio) to 1.65X (from 1.53X), and roll forward the valuation timeframe

to 2017E (from 2016E). Accordingly, we raise our 12-month target price to S$4.76 (from S$3.75), implying

2016E/17E EV/EBITDA of 23X/19X, which is at the higher end of the historical range (+/-1 std since 2006: 17X-23X).

Key upside/downside risks:

(1) Better-/worse-than-expected execution/results, and (2) value accretive/dilutive

hospitals acquisitions.

Percentile 20th 40th 60th 80th 100th

* Returns = Return on Capital For a complete description of the investment profile measures please refer to the disclosure section of this document. Raffles Medical (RAFG.SI)

Asia Pacific Consumer Peer Group Average

Key data Current

Price (S$) 4.51

12 month price target (S$) 4.76

Market cap (S$ mn / US$ mn) 2,544.4 / 1,813.3

Foreign ownership (%)

--12/14 12/15E 12/16E 12/17E

EPS (S$) 0.12 0.13 0.14 0.16

EPS growth (%) 3.1 7.9 9.6 11.7

EPS (diluted) (S$) 0.12 0.13 0.14 0.16

EPS (basic pre-ex) (S$) 0.12 0.13 0.14 0.16

P/E (X) 30.2 34.6 31.5 28.2

P/B (X) 3.8 4.4 4.1 3.7

EV/EBITDA (X) 21.1 24.9 22.4 18.2

Dividend yield (%) 1.5 1.3 1.4 1.6

ROE (%) 13.4 13.0 13.2 13.7

Sep-14 Dec-14 Mar-15 Jul-15 Price performance chart

Raffles Medical (L) FTSE Straits Times Index (R)

Share price performance (%) 3 month 6 month 12 month

Absolute 2.3 15.9 13.6

Rel. to FTSE Straits Times Index 19.6 37.2 32.4

(14)

Raffles Medical: Summary financials

Profit model (S$ mn) 12/14 12/15E 12/16E 12/17E Balance sheet (S$ mn) 12/14 12/15E 12/16E 12/17E

Total revenue 374.6 413.9 462.4 529.7 Cash & equivalents 150.2 135.0 146.1 158.8

Cost of goods sold (83.8) (91.8) (103.7) (111.0) Accounts receivable 37.0 42.9 50.2 60.2

SG&A (190.7) (212.4) (237.2) (282.3) Inventory 8.5 12.4 13.9 15.9

R&D -- -- -- -- Other current assets 0.0 0.0 0.0 0.0

Other operating profit/(expense) (19.8) (22.4) (25.0) (28.6) Total current assets 195.7 190.3 210.2 234.9

EBITDA 90.0 99.1 112.2 134.7 Net PP&E 228.2 359.1 446.3 439.4

Depreciation & amortization (9.6) (11.6) (15.6) (26.9) Net intangibles 0.2 0.2 0.2 0.2

EBIT 80.3 87.4 96.5 107.7 Total investments 0.0 0.0 0.0 0.0

Interest income 1.0 0.8 0.7 0.7 Other long-term assets 231.0 231.0 231.0 231.0

Interest expense (0.1) (0.4) (1.1) (1.1) Total assets 655.0 780.5 887.7 905.4

Income/(loss) from uncons. subs. 0.0 0.0 0.0 0.0

Others 0.0 0.0 0.0 0.0 Accounts payable 74.5 82.6 92.6 106.8

Pretax profits 81.3 87.7 96.2 107.4 Short-term debt 6.4 81.4 131.4 81.4

Income tax (13.3) (14.4) (15.8) (17.6) Other current liabilities 24.0 24.0 24.0 24.0

Minorities (0.3) (0.3) (0.4) (0.4) Total current liabilities 104.9 188.0 248.0 212.2

Long-term debt 0.0 0.0 0.0 0.0

Net income pre-preferred dividends 67.6 73.0 80.0 89.4 Other long-term liabilities 9.9 9.9 9.9 9.9

Preferred dividends 0.0 0.0 0.0 0.0 Total long-term liabilities 9.9 9.9 9.9 9.9

Net income (pre-exceptionals) 67.6 73.0 80.0 89.4 Total liabilities 114.8 197.9 257.9 222.1

