Lokman Hekim Outperform

Transcription

Lokman Hekim
Outperform
March 28, 2016
2016 Extel Survey runs from 21 March to 29 April.
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Good things come to those who wait

Lokman Hekim deserves a fresh look as: i) Its EBITDA margin
improved by 7 pps over the last two years given that its Van
hospitals have started to pay off due to increased occupancy
rates, ii) the Company has no FX exposure, iii) low/diminishing
leverage and iv) better cost management.

A potential M&A target and acquirer. The share buy-back
program is ongoing and we believe there is a limited downside.

Initiating with an Outperform rating and a 12-month target
share price of TL5.03, indicating 93% potential return.
What has changed from 2013-2015: Lokman Hekim’s EBITDA margin
improved by 7 pps to 13.2% in 2015 from 2013. The operational pickup especially at the Van hospital in eastern Turkey was key. Two
hospitals in Van started to run together in 2013 and now account for
half of the total EBITDA vs. an EBITDA loss in 2013. We expect
another year of strong operating figures from the Van hospitals
especially given the fact that another hospital belonging to the
competition (covering c40% of the bed capacity of all of the private
hospitals in the city) has recently shut down.
Another positive for the Company is the reduced share of lower
margin SSI (Social Security Institution) sales falling to 65% in 2015
vs. 70% in 2013, which is another testimony to Lokman Hekim’s high
quality of service at reasonable prices.
Labor costs and medical supplies expenses are the bulk of the costs
in the industry. Between 2013-2015, these expenses’ ratio to
Company’s revenues declined from 54% and 26% to 52% and 22%.
There is still room for improvement especially on the supply side.
Since c40% of the supply prices are linked to FX, we find the cost
control over input prices to be eye-catching given that the TL lost 30%
in value against the FX basket from 2013-2015.
The company had been carrying FX-denominated debt in 2013. It was
able to transform all of its debt to TL, reducing its vulnerability to FX
movements. As of end-2015, its net debt stood at TL28mn, implying a
net debt to EBITDA of 1.5x vs. 4.8x in 2013.
Share Price
12M Target Price
Potential Return
TL2.60
TL5.03
93%
Mcap
TL62mn USD22mn
EV
TL90mn
Stock Market Data (March 25, 2016)
Bloomberg/Reuters:
LKMNH.TI / LKMNH.IS
Rel. Performance:
1 mth
3 mth
1%
-5%
12M Range (TL):
12mth
10%
2.12 / 2.68
Average Daily Vol (TLmn) 3 mth:
1.0
YTD TL Return:
4%
Beta (2year, w eekly)
0.82
Weight in BIST-100
-
Shares Outstanding (mn):
24.0
Foreign Ow n. in Free Float :
Current
12M ago
14%
16%
The Com pany in Brief
Lokman Hekim is a hospital chain headquartered in Ankara,
Turkey. It is only hospital company trading in Bourse Istanbul.
Currently, the company operates four hospitals, tw o in Ankara
and tw o in Van in Eastern Turkey. Ankara accounts for c60% of
revenues w hile Van does c40%. The Company's total bed
capacity is 499. It also has presence in Erbil, Iraq w ith an imaging
center. It served 800k outpatient and 48k inpatient in 2015. It also
has husbandry and construction business but their share in total
revenues is negligible.
Shareholders Structure
Hamdi Ozkan
5%
Other
39%
Free Float
56%
Financials & Ratios
2015
2016E
2017E
Net Sales (TLmn)
142
163
183
202
YoY
13%
15%
12%
11%
19
24
28
30
YoY
39%
28%
15%
10%
M&A potential. Lokman Hekim could expand its hospital network
through the acquisitions of hospitals which lack a brand name or are
not financially solid in Turkey’s Anatolian region and in the east.
Lokman Hekim could also be an M&A target itself. In addition to the
Turkish healthcare sector’s growth prospects, stringent regulations
that make it hard to acquire a hospital license could result in avid
interest in private hospital providers. Transactions which have been
disclosed in the sector suggest a 9.3x EV/EBITDA, which implies a
19% higher target value than ours.
EBITDA (TLmn)
Catalysts. A value accretive acquisition and strong 1Q16 financials.
Net Income (TLmn)
2018E
5
8
9
11
216%
50%
13%
18%
EBITDA margin
13.2%
14.7%
15.0%
15.0%
Net margin
3.8%
4.9%
5.0%
5.3%
P/E (x)
11.6
7.7
6.9
5.8
Adj.EV/EBITDA (x)*
6.4
5.0
4.2
3.6
Adj. EV/Sales (x)*
0.4
0.3
0.3
0.2
EPS (TL)
0.22
0.34
0.38
0.44
YoY
0.08
Valuation & Risks. We initiate coverage with an Outperform DPS (TL)
Div. Yield
3.2%
recommendation and a 12-month target share price of TL5.03,
8%
indicating a 93% potential return. The stock trades at an average 80% ROE
*Adjusted w ith minorities
discount to its peers on 2016 EV/EBITDA and P/E. Risks include
regulatory changes, Public Private Partnership investments, Analyst: Baris Ince
+90 (212) 384 1141
overpaying for an acquisition and illiquidity.
[email protected]
0.12
0.17
0.19
4.5%
6.5%
7.3%
12%
12%
13%
Sales Contact:
+90 (212) 384 1155-58
[email protected]
Lokman Hekim
March 28, 2016
RESEARCH
SUMMARY FINANCIALS (TLmn)
Income Statement
Net Sales
COGS +OPEX
Operating Profit
Consolidated EBITDA
Net Other Income/ Expense
Profit (Loss) from Subsidiaries
Net financial Income/ Expense
Profit (Loss) before Tax
Tax
Minority Interests
Net Income
Ratios
EBIT Margin
EBITDA Margin
Net Income Margin
2015
142
-131
11
19
-1
0
-3
6
3
3
5
2016E
163
-148
15
24
-2
0
-2
12
-2
2
8
2017E
183
-165
18
28
-2
0
-2
15
-3
3
9
2018E
202
-182
21
30
-2
0
-1
17
-3
3
11
7.6%
13.2%
3.8%
9.5%
14.7%
4.9%
10.0%
15.0%
5.0%
10.1%
15.0%
5.3%
Sales Growth
EBITDA Growth
Net Income Growth
13%
39%
216%
15%
28%
50%
12%
15%
13%
11%
10%
18%
Balance Sheet
Current Assets
Cash and Cash Equivalents
Short-Term Trade Receivables
Inventories
Other Current Assets
Long Term Assets
Total Assets
Short Term Liabilities
Short-Term Financial Loans
Short-Term Trade Payables
Other Short-Term Liabilities
Long Term Liabilities
Long-Term Financial Loans
Other Long-Term Liabilities
Shareholders Equity
T. Liabilities & S.holders Equity
2015
46
1
32
5
8
91
137
36
12
14
11
34
17
18
67
137
2016E
57
4
37
6
10
89
145
38
12
16
11
37
20
18
70
145
2017E
68
10
41
7
11
86
155
40
12
18
11
39
21
18
76
155
2018E
81
15
46
8
12
84
164
42
12
20
11
40
22
18
82
164
Cash Flow Summary
EBITDA
WC Change
Operating Cash flow
Capex
Investing cash flow
Dividends paid
Change in net debt
CF from financing activities
2015
19
21
12
-6
-5
-2
-5
-7
2016E
24
26
12
-6
-8
-3
-1
0
2017E
28
30
17
-7
-8
-4
-4
-3
2018E
30
35
18
-7
-9
-5
-5
-3
2015
1.5
0.4
4.2%
14.9%
5.3%
15.0%
19.4%
2016E
1.1
0.4
3.7%
15.9%
7.5%
14.9%
15.3%
2017E
0.8
0.3
3.7%
16.6%
7.9%
16.4%
18.5%
2018E
0.6
0.2
3.7%
17.2%
8.8%
17.8%
21.7%
Key metrics
Net Debt/EBITDA (x)
Net Debt/Equity (x)
Capex/Sales (%)
WC Change/Sales (%)
ROCE (%)
ROIC (%)
FCF yield (%)
2
Please see the last page of this report for important disclosures.
Lokman Hekim
March 28, 2016
RESEARCH
INVESTMENT POSITIVES

We initiate coverage of Lokman Hekim with an Outperform
recommendation with a DCF based 12-month target price of
TL5.03/share. The stock has a 12-month total return potential of
93%.

We prefer to value Lokman Hekim using DCF as we believe that
DCF better captures the long-term growth potential of the business.

Lokman Hekim’s strong brand name in the region where it
operates, solid relationship with the government and sector
representatives, capability of successful integration of new
hospitals to its portfolio suggest a high growth potential given the
low per capita healthcare spending in Turkey.

Furthermore, we welcome the company’s efforts to attract foreign
patients. Lokman Hekim could enhance its revenue generation
capability with its diagnostic center in Erbil Northern Iraq, where the
health market is untouched. We do not incorporate any new
hospital acquisitions in our assumptions.

However, it is worth noting that Lokman Hekim has always
explored inorganic growth opportunities. We believe that an
acquisition could bring a further upside depending on the deal
price.
Unique exposure to the attractive Turkish healthcare market in the BIST
Lokman Hekim, the only hospital company trading in the Bourse Istanbul,
is the leading private healthcare provider in Ankara and Van with 499 bed
capacity. Turkey offers strong growth prospects in the healthcare sector.
Healthcare spending’s share in GDP lags far behind that of most of
developed countries. As of 2014, it was 5.4% compared to the OECD
average of 8.9%. Moreover, Turkey has a limited capacity in terms of the
number of hospital and beds. The number of beds per 10K people stands
at 27 vs. Europe’s 51. On the private hospital side, the good news is that
the government is willing to set aside a lower budget for health
expenditures going forward as the majority of health services are currently
provided by the state. The state’s declining exposure in the sector would
be positive for private hospitals.
Strong brand recognition in the regions in which it operates
Lokman Hekim was founded in 1996 in Turkey’s capital Ankara. Its first
hospital became operational in Etlik Ankara in 2002. Lokman Hekim then
went on to open the largest private hospital in Ankara’s Sincan region in
2008. Etlik Hospital is very dominant in its region and works at full
capacity. On the other hand, the Sincan Hospital is located in a
developing region of Ankara. There is increasing healthcare demand in
Sincan and Lokman Hekim’s popularity in the region is growing. After the
IPO in January 2011, the company established a 51% owned entity in the
eastern Turkish city of Van and opened one hospital in January 2012 and
another in February 2013. Lokman Hekim’s Van hospitals are very wellknown in the city and serve the majority of patients in the region since
many private hospital operators either left the city/region or the hospital
buildings (inc. some state-owned ones) became useless after the
3
RESEARCH
Lokman Hekim
March 28, 2016
earthquake in 2011. There were four private hospitals in Van and one of
them (representing c40% of private hospitals’ bed capacity in Van) has
been shut down recently . We believe that Lokman Hekim’s position in the
regions in which it operates would further strengthen going forward as it
offers quality services at favorable prices in unsaturated locations of the
growing Turkish healthcare market.
Growing player in Turkey
Lokman Hekim initiated its operations with a 37-bed hospital in a 2,900
sqm closed area in 2002. It now has 499-beds and provides healthcare
services in a 39,400-sqm plot. Its top line noted a 16% CAGR in 20092015 driven by the growth in patient figures, which grew from 538k to
848k as of 2015 (CAGR of 8%). We believe that Lokman Hekim could
expand its hospital network through the acquisition of hospitals which lack
a brand name or are not financially-solid in the Anatolian region and
eastern Turkey. Lokman Hekim is not new to acquisitions as it had taken
over two hospitals in Van. The company is always in search of inorganic
growth opportunities rather than organic growth. Since the company does
not prefer to invest heavily in construction as obtaining a hospital license
is becoming harder and harder after the new law took effective in 2008 ,
our projections do not include a potential acquisition which could yield a
further upside depending on the deal price.
…as well as abroad
Lokman Hekim is also striving to increase its international presence. It
invested in a diagnostic center in Erbil, Northern Iraq. Northern Iraq is an
untouched market in terms of healthcare services and offers a strong
growth potential in the long term, in our view. The company transfers its
patients from Erbil to Ankara. It is also worth noting that the company
benefits from the incentives provided by the Turkish government.
Accordingly, half of the diagnostic center’s rent is being paid by the
government and half of the revenues from Iraqi patients will be exempt
from taxation. Once the number of Iraqi patients has reached a sizable
share in total, the Company will become much more profitable. Lokman
Hekim also has healthcare tourism sales offices in Azerbaijan, Iraq,
Sweden and the Netherlands.
Better pricing due to the new regulation and maturity in Van Hospitals
Almost all private hospitals in Turkey work with Social Security Institution
(SSI). As of 2015, sales to SSI accounted for 65% of Lokman Hekim’s
overall revenues vs. 70% in 2013. The current law allows for “extra billing”
by private healthcare providers, whereby, based on the detailed criteria
adopted by the Council of Ministers, private healthcare providers are
being allowed to charge up to 200% (vs. 100% before 2014) above the
price paid by SSI. The extra charges have to be paid by patients on an
out-of-pocket basis. It appears that the hospitals in Van have started to
pay off after two-three years and now Van accounts for 39% of total
revenues (48% of EBITDA) in 2015 vs. 32% (EBITDA loss) in 2013.
According to the management, one of their major competitors in Van
(representing c40% of the established bed capacity of private hospitals in
the city) has stopped their operations recently. Therefore, Lokman is likely
to increase the occupancy rate of its Van hospital in 2016. In addition, the
company will increase the established bed capacity of the Van hospital in
4
Lokman Hekim
March 28, 2016
RESEARCH
order to take advantage of diminishing supply.
New growth areas
The company is also eyeing other sectors that offer opportunities. In
addition to its hospital business, Lokman Hekim also has husbandry and
residential businesses. However, those are currently negligible compared
to its core hospital business. Its husbandry operations accounted for only
2% of its overall revenues in 2015. Lokman Hekim had one building with
44 apartments with c7000sqm to be sold and one building with 4500sqm
to be leased. The buildings were completed with an investment of
TL15mn in 2015. The 36/44 apartments have all been delivered.