Post-tax exceptionals 0.0 0.0 0.0 0.0

Net income 67.6 73.0 80.0 89.4 Preferred shares 0.0 0.0 0.0 0.0

Total common equity 538.8 580.8 627.7 680.7

EPS (basic, pre-except) (S$) 0.12 0.13 0.14 0.16 Minority interest 1.5 1.8 2.2 2.6

EPS (basic, post-except) (S$) 0.12 0.13 0.14 0.16

EPS (diluted, post-except) (S$) 0.12 0.13 0.14 0.16 Total liabilities & equity 655.0 780.5 887.7 905.4

DPS (S$) 0.06 0.06 0.06 0.07

Dividend payout ratio (%) 45.5 45.0 45.0 45.0 BVPS (S$) 0.96 1.03 1.11 1.21

Free cash flow yield (%) (5.6) (2.3) (0.2) 3.9

Growth & margins (%) 12/14 12/15E 12/16E 12/17E Ratios 12/14 12/15E 12/16E 12/17E

Sales growth 9.9 10.5 11.7 14.5 CROCI (%) 22.4 15.6 14.5 16.1

EBITDA growth 9.4 10.1 13.3 20.1 ROE (%) 13.4 13.0 13.2 13.7

EBIT growth 8.6 8.8 10.5 11.6 ROA (%) 11.0 10.2 9.6 10.0

Net income growth 4.9 7.9 9.6 11.7 ROACE (%) 22.1 15.8 14.1 14.8

EPS growth 3.1 7.9 9.6 11.7 Inventory days 38.3 41.6 46.3 48.9

Gross margin 77.6 77.8 77.6 79.0 Receivables days 39.5 35.2 36.8 38.0

EBITDA margin 24.0 23.9 24.3 25.4 Payable days 320.3 312.3 308.4 327.8

EBIT margin 21.4 21.1 20.9 20.3 Net debt/equity (%) (26.6) (9.2) (2.3) (11.3)

Interest cover - EBIT (X) NM NM 248.1 323.3

Cash flow statement (S$ mn) 12/14 12/15E 12/16E 12/17E Valuation 12/14 12/15E 12/16E 12/17E

Net income pre-preferred dividends 67.6 73.0 80.0 89.4

D&A add-back 9.6 11.6 15.6 26.9 P/E (analyst) (X) 30.2 34.6 31.5 28.2

Minorities interests add-back 0.3 0.3 0.4 0.4 P/B (X) 3.8 4.4 4.1 3.7

Net (inc)/dec working capital 9.6 (1.7) 1.2 2.2 EV/EBITDA (X) 21.1 24.9 22.4 18.2

Other operating cash flow 6.2 0.0 0.0 0.0 EV/GCI (X) 4.0 4.0 3.5 3.3

Cash flow from operations 93.5 83.3 97.2 119.0 Dividend yield (%) 1.5 1.3 1.4 1.6

Capital expenditures (207.1) (142.5) (102.9) (20.0)

Acquisitions 0.0 0.0 0.0 0.0

Divestitures 0.0 0.0 0.0 0.0

Others 1.1 0.0 0.0 0.0

Cash flow from investments (206.0) (142.5) (102.9) (20.0)

Dividends paid (common & pref) (12.6) (31.0) (33.1) (36.3)

Inc/(dec) in debt 1.6 75.0 50.0 (50.0)

Common stock issuance (repurchase) 7.8 0.0 0.0 0.0

Other financing cash flows (0.2) 0.0 0.0 0.0

Cash flow from financing (3.3) 44.0 16.9 (86.3)

Total cash flow (115.7) (15.2) 11.2 12.7 Note: Last actual year may include reported and estimated data.

(15)

Bangkok Dusit (BDMS.BK) – Margins to remain under pressure; retain Sell

We retain our Sell rating on BDMS (8% potential downside) as we expect the company to experience a slowdown driven by the

weak Thai economy and forecast a DACF CAGR of 7% over 2015E-17E (vs. 20% over 2010-14), which would rank it in the fourth

quartile within our coverage universe. BDMS will also remain Q4 on the CROCI scores with average CROCI of 10% (2015E-17E).