A M&A target
There has been increasing interest in the Turkish health sector by
domestic and international players given the lower share of healthcare
spending compared to developed countries, rising GDP per capita and
the increasing health awareness of Turkish citizens. We have seen many
M&A deals in recent years that have materialized at a 9.3x EV/EBITDA
multiple based on those that have been disclosed, according to the
Capital IQ. We believe that Lokman Hekim could be a target company. If
we take the above mentioned multiple as a benchmark, the Company’s
value would be TL144mn based on our forecasts, which is 132% higher
than its current market value.
Share buy-back
The Company initiated a share buy-back program in 1Q15 with a upper
share price limit of TL6 for three years. Lokman Hekim has bought back
777,615 shares so far, implying 3.2% of its paid in capital. The program
limits the downside potential to the shares. Until the Company finds a
value accretive investment opportunity, the share buy-back seems
plausible, in our view.
Dividend payer
The Company has been a consistent dividend payer since 2013. The
average pay-out ratio has been 84% over the past three years. It will
distribute 53% of its 2015 earnings, implying a 4.5% yield. We have
assumed 50% pay out ratio for 2016E and 2017E earnings, indicating
6.5% and 7.3% yield.
Dividends
5
140%
4.5
120%
4
100%
3.5
3
80%
2.5
60%
2
1.5
40%
1
20%
0.5
0
0%
2014
2015
2016E
Gross Dividends
2017E
2018E
Pay-out ratio
Source: Garanti Securities
5
RESEARCH
Lokman Hekim
March 28, 2016
Affiliation with the Sevgi Foundation
The Company formed an affiliation with the Sevgi Foundation and
donated an 8,567sqm plot to the foundation to establish a university. The
affiliation will be positive in the long-term providing a qualified and
reasonably paid workforce and will make the Company more competitive
in the sector.
INVESTMENT RISKS
Public Private Partnership (PPP) Investments
The government is continuously making huge hospital investments across
the country with private sector pariticipants. The company believes that
government’s strategy to build large hospital complexes will not have a
major impact on private hospitals as those complexes effectively replace
the state run hospitals within the city centres. Those hospitals cater to a
different segment and do not pose threat to the private hospitals in the
city centres. There is an city hospital construction in Etlik, Ankara (where
Lokman Hekim generates 20% of revenues) with 3,566 beds which is
expected to be completed in a couple of years.
Regulatory risks
Turkish government is the main supplier of healthcare in the country and
controls the sector. Because of high burden of health expenditures in the
budget, the government had not adjusted the patient tariffs for seveneight years till 2014. However, private hospitals might suffer from the
increase in their cost base. Prolonged unadjusted tariffs would result in
contracting margins for private hospital operators.
Overpaying
The company has 1.5x of Net Debt/EBITDA and 0.4x Net Debt/Equity as
of 2015. It is looking for inorganic growth opportunities. Overpaying an
acquisition or deterioration in profitability due to newly acquired
companies or high investment in a sector deemed as promising would
lever the company. That could be result in more financial expenses. The
company has TL28mn net debt and TL1.5mn long FX position mainly
stemming from USD as of end-2015.
Risk of new supply
Main shareholders of the company are several individuals from different
occupations like doctors, businessman, and academicians. There would
be some share registrations to be sold in Bourse Istanbul. There are two
types of share, namely “A” and “B.” “A” shares account for 0.81% of its
paid-in capital and hold the privilege of appointing 51% of the Executive
Committee. Nine individuals hold “A” type shares.
Low liquidity
Lokman Hekim’s 3-month average daily trading volume is TL1.0mn which
could result in sharp price changes and bring additional volatility to the
shareholders.
6
Lokman Hekim
March 28, 2016
RESEARCH
VALUATION
DCF
We set a 12-month Target Price of TL5.03/share for Lokman Hekim. We
employ DCF as our preferred valuation methodology. We use a risk-free
rate of 10.0%, a WACC of 15% and a terminal growth rate of 5%. We
arrive at a 12-month target price of TL5.03/share for Lokman Hekim.
Lokm an Hekim DCF
(TLm n)
2016E
Revenue
163
EBIT
14
Taxes on EBIT
-2
NOPLAT
12
Depreciation
8
Other non-cash charges
0
Gross Cash Flow
20
Increase in Working Capital
5
Capital Expenditures
6
Gross Investm ent
11
Free Cash Flow
9
Assum ptions
Revenue grow th (TL, %)
15.2
EBITDA margin (%)
14.7
Depr/Sales (%)
5.2
Chg in Working Capital/Sales (%)
2.9
Capex/Sales (%)
3.7
Source: Garanti Securities estimates
WACC Assum ptions
(%)
2016E
Risk-free Rate (RFR)
10.0
Equity Risk Premium
6.0
Cost of Equity
16.0
Cost of Debt
16.0
Tax Rate
15.0
Cost of Debt after Tax
13.6
Weight - Equity
69
Weight - Debt
31
WACC
15.2
Valuation Sum m ary (TLm n)
PV of FCF
Terminal Grow th
PV of Terminal Value
Adj. Net Debt
Minorities
EV
12M Target Mcap
2017E
183
16
-3
13
9
0
22
4
7
11
11
2018E
202
19
-4
15
10
0
25
4
7
12
13
2019E
222
20
-4
16
11
0
27
3
8
11
16
2020E
243
24
-5
19
12
0
30
4
9
13
18
2021E
266
26
-5
21
13
0
33
4
10
14
19
2022E
292
30
-6
24
14
0
38
4
11
15
23
12.2
15.0
5.0
2.4
3.7
10.6
15.0
4.9
2.1
3.7
9.5
14.9
4.8
1.5
3.7
9.5
15.2
4.8
1.5
3.7
9.5
15.1
4.7
1.5
3.7
9.8
15.0
4.7
1.5
3.7
2017E
10.0
6.0
16.0
16.0
20.0
12.8
70
30
15.0
2018E
10.0
6.0
16.0
16.0
20.0
12.8
71
29
15.1
2019E
10.0
6.0
16.0
16.0
20.0
12.8
70
30
15.0
2020E
10.0
6.0
16.0
16.0
20.0
12.8
70
30
15.0
2021E
10.0
6.0
16.0
16.0
20.0
12.8
70
30
15.0
2022E
10.0
6.0
16.0
16.0
20.0
12.8
70
30
15.0
62
5.0%
92
28
21
104
121
LKMNH 12-m th Target Price (TL/share)
Perpetuity Grow th Rate
4.5% 5.0% 5.5%
WACC + 1%
4.12 4.30 4.50
WACC
4.80 5.03 5.28
WACC - 1%
5.62 5.92 6.25
7
RESEARCH
Lokman Hekim
March 28, 2016
Main Assumptions
The key assumptions in our valuation are listed below:
Revenue: We predict that Lokman Hekim will attain a 2015-22E revenue
CAGR of 11%. We expect inpatient and outpatient numbers to grow by a
CAGR of only 4% during the same period. We increased our average
revenue per patient parallel to our inflation expectations. We do not
include any inorganic growth in our model.