Additionally, given the significant number of new hospitals (13 over the past two calendar years), we continue to expect margins to

remain under pressure as these hospitals can only slowly improve occupancy. We cut our FY15E-16E EBITDA by up to 6% post 1H15

results where BDMS guided for margins to remain towards the lower end of the 22%-23% range. Current valuation (2016E

EV/EBITDA of 21.5X) is near the historical average and does not seem to factor in both the revenue and margin slowdown that

BDMS will likely witness, in our view.

Catalysts:

(1) Slow ramp-up in new greenfield hospitals and limited new brownfield hospital additions to be margins/returns

dilutive over the next 12 months, (2) weaker-than-expected revenue growth announced during the company’s quarterly results, (3)

DACF CAGR slipping to quartile 4 over 2015E-17E from the first quartile over 2004-14.

Valuations:

We adopt 2017E Director’s Cut (EV/GCI vs. CROCI/WACC) methodology to value BDMS. We mark to market the sector

cash return multiple (val ratio) from 1.53X to 1.65X. Reflecting these changes and our estimate revisions, we raise our 12-month

target price to Bt17.7 (from Bt17.2) which implies 2016E/17E EV/EBITDA of 20X/18.2X.

Key upside risks:

(1)

Higher-than-expected new hospital additions from brownfield activity, and (2) stronger-than-expected

execution/margins on greenfield operations.

Exhibit 21:

New hospitals could lead to further margin woes for BDMS

EBITDA margins: Overall, existing hospitals

Exhibit 22:

Valuation does not seem to factor in the growth slowdown

1-year forward: EV/EBITDA vs. EBITDA growth

Source: Company data. Source: Company data, Datastream, Goldman Sachs Global Investment Research.

3 3

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

No. of new hospitals (RHS) Overall EBITDA margin EBITDA margin of existing operation

0%

EBITDA growth (%) EV/EBITDA Average +1 Std dev -1 Std dev

EV/EBITDA (x)

Average = 13.6X

-1std = 7.6X +1std = 19.5X

(16)

Siloam (SILO.JK) – Leveraged to the highest growth market, but priced in; stay Neutral

Siloam has lowered its guidance for three mature hospitals (Surabaya, Balikpapan, MRCCC – a combined 22% of overall revenues)

which are under construction to replace overcrowded building facilities. The company’s new guidance points to no growth in

revenues and EBITDA in these three hospitals for the next 18 months, i.e. until construction completes. Further, the company’s

flagship Lippo Village (1H15: 18% of revenue, 24% of EBITDA) is also witnessing lackluster growth in both IPD admissions/OPD/ED

visits. On the back of this, we lower our 2016-17 sales forecasts by 3%-7%, EBITDA forecasts by 6%-14% as most of the growth is

driven by the new/developing hospitals whose margins are lower than that of Lippo Village.

Our revised forecast still points to a 280bp expansion in CROCI and DACF CAGR of 28% for SILO over 2015E-17E, which would rank

it in quartile 1 for growth but it is quartile 3 for CROCI through 2020E. That said, given that SILO’s share price fell 1% YTD vs. the

sector up 25%, we believe most of the negative news has been priced in. However, we maintain our Neutral rating as valuations

look high relative to peer average.

Valuations:

We adopt 2017E Director’s Cut (EV/GCI vs. CROCI/WACC) methodology to value Siloam but given our estimate cuts, we

lower our 12-month target price to Rp14,600 (from Rp15,100). The stock does not have a long trading history, but it trades at a

premium to peers, which we think is fair given its superior growth prospects. Our new target price implies 2016E/17E EV/EBITDA of

24X/20X.

(17)

Volumes are slowing down, firms focusing on revenue intensity

Exhibit 23:

BPJS-led volume growth for SILO; the rest have seen a slowdown

Exhibit 24:

IHH is maintaining focus on revenue intensity

Source: Company data. Source: Company data.