EBITDA margin: We conservatively believe that the EBITDA margin will
remain in the 14.7-15.2% range throughout our forecast period.
Working capital: We calculate that the company’s working capital cycle
was 15% of sales in 2015. We conservatively project a gradual increase
in the ratio reaching 17% in 2017-2022E from 16% in 2016E.
Capital expenditures: We expect Lokman Hekim’s capex/sales ratio to be
4% in 2016 and maintain it until 2022.
GUIDANCE vs. OUR 2016 FORECASTS
Lokman Hekim has provided a detailed forecast of their expectations for
2016E as follows. Our estimates are provided alongside company
estimates for comparison. We are in line with company’s guidance.
2014
2015
2016
(TLm n)
Actual Guidance Realization Guidance Garanti Forecasts
Revenues
125.5
139.5
141.6
163.3
163.1
EBITDA
13.4
16.5
18.7
23.3
23.9
EBITDA margin
10.7%
11.8%
13.2%
14.3%
14.7%
Net Income
1.7
5
5.4
8.7
8.1
Net margin
1.4%
3.6%
3.8%
5.3%
4.9%
Source:Garanti Securities
8
Lokman Hekim
March 28, 2016
RESEARCH
Peer Comparison
We tabulate below the hospital operators’ multiples to provide a
perspective as to where Lokman Hekim stands vis-à-vis its international
peers due to the absence of listed peers in the Bourse Istanbul.
On the international front, Lokman Hekim trades at a substantial discount
to peers both on EV/EBITDA and P/E terms even though it offers stronger
earnings growth prospects yet its size is smaller therefore, we refrained
from using multiple comparison in our valuation.
International Com parison
Com pany
Nam e
Em erging Markets
South Africa
Life Healthcare
Netcare
Asia Pacific/Middle East
Bangkok Dusit Medical
Bumrungrad International
IHH Healthcare
Apollo Hospital
KPJ healthcare
NMC health
Developed Markets
North Am erica
Community Health Systems, Inc.
Envision Healthcare Holdings Inc.
HCA Holdings Inc.
Lifepoint Hospitals
Acadia Healthcare Co.
Europe
Biomerieux SA
Fresenius Medical Care
Austrialia
Healthscope
Japara Healthcare
Ramsay Health Care
Monash IVF
Market Revenue CAGR EBITDA CAGR Earnings CAGR
Currency Cap (m )
2015-18E (%) 2015-18E (%)
2015-18E (%)
13.2
13.5
17.8
9.3
13.2
14.6
ZAR
36,853
9.6
9.3
11.8
ZAR
51,401
9.2
16.0
16.6
13.6
13.6
18.2
THB
350,096
11.3
13.0
18.0
THB
150,830
11.9
13.5
13.7
MYR
52,964
14.6
15.5
18.7
INR
195,172
18.4
13.3
20.8
MYR
4,511
13.1
17.1
14.2
AED
10,009
19.4
28.8
37.8
8.8
11.0
17.4
9.5
11.0
18.8
USD
1,933
3.4
6.2
33.3
USD
3,758
14.0
18.9
39.6
USD
30,225
6.0
6.2
11.6
USD
2,830
11.7
12.5
10.6
USD
4,671
29.6
36.3
47.4
7.5
11.2
16.3
EUR
3,937
6.1
17.0
29.1
EUR
23,274
7.7
10.3
14.1
9.1
10.9
15.8
AUD
4,546
8.0
9.0
19.0
AUD
808
13.8
15.7
15.7
AUD
12,614
9.1
11.3
14.6
AUD
407
12.6
12.1
14.3
Lokman Hekim
TRY
Prem/(disc) to South Africa
Prem/(disc) to Asia Pacific/M iddle East
Prem/(disc) to North America
Prem/(disc) to Europe
Prem/(disc) to Austrialia
Prem/(disc) to Emerging M arkets
Prem/(disc) to Developed M arkets
Source: Bloomberg, Garanti Securties estimates
62
12.6
17.7
25.8
EV/Sales
2016E
2017E
4.9
4.4
2.0
1.8
2.7
2.4
1.5
1.4
5.3
4.7
5.4
4.8
7.6
6.8
5.6
4.9
3.4
2.9
1.8
1.7
2.9
2.4
1.7
1.6
1.5
1.4
0.9
0.9
1.0
0.9
1.4
1.4
0.8
0.7
2.8
2.5
1.9
1.7
2.0
1.9
1.9
1.7
2.0
1.9
2.5
2.4
2.5
2.1
1.8
1.7
3.1
2.9
0.3
-83%
-94%
-78%
-83%
-84%
-93%
-81%
0.3
-85%
-94%
-80%
-84%
-85%
-94%
-82%
EV/EBITDA
2016E
2017E
22.8
19.6
9.8
8.7
9.8
8.9
9.7
8.5
24.3
20.8
24.3
21.0
25.0
22.0
21.8
18.7
25.2
20.9
14.7
13.5
14.5
11.7
9.5
8.7
7.9
7.3
6.5
6.2
9.2
8.1
7.2
6.8
6.8
6.0
12.7
11.0
9.9
8.9
9.9
8.8
9.9
8.9
12.8
11.7
14.1
13.1
13.9
11.5
12.4
11.3
10.2
9.5
5.0
-49%
-79%
-37%
-49%
-61%
-78%
-48%
4.2
-52%
-80%
-43%
-53%
-64%
-79%
-52%
P/E
2016E
40.0
18.0
18.3
17.7
42.6
39.3
37.7
49.0
51.9
29.3
18.5
18.0
12.9
5.4
13.7
12.0
16.5
19.3
21.1
21.6
21.0
25.6
23.6
24.9
26.7
14.7
7.7
-57%
-82%
-40%
-63%
-70%
-81%
-57%
EBITDA Margin (%)
2017E 2016E
2017E
33.5
21.6
22.1
15.6
20.3
21.0
16.1
27.4
27.5
15.3
15.2
16.3
35.6
21.8
22.2
33.2
22.2
22.8
33.2
30.5
30.9
40.8
25.8
26.4
41.6
13.5
13.8
25.9
12.3
12.4
14.9
20.3
20.6
16.1
18.3
18.5
11.6
18.6
18.7
4.9
14.2
14.2
11.7
11.1
11.4
11.2
19.9
19.9
13.9
12.0
12.4
15.8
22.4
22.7
18.7
19.3
19.6
19.1
20.3
21.2
18.7
19.2
19.3
22.8
15.9
16.2
21.3
17.9
18.1
21.1
17.7
18.5
23.8
14.6
15.0
13.8
30.7
30.4
6.9
-56%
-81%
-41%
-63%
-70%
-79%
-57%
14.7
-28%
-33%
-21%
-24%
-8%
-32%
-20%
15.0
-28%
-32%
-19%
-23%
-7%
-32%
-18%
9
Lokman Hekim
March 28, 2016
RESEARCH
COMPANY OVERVIEW
Lokman Hekim was founded in 1996 in Ankara. Lokman Hekim operates
four hospitals, two in Ankara and two in Van. Lokman Hekim has a
diagnostic center in Erbil, Iraq. The Company has a 499-bed capacity and
could serve 850k patients (inpatient + outpatient). Lokman Hekim provide
services to foreign patients as well and works with major insurance
companies all over Europe and in the region.
Initial Public Offering (IPO)
IPO price was TL2.48/share (adjusted). Lokman Hekim’s shares started
trading on the Istanbul Stock Exchange on January 20, 2011. 20% of the
company was offered to the public. However, its effective free float is
56%, according to the Central Registry Agency because of share
registrations, in our view.
There are two types of shares, namely “A” and “B.” “A” shares account for
0.81% of its paid-in capital and hold the privilege of appointing 51% of the
Executive Committee. Nine individuals hold “A” type shares.
Lokm an Hekim share perform ance
200.0
180.0
160.0
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0.0
01.02.2011
01.02.2012
Source: Rasyonet
01.02.2013
LKMNH
01.02.2014
01.02.2015
01.02.2016
LKMNH relative to XU100
Shareholder structure
Share type
Value (TLm n)
% of total
A
0.13
0.81%
B
15.87
99.2%
Total
16.00
100.00%
Source: The company
10
Lokman Hekim
March 28, 2016
RESEARCH
"A" type shareholders
Nam e
Stake
% of total
Mustafa Sarıoğlu
0.01
0.09%
İrfan Güvendi
0.01
0.09%
Selamet Koç
0.01
0.09%
Mehmet Altuğ
0.01
0.09%
Nazım Bilgen
0.01
0.09%
Temel Ünlü
0.01
0.09%
Celil Göçer
0.01
0.09%
Murat Alper
0.01
0.09%
Hamdi Ozkan
0.01
0.09%
Total
0.13
0.81%
Source: The company
Key Milestones
1996 - The company was established with five shareholders
2002 - A first hospital was opened in Ankara’s Etlik region
2008 - Lokman Hekim’s largest hospital became operational in Ankara
2011 - Lokman Hekim shares started to trade on the Bourse Istanbul
- Lokman Hekim acquired Van Medisina Hospital
2013 - Its second hospital in Van became operational in 1Q13
- It opened a diagnostic center in Erbil Northern Iraq
TOP MANAGEMENT
Top Managem ent
Mustafa Sarıoglu
Mehmet Altug
Celil Gocer
Necmettin Din
Ibrahim Ugur
Esat Arslan
Yavuz Kocamis
Suleyman Inceoz
Ali Yakut
Source: The Company
Position
Chairman & CEO
Deputy Chairman
Member
Member
Member & Director of Medical Services
Independent Member
Independent Member
CFO
Director of Business Development and Project
Occupation
MD
MD
MD
MD
MD
MD
Businessman
Accountant
MD
11
Lokman Hekim
March 28, 2016
RESEARCH
BUSINESS OVERVIEW
Facilities
Facilities
Launch
Etlik
2002
Sincan
2008
Van
2011
Hayat*
2013
Arbil (Imaging Centre)
2013
Source: The company data
* became operational in late Feb-13
Location Closed area (sqm ) Leased or not Inpatient capacity
Ankara
2,900
Leased
37 - beds
Ankara
17,500
Ow ned
201- beds
Van
12,500
Leased
207- beds
Van
4,500
Leased
54- beds
Iraq
2,000
Leased
Lokman Hekim employs 1,484 employees in four hospitals as of 2015.
Apart from the Sincan Hospital, the other hospitals are leased in TL
terms.
# of personnel
Total Personnel
MD
Admins
Other
2011
972
136
44
792
2012
1158
150
62
946
19%
2013
1297
159
62
1076
12%
2014
1423
168
75
1180
10%
2015
1484
169
74
1241
4%
Lokman Hekim Business Model Highlights
Hospital topline evolution
(TLm n)
2013
2014
Etlik Revenues
22.8
24.2
growth
2%
6%
Sincan Revenues
45
49
growth
3%
10%
Van Revenues
33
36
growth
9%
12%
Hayat Revenues
1.66
4.89
growth
195%
Erbil Revenues
0.1
0.70
growth
615%
Total
102.1
115.6
growth
7%
13%
Breakdow n (%)
Etlik
22%
21%
Sincan
44%
43%
Van
32%
31%
Hayat
2%
4%
Erbil
0%
1%
Source: Garanti Securities, The company data
Sales to SSI
71.2
81.2
Other
31.0
34.4
Total
102.2
115.6
Breakdow n (%)
SSI
70%
70%
Other
30%
30%
2015
27.7
15%
54
10%
44
22%
9.39
92%
1.21
73%
136.8
18%
20%
40%
32%
7%
1%
88.9
48.0
136.8
65%
35%
Num ber of patients evolution
2013
2014
OUTpatient
# of patient
765,621
762,874
growth
-3%
0%
Revenue
57
51
growth
31%
-9%
INpatient
# of patient
41,684
42,222
growth
-12%
1%
Revenue
46
64
growth
5%
41%
Average revenue per patient (ARPP)
(TLm n)
2013
2014
ARPoP
74
67
growth
35%
-9%
ARPiP
1094
1520
growth
19%
39%
ARPP
127
144
growth
22%
13%
2015
800,071
5%
57
10%
48,190
14%
80
25%
2015
71
5%
1663
9%
161
12%
12
Lokman Hekim
March 28, 2016
RESEARCH
Revenue

Lokman Hekim generally caters to the low-to-middle income
segment of the population which are mostly publicly insured. 65%
of Lokman Hekim’s revenues come from SSI as of 2015. As such,
the impact of any possible governmental measures to reduce
healthcare expenditures on the company’s revenues would be
major.

On the other hand, inpatient revenues comprise 58% of Lokman
Hekim’s medical revenues, while the remaining is outpatient. On a
hospital basis, in 2015, the company generated 60% of its
revenues in Ankara vs. 39% in Van. With the launch of the Hayat
hospital in late 1Q13, Van’s share in the total increased.

We believe that there is an upside to our numbers as we do not
incorporate any sales which might come from possible acquisitions
into our model.

When we look at the average revenue per patient (ARPP), growth
in ARRP has been very volatile and we cannot establish any
relationship to inflation or any other parameters. We attribute this
situation to hospitals’ different locations and hospital openings. The
company’s diagnostic center in Erbil could generate higher margin
international revenues in the long term.
The company also records husbandry, residential and rental revenues,
which are a very miniscule portion in total (3% of consolidated revenues).
We project a 15% increase in 2016 revenues and 11% CAGR between
2015-22E.