Exhibit 25:

Outpatient growth led by domestic segment for SILO/BDMS

Exhibit 26:

SILO’s ASPs are being dragged down on account of BPJS

13%

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Inpatient volume growth (yoy)

BDMS BH IHH SILO

-4%

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Revenue per admission growth (yoy)

BDMS BH IHH SILO

5%

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Outpatient volume growth (yoy)

BDMS BH SILO

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Revenue per visit growth (yoy)

(18)

SILO has grown the fastest, but BH has delivered the best quality of earnings

Exhibit 27:

SILO, BH are growing their revenues relatively faster

Exhibit 28:

BH, IHH’s EBITDA margins are relatively higher

Exhibit 29:

SILO enjoys relatively higher EBITDA growth

Exhibit 30:

BH/IHH have outperformed BDMS/RFMD in PAT growth

9%

2Q14 3Q14 4Q14 1Q15 2Q15

Revenue growth (yoy)

BDMS BH IHH RFMD SILO

21.4%

2Q14 3Q14 4Q14 1Q15 2Q15

EBITDA margins

19%

2Q14 3Q14 4Q14 1Q15 2Q15

EBITDA growth (yoy)

23%

2Q14 3Q14 4Q14 1Q15 2Q15

Net profit growth (yoy)

(19)

Exhibit 31:

Key financials, pricing summary

Source: Company data, Datastream, Goldman Sachs Global Investment Research.

Sing/Mal/Tur

Sing

Indo

2015E

Bumrungrad

BDMS

IHH

Raffles Medical

Siloam

Revenues (US $ mn)

550 1,834

2,299

304

325 Growth (2013-15E)

13%

12%

7%

10%

34%

EBITDA (US $ mn)

171

403

598

73

43 Growth (2013-15E)

21%

8%

13%

10%

39%

PAT (US $ mn)

111

231

265

54

7 Growth (2013-15E)

30%

9%

35%

9%

20%

EBITDA margin (%)

31.1%

22.0%

26.0%

23.9%

13.3%

Asset Turns (X)

0.99

0.52

0.34

0.76

0.97 Cash Conversion (X)

0.84

0.86

0.89

0.86

1.05 CROCI (%)

25.8%

9.9%

7.9%

15.6%

13.6%

ROE

31.2%

15.9%

5.0%

13.0%

5.2%

Pricing Currency

THB

MYR

SGD

IDR

Share price (current)

235

19.3

5.84

4.51 13600

Market cap (US $ mn)

4,756

8,305

11,027

1,813

1,091

ADVT(US $ mn)

6.5

3.5

10.1

1.9

14.2 Largest shareholders

Share holder 1

BDMS: 24%

Prasert

Prasarttong-Osoth: 23%

Khazanah: 44%

Raffles Medical

Holding: 48%

Megapratama:

60%

Share holder 2

BKK Insurance: 15%

Wichai

Thongtang:14%

Mitsui: 2%

Aberdeen: 5%

Gloria Mulia: 4%

Share holder 3

Sinsuptawee: 9%

BKK Airways: 8%

EPF: 9%

S&D Holdings: 3%

Blackrock: 4%

Valuation (2016E)

EV/EBITDA (X)

29.4

21.8

19.5

22.4

22.5 EV/GCI (X)

6.9

2.5

1.9

3.5

2.6 P/E (X)

36.8

33.4

38.8

31.5

157.8 Absolute price performance

3M

29%

1%

2%

1%

6M

64%

-4%

8%

16%

1%

12M

86%

5%

18%

14%

-13%

Relative price performance vs. Country benchmark

3M

41%

9%

5%

20%

14%

6M

80%

5%

17%

37%

27%

12M

110%

19%

32%

3%

(20)

Exhibit 32:

Global hospitals’ valuation comps

Note: *denotes stock is on our regional Conviction List. NC=Not Covered. Estimates for NC companies are from Bloomberg.

Source: Datastream, Bloomberg, Goldman Sachs Global Investment Research.

2015E 2016E 2015E 2016E 2015E 2016E 2015E 2016E 2015E 2016E Sales EBITDA EPS

Siloam International Hospitals SILO.JK Neutral 1,118 Rp 13,875 29.6 22.9 28.2 21.9 n.a. 161.0 14% 14% 5% 6% 24% 32% 23%

Mitra Keluarga MIKA.JK NC 2,850 Rp 26,975 49.0 41.4 n.a. n.a. 64.4 54.1 n.a. n.a. 25% 23% 18% 18% 16%

Sarana Meditama Metropolitan SAME.JK NC 222 Rp 2,600 21.0 17.7 n.a. n.a. 59.5 88.2 n.a. n.a. 23% 13% n.a. n.a. n.a.

IHH Healthcare Bhd IHHH.KL Buy 11,023 RM 5.84 23.0 19.5 25.9 22.2 48.0 38.8 8% 9% 5% 6% 17% 16% 23%

Bumrungrad Hospital BH.BK Neutral 4,710 Bt 233.00 35.6 30.9 41.7 35.2 55.7 46.4 25% 26% 30% 31% 13% 17% 23%

Bangkok Dusit Medical Services BDMS.BK Sell 8,167 Bt 19.00 22.5 20.0 26.2 23.4 34.9 30.0 10% 11% 17% 18% 15% 13% 17%

Raffles Medical RAFG.SI Neutral 1,798 S$ 4.48 24.8 22.2 29.0 25.9 34.3 31.3 16% 14% 13% 13% 12% 14% 10%

Apollo Hospitals APLH.BO NC 2,975 Rs 1,359.85 23.2 19.5 n.a. n.a. 46.9 37.6 n.a. n.a. 12% 14% 20% 15% 20%

Fortis Healthcare FOHE.BO NC 1,366 Rs 191.30 39.9 22.8 n.a. n.a. 531.7 47.7 n.a. n.a. 0% 4% 15% 135% -208%

Aier Eye Hospital 300015.CH NC 5,202 Rmb 32.46 47.8 38.7 n.a. n.a. 79.0 59.7 n.a. n.a. 17% 19% 24% 20% 30%

HCA Holdings HCA Buy* 36,488 $ 84.98 8.4 7.4 7.1 7.0 16.2 14.5 0.2 0.2 -32% -51% 7% 8% 11%

Community Health Systems Inc. CYH Neutral 5,971 $ 51.74 7.3 6.7 9.1 8.4 11.4 9.3 0.1 0.1 12% 13% 6% 12% 23%

Tenet Healthcare Corp. THC Neutral 4,659 $ 46.94 8.1 7.1 7.8 10.3 22.6 14.1 0.1 0.1 12% 12% 8% 17% 43%

Universal Health Services Inc. UHS Neutral 13,656 $ 135.31 9.9 8.8 12.7 11.5 19.1 17.9 0.1 0.1 18% 16% 9% 11% 13%

LifePoint Hospitals Inc. LPNT Buy* 3,682 $ 79.36 7.8 7.4 9.2 9.6 19.6 18.9 0.1 0.1 8% 8% 13% 10% 15%

Ramsay Health Care RHC.AX Neutral 8,538 A$ 59.10 12.4 11.3 15.1 14.6 28.2 24.7 0.1 0.1 25% 25% 12% 13% 14%

Primary Health Care PRY.AX Sell 1,479 A$ 4.01 7.5 6.9 13.8 12.3 15.7 13.7 0.1 0.1 6% 6% 5% 6% 12%

Al Noor Hospitals Group ANHA.L Buy 1,472 £ 818.50 10.8 8.6 10.4 8.5 14.2 11.9 0.4 0.4 36% 33% 16% 17% 18%

NMC Health NMC.L Neutral 2,171 £ 759.50 19.4 15.4 17.4 14.2 28.3 22.4 0.2 0.2 16% 18% 16% 18% 18%

Mouwasat Medical Services 4002.SE Neutral 1,628 SR 122.09 18.3 14.6 19.0 15.2 22.7 18.8 0.2 0.2 24% 25% 21% 21% 16%

Dallah Healthcare Holding 4004.SE Sell 1,306 SR 103.79 20.6 15.9 21.2 16.5 32.6 24.6 0.1 0.2 11% 14% 27% 27% 22%

Netcare Ltd. NTCJ.J Buy 3,781 R 38.31 11.5 9.8 14.2 11.9 18.3 15.0 0.1 0.1 29% 30% 9% 16% 21%

Life Healthcare Group LHCJ.J Neutral 2,782 R 36.34 10.7 10.1 13.7 12.8 19.0 17.3 0.2 0.2 35% 33% 11% 10% -2%