Consolidated revenues
(TLm n)
2013
2014
Medical
102.1
115.6
growth
7%
13%
Other
5.3
9.9
Total
107.4
125.5
growth
-14%
17%
Breakdow n (%)
Medical
95%
92%
Other
5%
8%
2015
136.8
18%
4.7
141.6
13%
97%
3%
Gross margin
Lokman Hekim’s gross margin averaged 8.8% between 2013-15, but we
see the scope for higher gross margins in 2016 as the Company’s
expenses should diminish proportionally because the hospitals in Van
have matured after employing new doctors, enhancing their marketing
efforts coupled with lower prices to raise traffic and revenues. Labour
costs have the lion’s share (52%) in the cost of goods followed by
equipment and raw materials (22%). According to the management, 5013
Lokman Hekim
March 28, 2016
RESEARCH
60% of labor costs are derived from doctors’ salaries even though they
account for c11% of the total number of employees. With the increasing
operational leverage backed by higher capacity utilizations, we believe
there is further room for improvement in costs. We conservatively expect
the Company’s gross margin to normalize to 14.5% throughout our
forecast horizon.
Cogs & Margins
(TLm n)
2013
2014
Medical Cogs
96.0
105.9
growth
17%
10%
Other Cogs
6.0
7.9
Total Cogs
102.0
113.8
growth
-10%
12%
Gross Profit
Medical
6.1
9.7
margin
5.9%
8.4%
Other
-0.6
2.0
margin
-12.1%
19.8%
Overall Gross Profit
5.4
11.7
margin
5.1%
9.3%
COGS
2015 (TLm n)
120.5 Salary under COGS
growth
14%
as % of sales
3.9
124.5 Equipment and raw materials under COGS
growth
9%
as % of sales
16.3 Other under COGS
growth
11.9%
as % of sales
0.8
16.8% Depreciation (inc. severance ) under COGS
growth
17.1
as % of sales
12.1%
2013
56.27
24%
52.4%
27.58
19%
25.7%
12.76
-70%
11.9%
5.41
58%
5.0%
2014
59.24
5%
47.2%
30.36
10%
24.2%
17.60
38%
14.0%
6.65
23%
5.3%
2015
70.08
18%
49.5%
31.60
4%
22.3%
15.11
-14%
10.7%
7.67
15%
5.4%
Operational expenses
The company managed to keep its operating expenses under control
compared to revenues with a share of around 4-4.5% during the same
period. We assumed a 4.5% ratio going forward.
Opex
(TLm n)
Selling & Marketing
Advertisement
growth
as % of sales
Other
growth
as % of sales
General Adm inistrative
Salary etc expenses
growth
as % of sales
Rent
growth
as % of sales
Maintenance
growth
as % of sales
Consultancy-legal issues
growth
as % of sales
Other
growth
as % of sales
Overall Opex
growth
as % of sales
2013
1.0
1.0
80%
0.9%
0.0
-98%
0.0%
3.32
1.9
28%
1.7%
0.14
28%
0.1%
0.14
28%
0.1%
0.28
28%
0.3%
0.91
-61%
0.8%
4.30
-16%
4.0%
2014
0.9
0.9
-11%
0.7%
0.0
304%
0.0%
4.24
2.9
57%
2.3%
0.24
74%
0.2%
0.03
-78%
0.0%
0.37
33%
0.3%
0.68
-25%
0.5%
5.13
19%
4.1%
2015
1.3
1.2
42%
0.9%
0.0
58%
0.0%
5.11
3.2
10%
2.3%
0.31
30%
0.2%
0.02
-39%
0.0%
0.54
46%
0.4%
1.03
51%
0.7%
6.38
24%
4.5%
14
Lokman Hekim
March 28, 2016
RESEARCH
1.5 pps improvement in EBITDA margin in 2016, but stable thereafter.
Lokman Hekim’s EBITDA margin rose from 6% in 2012 to 13% in 2015.
The rise in the EBITDA margin stemmed mainly from lower cogs. We
project the EBITDA margin to increase to 14.7% in 2016 from 13.2% in
2015 with a more profitable contribution from its Van operations. We
believe that the company will be able to increase its EBITDA margin from
13.2% to a normalized 15% in 2016-2022E.
Working capital requirement
Lokman Hekim had days payable hovering at around 56 in the last three
years with days receivable of 78 days, according to our calculations. 65%
of the company’s revenues come from the Social Security Institution and
there are 75 legal receivable days. In this regard, the company will always
be in need of short-term financing. We do not expect a major change in
those days in the foreseeable future.
Working Capital Days
2012
2013
Receivables days
74
67
Inventory days
10
33
Payables days
51
68
Cash conversion cycle
32
32
2014
84
19
56
48
2015
82
17
43
55
Capital expenditures
Lokman Hekim’s business is not capital intensive. The company spent 4%
of its revenues on capital expenditures in 2014-15. New hospital openings
and renovations were the main reason behind the capex requirement.
The company does not envisage any new hospital start-up investments. It
prefers to lease building or take over an existing one. We assume a
capex at 4% of revenues going forward.
Capex evolution
9
7%
8
6%
7
5%
6
5
4%
4
3%
3
2%
2
1%
1
0
0%
2013
2014
2015
Capex
2016E
2017E
2018E
as % of sales
15
Lokman Hekim
March 28, 2016
RESEARCH
Balance Sheet / Financial Expenses
Lokman Hekim has TL28mn in net debt and a TL1.5mn long FX position
as of end-2015. It generates all of its revenues in TL terms and borrows in
TL terms. Our calculations suggest that the average cost of funding is c13
-14% for Lokman Hekim. Furthermore, according to the agreed terms,
Lokman Hekim is exposed to some fees in its credit card receivables in
exchange for reimbursement by the banks 30-day average. Lokman
Hekim works with all the major banks via credit cards where the credit risk
is transferred to the banks and clients benefit from extended payment
terms. We expect net financial expenses/sales at c1% through our
forecast horizon.
LKMNH Balance Sheet
(TLm n)
2013
2014
Cash and cash equivalents
2
0
Total Financial debt
34
33
Short-term debt
29
19
Long-term debt
5
14
Net Debt
32
33
Net Debt / Equity
0.54
0.54
Net Debt / EBITDA
4.8
2.4
Source: Company data, Garanti Securities estimates
2015
1
28
12
17
28
0.42
1.5
2016E
4
32
12
20
27
0.39
1.1
2017E
10
33
12
21
23
0.31
0.8
2018E
15
34
12
22
19
0.23
0.6
OTHER BUSINESSESS
Husbandry
The company has a 74% stake in Hay Sut, a dairy company. Hay Sut was
established in 2008 and started to operate in 2009. As of 2015, Hay Sut
has 757 cattle. However, its husbandry operations are currently negligible
as a percentage in overall revenues (2%).
Construction & Rental Income
The company obtained a building license to build on a 5,413sqm plot in
Etimesgut, Ankara. Lokman had one building with 44 apartments with
c7,000sqm to be sold and one building with 4,500sqm to be leased. The
project was completed with an investment of TL15mn in 2015. The annual
rental expectation for this asset is about TL0.25mn.
16
Lokman Hekim
March 28, 2016
RESEARCH
OUTLOOK AND FORECASTS
Num ber of patients evolution
2013
2014
2015
2016E
2017E
2018E
2019E
2020E
2021E
2022E
765,621
-3%
57
31%
762,874
0%
51
-9%
800,071
5%
57
10%
840,075
5%
65
14%
882,078
5%
71
10%
917,361
4%
77
9%
944,882
3%
83
8%
# of patient
41,684
42,222
growth
-12%
1%
Revenue
46
64
growth
5%
41%
48,190
14%
80
25%
51,563
7%
93
16%
54,657
6%
106
14%
56,843
4%
119
12%
58,549
3%
131
11%
60,305
3%
145
11%
62,114
3%
161
11%
63,978
3%
178
11%
OUTpatient
# of patient
growth
Revenue
growth
973,229 1,002,426 1,032,498
3%
3%
3%
89
96
103
8%
8%
8%
INpatient
Average revenue per patient (ARPP)
(TLm n)
2013
2014
2015
2016E
2017E
2018E
2019E
2020E
2021E
2022E
growth
74
35%
67
-9%
71
5%
77
9%
80
4%
84
4%
88
4%
92
4%
96
4%
101
5%
growth
1094
19%
1520
39%
1663
9%
1804
9%
1940
8%
2085
8%
2242
8%
2410
8%
2591
7%
2785
7%
127
144
growth
22%
13%
161
12%
177
10%
189
7%
201
6%
213
6%
227
6%
241
6%
257
7%
ARPoP
ARPiP
ARPP
Consolidated revenues
(TLm n)
Medical
growth
Other
2013
102.1
7%
5.3
2014
115.6
13%
9.9
2015
136.8
18%
4.7
2016E
157.6
15%
5.5
2017E
176.9
12%
6.1
2018E
195.6
11%
6.8
2019E
214.2
10%
7.4
2020E
234.6
10%
8.1
2021E
257.0
10%
8.9
2022E
282.0
10%
9.8
107.4
11%
125.5
17%
141.6
13%
163.1
15%
183.0
12%
202.3
11%
221.6
10%
242.7
10%
265.9
10%
291.8
10%
Breakdow n (%)
Medical
95%
92%
Other
5%
8%
97%
3%
97%
3%
97%
3%
97%
3%
97%
3%
97%
3%
97%
3%
97%
3%
2014
105.9
10%
7.9
113.8
12%
2015
120.5
14%
3.9
124.5
9%
2016E
135.8
13%
4.5
140.3
13%
2017E
151.3
11%
5.1
156.4
11%
2018E
167.1
10%
5.6
172.7
10%
2019E
183.2
10%
6.2
189.4
10%
2020E
199.7
9%
6.8
206.5
9%
2021E
219.0
10%
7.4
226.4
10%
2022E
240.4
10%
8.1
248.5
10%
6.1
9.7
5.9%
8.4%
Other
-0.6
2.0
margin
-12.1%
19.8%
Overall Gross Profit
5.4
11.7
margin
5.1%
9.3%
16.3
11.9%
0.8
16.8%
17.1
12.1%
21.9
13.9%
0.9
16.8%
22.8
14.0%
25.6
14.5%
1.0
16.8%
26.6
14.6%
28.5
14.6%
1.1
16.8%
29.6
14.6%
30.9
14.4%
1.2
16.8%
32.2
14.5%
34.8
14.9%
1.4
16.8%
36.2
14.9%
37.9
14.8%
1.5
16.8%
39.4
14.8%
41.6
14.8%
1.6
16.8%
43.3
14.8%
Total
growth
Cogs & Margins
(TLm n)
Medical Cogs
growth
Other Cogs
Total Cogs
growth
Gross Profit
Medical
margin
2013
96.0
17%
6.0
102.0
22%
17
Lokman Hekim
March 28, 2016
RESEARCH
COGS
(TLm n)
Salary
2013
56.27
growth
24%
as % of sales
52.4%
Equipment and raw materials under COGS
27.58
growth
19%
as % of sales
25.7%
Other
12.76
growth
10%
as % of sales
11.9%
Depreciation (inc. severance)
5.41
growth
58%
as % of sales
5.0%
Depreciation under Opex
0.11
growth
28%
as % of sales
0.1%
Overall Depreciation+ severance
growth
as % of sales
2014
59.24
5%
47.2%
30.36
10%
24.2%
17.60
38%
14.0%
6.65
23%
5.3%
0.21
90%
0.2%
2015
70.08
18%
49.5%
31.60
4%
22.3%
15.11
-14%
10.7%
7.67
15%
5.4%
0.25
17%
0.2%
2016E
77.82
11%
47.7%
33.14
5%
20.3%
21.15
39.9%
13.0%
8.22
7%
5.0%
0.27
7%
0.2%
2017E
86.56
11%
47.3%
37.19
12%
20.3%
23.77
12.4%
13.0%
8.87
8%
4.8%
0.29
8%
0.2%
2018E
95.71
11%
47.3%
41.11
11%
20.3%
26.29
10.6%
13.0%
9.59
8%
4.7%
0.31
8%
0.2%
2019E
105.20
10%
47.5%
45.02
10%
20.3%
28.78
9.5%
13.0%
10.37
8%
4.7%
0.34
8%
0.2%
2020E
114.36
9%
47.1%
49.31
10%
20.3%
31.56
9.6%
13.0%
11.24
8%
4.6%
0.37
8%
0.2%
2021E
125.67
10%
47.3%
54.02
10%
20.3%
34.57
9.5%
13.0%
12.18
8%
4.6%
0.40
8%
0.1%
2022E
138.07
10%
47.3%
59.29
10%
20.3%
37.94
9.8%
13.0%
13.24
9%
4.5%
0.43
9%
0.1%
6.86
24%
5.5%
7.92
15%
5.6%
8.48
7%
5.2%
9.15
8%
5.0%
9.90
8%
4.9%
10.71
8%
4.8%
11.60
8%
4.8%
12.58
8%
4.7%
13.67
9%
4.7%
2014
0.9
0.9
-11%
0.7%
0.0
304%
0.0%
4.24
2.9
57%
2.3%
0.24
74%
0.2%
0.03
-78%
0.0%
0.37
33%
0.3%
0.68
-25%
0.5%
5.13
19%
4.1%
2015
1.3
1.2
42%
0.9%
0.0
58%
0.0%
5.11
3.2
10%
2.3%
0.31
30%
0.2%
0.02
-39%
0.0%
0.54
46%
0.4%
1.03
51%
0.7%
6.38
24%
4.5%
2016E
1.5
1.4
15%
0.9%
0.0
15%
0.0%
5.89
3.7
15%
2.3%
0.36
15%
0.2%
0.02
15%
0.0%
0.62
15%
0.4%
1.18
15%
0.7%
7.35
15%
4.5%
2017E
1.6
1.6
12%
0.9%
0.1
12%
0.0%
6.60
4.2
12%
2.3%
0.41
12%
0.2%
0.02
12%
0.0%
0.70
12%
0.4%
1.33
12%
0.7%
8.24
12%
4.5%
2018E
1.8
1.8
11%
0.9%
0.1
11%
0.0%
7.30
4.6
11%
2.3%
0.45
11%
0.2%
0.03
11%
0.0%
0.77
11%
0.4%
1.47
11%
0.7%
9.11
11%
4.5%
2019E
2.0
1.9
10%
0.9%
0.1
10%
0.0%
8.00
5.0
10%
2.3%
0.49
10%
0.2%
0.03
10%
0.0%
0.85
10%
0.4%
1.61
10%
0.7%
9.98
10%
4.5%
2020E
2.2
2.1
10%
0.9%
0.1
10%
0.0%
8.76
5.5
10%
2.3%
0.54
10%
0.2%
0.03
10%
0.0%
0.93
10%
0.4%
1.76
10%
0.7%
10.93
10%
4.5%
2021E
2.4
2.3
10%
0.9%
0.1
10%
0.0%
9.59
6.0
10%
2.3%
0.59
10%
0.2%
0.03
10%
0.0%
1.01
10%
0.4%
1.93
10%
0.7%
11.98
10%
4.5%
2022E
2.6
2.5
10%
0.9%
0.1
10%
0.0%
10.53
6.6
10%
2.3%
0.65
10%
0.2%
0.04
10%
0.0%
1.11
10%
0.4%
2.11
10%
0.7%
13.14
10%
4.5%
2014
1423
168
75
1180
10%
2015
1484
169
74
1241
4%
2016E
1510
172
75
1263