Mediclinic International Ltd. MDCJ.J Neutral 6,590 R 105.50 14.8 13.5 16.9 15.6 19.9 18.5 0.1 0.1 14% 13% 10% 9% 9%

Rhoen-Klinikum RHKG.DE NC 2,042 € 25.31 8.7 8.2 n.a. n.a. 25.2 22.3 n.a. n.a. 7% 7% -8% 37% -47%

Mediclin AG MEDG.DE NC 183 € 3.51 6.0 5.5 n.a. n.a. 15.3 12.5 n.a. n.a. 7% 7% 3% 5% 20%

Chularat Hospital CHG.BK NC 619 Bt 1.95 24.4 20.8 n.a. n.a. 38.6 30.8 n.a. n.a. 20% 21% 17% 20% 22%

Price as of 16-Sep-2015

2015-17E CAGR (%)

EV/DACF(X) P/E (X) CROCI (%) ROE (%)

EV/EBITDA(X)

Company name Ticker Rating Market cap

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Disclosure Appendix

Reg AC

We, Shyam Srinivasan, CFA, Miang Chuen Koh, CFA, Wieta Anton Honoris and Arthur Khoo, hereby certify that all of the views expressed in this report accurately reflect our personal views about the subject company or companies and its or their securities. We also certify that no part of our compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Goldman Sachs' Global Investment Research division.

Investment Profile

The Goldman Sachs Investment Profile provides investment context for a security by comparing key attributes of that security to its peer group and market. The four key attributes depicted are: growth, returns, multiple and volatility. Growth, returns and multiple are indexed based on composites of several methodologies to determine the stocks percentile ranking within the region's coverage universe.

The precise calculation of each metric may vary depending on the fiscal year, industry and region but the standard approach is as follows:

Growth is a composite of next year's estimate over current year's estimate, e.g. EPS, EBITDA, Revenue. Return is a year one prospective aggregate of various return on capital measures, e.g. CROCI,

ROACE, and ROE. Multiple is a composite of one-year forward valuation ratios, e.g. P/E, dividend yield, EV/FCF, EV/EBITDA, EV/DACF, Price/Book. Volatility is measured as trailing twelve-month

volatility adjusted for dividends.

Quantum

Quantum is Goldman Sachs' proprietary database providing access to detailed financial statement histories, forecasts and ratios. It can be used for in-depth analysis of a single company, or to make comparisons between companies in different sectors and markets.

GS SUSTAIN

GS SUSTAIN is a global investment strategy aimed at long-term, long-only performance with a low turnover of ideas. The GS SUSTAIN focus list includes leaders our analysis shows to be well positioned to deliver long term outperformance through sustained competitive advantage and superior returns on capital relative to their global industry peers. Leaders are identified based on quantifiable analysis of three aspects of corporate performance: cash return on cash invested, industry positioning and management quality (the effectiveness of companies' management of the environmental, social and governance issues facing their industry).

Disclosures

Coverage group(s) of stocks by primary analyst(s)

Shyam Srinivasan, CFA: Asia Pacific Financials. Miang Chuen Koh, CFA: ASEAN. Wieta Anton Honoris: ASEAN.

ASEAN: Alliance Global Group, Astra Agro Lestari, Astra International, Ayala Corp., Bangkok Chain Hospital, Bangkok Dusit Medical Services, Bloomberry Resorts Corp., Bumrungrad Hospital, Ciputra Development Tbk, First Resources, Genting, Genting Malaysia Bhd, Genting Singapore Plc, Golden Agri-Resources Ltd., IHH Healthcare Bhd, IOI Corp., Jardine Cycle & Carriage, Keppel Corp., KPJ Healthcare Bhd, Kuala Lumpur Kepong, Lafarge Malaysia Bhd, Lippo Karawaci Tbk, Manila Water Co. Inc., Nagacorp Ltd., Noble Group, PT Bumi Serpong Damai Tbk, PT Indocement Tunggal Prakarsa Tbk, PT Jasa Marga (Persero) Tbk, PT United Tractors, Raffles Medical, Sembcorp Industries, Sembcorp Marine, Semen Indonesia Persero Tbk, Siam Cement PCL, Siam City Cement Public Co., Siam City Cement Public Co. (Foreign), Siloam International Hospitals, Sime Darby Bhd, Summarecon Agung Tbk, Westports Holdings, Wilmar International.

Asia Pacific Financials: AIA Group, AMMB Holdings, Axis Bank, Bajaj Finance, Bajaj Finserv, Bangkok Bank, Bangkok Bank (Foreign), Bank Central Asia, Bank Danamon, Bank Mandiri, Bank Negara Indonesia, Bank of Baroda, Bank of East Asia, Bank Rakyat Indonesia, Bank Tabungan Negara, Bank Tabungan Pensiunan Nasional, BDO Unibank, BNK Financial Group, BOC Hong Kong (Holdings), Cathay Financial, Chailease Holdings, Chang Hwa Commercial Bank, China Development Financial, CIMB Group Holdings, CTBC Financial Holdings, Dah Sing Banking Group, Dah Sing Financial Holdings, DBS Group Holdings, DGB Financial Group, E.Sun Financial Holding, Federal Bank, First Financial Holdings, Fubon Financial Holdings, Hana Financial Group, Hang Seng Bank, HDFC Bank, Hong Leong Bank, Housing Development Finance Corp., HSBC Holdings, ICICI Bank, IDFC Ltd., IndusInd Bank, Industrial Bank of Korea, Kasikornbank, Kasikornbank (Foreign), KB Financial Group, Kotak Mahindra Bank, Krung Thai Bank, Krung Thai Bank (Foreign), L&T Finance Holding, LIC Housing Finance, Mahindra & Mahindra Financial Svcs., Malayan Banking Bhd, Mega Financial Holdings, Metropolitan Bank and Trust Co, Oriental Bank of Commerce, Oversea-Chinese Banking Corp., Power Finance Corp., Public Bank Bhd, Punjab National Bank, RHB Capital, Shin Kong Financial Holdings, Shinhan Financial Group, Shriram Transport Finance, Siam Commercial Bank, Siam Commercial Bank (Foreign), SinoPac Holdings, Standard Chartered Bank, State Bank of India, Taishin Financial Holdings, TMB Bank Public Co., TMB Bank Public Co. (Foreign), United Overseas Bank, Woori Bank, Yes Bank, Yuanta FHC.

Company-specific regulatory disclosures

The following disclosures relate to relationships between The Goldman Sachs Group, Inc. (with its affiliates, "Goldman Sachs") and companies covered by the Global Investment Research Division of Goldman Sachs and referred to in this research.

Goldman Sachs has received compensation for investment banking services in the past 12 months: Siloam International Hospitals (Rp13,750)

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Goldman Sachs had an investment banking services client relationship during the past 12 months with: IHH Healthcare Bhd (RM5.88) and Siloam International Hospitals (Rp13,750)

Goldman Sachs had a non-securities services client relationship during the past 12 months with: Bangkok Dusit Medical Services (Bt19.20), Bumrungrad Hospital (Bt237.00), IHH Healthcare Bhd (RM5.88), Raffles Medical (S$4.50) and Siloam International Hospitals (Rp13,750)

Distribution of ratings/investment banking relationships

Goldman Sachs Investment Research global coverage universe

Rating Distribution Investment Banking Relationships

Buy Hold Sell Buy Hold Sell

Global 32% 53% 15% 46% 38% 33%

As of July 1, 2015, Goldman Sachs Global Investment Research had investment ratings on 3,248 equity securities. Goldman Sachs assigns stocks as Buys and Sells on various regional Investment Lists; stocks not so assigned are deemed Neutral. Such assignments equate to Buy, Hold and Sell for the purposes of the above disclosure required by NASD/NYSE rules. See 'Ratings, Coverage groups and views and related definitions' below.

Price target and rating history chart(s)

13.7 14

Bangkok Dus it Medical Se rvices (BDMS.BK)

Goldman Sachs rating and stock price target history

Stock Price Currency : Thai Baht

Source: Goldman Sachs Investment Research for ratings and price targets; FactSet closing prices as of 6/30/2015.

The price targets show n should be considered in the context of all prior published Goldman Sachs research, which may or may not have included price targets, as w ell as developments relating to the company, its industry and financial markets.

Rating

Price target

Price target at removal

Covered by Miang Chuen Koh, CFA, as of Jun 5, 2014

Not covered by current analyst

Bangkok S.E.T. - Price

2012 2013 2014 2015

118 124

Bum rungrad Hos pital (BH.BK)

Stock Price Currency : Thai Baht

Rating

Price target

Bangkok S.E.T. - Price

2012 2013 2014 2015

3.1

Raffle s Medical (RAFG.SI)

Stock Price Currency : Singapore Dollar

Rating

Price target

FTSE Straits Times Index

2012 2013 2014 2015

3.05

IHH Healthcare Bhd (IHHH.KL)

Stock Price Currency : Malaysian Ringgit

Rating

Price target

Covered by Miang Chuen Koh, CFA, as of Aug 21, 2012

Kuala Lumpur

en gs defensive qualities shine through in volatile times ihh up to buy

ASEAN: Healthcare Services: Hospitals

Equity Research

Defensive qualities shine through in times of volatility; IHH up to Buy, Sell BDMS

Still positive on private healthcare spending

Amidst the recent market volatility, we remain

positive on ASEAN healthcare services and expect

private healthcare spending in USD to post 12%

CAGR (1.5X GDP) over FY15E-20E driven by rising

income levels and needs, lifestyle changes/ageing

population and indirect support from government

healthcare funding. Despite the c.15% CAGR in

healthcare spending over the past ten years,

healthcare expenditure penetration in ASEAN

remains low at c.4% of GDP (2014).

Indo poised for higher growth, Malaysia next

We expect Indonesia to be the highest growth

(17% CAGR) market for healthcare spending given

favorable demographics and higher consumer

spending, followed by Malaysia (11%), Thailand

(8%) and Singapore (6%), over FY15E-20E.

Revising earnings estimates, target prices

We update our earnings estimates for our ASEAN

hospitals coverage reflecting 1H15 results and

changes in macro assumptions. We also revise

our target prices as we roll forward the timeframe

for our EV/GCI vs. CROCI/WACC valuation

framework to 2017E (from 2016E).

IHH up to Buy on solid growth prospects

We upgrade IHH to Buy (from Neutral), with 20%

upside, as we like its dominant position in all its

home markets and believe new ventures in HK/India

will provide fresh impetus. We forecast

revenue/EBITDA CAGR (FY15E-17E) of 17%/16% and

believe valuation at 19.6X 2016E EV/EBITDA, a 15%

discount to the sector, offers an attractive entry

point. Our revised net profit estimates are 6%-7%

above Bloomberg consensus and we believe the

market is underappreciating its growth prospects.

Retain Sell on BDMS; BH, RFMD now Neutral

We maintain Sell on Bangkok Dusit as current

valuation (21X 2016E EV/EBITDA) does not seem to

factor in a slowdown in growth of 12%/10%

revenue/EBITDA CAGR (FY15E-17E) vs. 20%/20%

(past five years). We downgrade BH to Neutral

(from Buy) and upgrade RFMD to Neutral (from

Sell) post their recent share price performances.

We also retain Neutral on Siloam, a pure Indonesia

play, as valuation remains fair despite garnering

the highest DACF CAGR of 28% (FY15E-17E). We

transfer the ASEAN hospitals coverage to Shyam

Srinivasan from Miang Chuen Koh with this note.

Goldman Sachs does and seeks to do business with companies

covered in its research reports. As a result, investors should be aware

that the firm may have a conflict of interest that could affect the

objectivity of this report. Investors should consider this report as only a

single factor in making their investment decision. For Reg AC

certification and other important disclosures, see the Disclosure

Appendix, or go to www.gs.com/research/hedge.html. Analysts

employed by non-US affiliates are not registered/qualified as research

Table of contents

Positive on private healthcare spending in ASEAN; IHH up to Buy

3

We see Indonesia as the most attractive healthcare market in ASEAN, followed by Malaysia…

4

…and expect Thailand to see a rebound, but Singapore to witness a deceleration in spending

5

Updating estimates post 1H15 results and

recent

macro

revisions

7

Roll forward to 2017: Two-year forward Director’s

Cut

valuation

methodology

8

Bumrungrad Hospital (BH.BK): Down to Neutral

post

share