2%
2017E
1545
176
77
1292
2%
2018E
1572
179
78
1314
2%
2019E
1598
182
80
1336
2%
2020E
1607
183
80
1344
1%
2021E
1633
186
81
1366
2%
2022E
1660
189
83
1388
2%
5.52
57%
5.1%
Opex
(TLm n)
Selling & Marketing
Advertisement
2013
1.0
1.0
growth
80%
as % of sales
0.9%
Other
0.0
growth
-40%
as % of sales
0.0%
General Adm inistrative
3.32
Salary
1.9
growth
28%
as % of sales
1.7%
Rent
0.14
growth
28%
as % of sales
0.1%
Maintenance
0.14
growth
28%
as % of sales
0.1%
Consultancy
0.28
growth
28%
as % of sales
0.3%
Other
0.91
growth
28%
as % of sales
0.8%
Overall Opex
4.30
growth
37%
as % of sales
4.0%
# of personnel
Total Personnel
MD
Admins
Other
2013
1297
159
62
1076
12%
18
Lokman Hekim
March 28, 2016
RESEARCH
M&As
Turkey has been attracting many high profile multinational firms operating
in different sub-sectors of the healthcare industry, especially since 2004.
Many international companies have established production bases in the
country to benefit from Turkey’s geographical position, highly skilled
human resources in production and management and the unsaturated
domestic market with a high growth potential. There has been ongoing
interest in the Turkish healthcare sector in the last decade. We have seen
many deals completed so far and interest in them is still ongoing.
However, the transaction details of most M&As have not been disclosed.
According to Mergermarket, the Acibadem and Safak Group were
acquired at a 17.5x EV/EBITDA and 12.0x EV/EBITDA in 2012 and 2008.
According to Capital IQ (as shown in the table below), the known
transactions, point to a 9.3x median EV/EBITDA multiple and 1.9x EV/
Sales, implying 19% and 24% higher value than our target value.
All
Transactions
Announced
Date
Target
Country
Buyers
07.29.2013
Health Management Associates Inc.
United States
Community Health Systems, Inc. (NYSE:CYH)
09.11.2014
Mediclinic International plc (LSE:MDC)
South Africa
-
06.24.2013
Vanguard Health Systems Inc.
United States
Tenet Healthcare Corp. (NYSE:THC)
12.02.2015
Rede D'Or São Luiz S.A.
Brazil
05.12.2014
Ramsay Générale de Santé SA (ENXTPA:GDS)
06.22.2015
01.10.2011
Sellers
Total Transaction
Value (USDm )
Target LTM
Target LTM
Im plied
Im plied
Im plied
Im plied
Financials - Total
Financials Enterprise
Enterprise
Enterprise
Equity Value
Revenue (at
EBITDA (at
Value
Value/EBITDA Value/Revenues
(USDm )
Announcem ent) Announcem ent)
(USDm m )
(x)
(x)
(USDm )
(USDm )
BlackRock, Inc. (NYSE:BLK); The Vanguard Group, Inc.;
Wellington Management Group LLP; Glenview Capital
-
7,715.94
3,709.44
7,630.03
5,868.31
880.08
8.67
1.3
2.42
1,006.41
3,310.13
2,995.6
654.43
5.21
1.14
Lexington Partners L.P.; Metalmark Capital LLC; The
Blackstone Group, Private Equity Group
Banco BTG Pactual S.A.; BTG Pactual Participations Ltd.
4,818.36
1,687.91
4,295.56
5,936.7
523.9
8.2
0.724
GIC Special Investments Pte. Ltd.
614.96
5,167.69
5,817.13
1,877.93
324.15
26.13
4.51
France
Ramsay Générale de Santé SA
Santé S.à r.l.; Santé Développement Europe S.A.S.
1,949.49
1,313.07
2,160.74
2,507.2
303.41
7.13
0.863
Spire Healthcare Group Plc (LSE:SPI)
United Kingdom
Remgro Limited (JSE:REM)
2,284.82
2,949.43
1,293.25
236.81
11.69
2.14
Spain
CVC Capital Partners Limited
Cinven Limited; Cinven Group Ltd.; Cinven Capital
Management (V) General Partner Limited; Cinven Partners,
Capio AB (publ) (OM:CAPIO)
683.16
Quirónsalud
1,164.52
1,164.52
1,164.52
712.95
144.92
8.04
1.63
05.20.2015
Al Noor Hospitals Group Plc
United Arab Emirates Amanat Holdings PJSC (DFM:AMANAT)
68.06
1,643.93
1,558.93
458.65
97.98
15.91
3.4
03.13.2012
Bumrungrad Hospital Public Company Limited
(SET:BH)
Reliant Hospital Partners, LLC
Thailand
Deutsche Bank, Private Banking and Investment Banking
Investments
Bangkok Dusit Medical Services Public Company Limited (SET:BDMS) -
72.97
1,202.22
1,322.97
356.41
89.81
14.28
3.6
United States
HEALTHSOUTH Corp. (NYSE:HLS)
730.0
730.0
730.0
249.0
82.0
8.9
2.93
Bumrungrad Hospital Public Company Limited
(SET:BH)
Partnerships in Care Limited
Thailand
Bangkok Dusit Medical Services Public Company Limited (SET:BDMS) -
86.05
1,361.48
1,390.99
333.93
78.1
18.17
4.25
06.03.2014
United Kingdom
Acadia Healthcare Company, Inc. (NasdaqGS:ACHC)
Cinven Limited
674.0
674.0
662.0
285.0
75.0
8.83
2.32
09.22.2014
Luz Saúde, S.A. (ENXTLS:LUZ)
Portugal
Fidelidade-Companhia de Seguros, S.A.
853.11
611.77
841.63
492.25
73.89
11.23
1.68
12.11.2012
LifeCare Holdings, Inc.
United States
-
Espirito Santo Financial Group SA; Goldman Sachs Group,
Merchant Banking Division; Highbridge Capital
The Carlyle Group LP (NasdaqGS:CG)
801.39
320.0
769.85
483.18
59.71
12.89
1.59
04.08.2011
Prasit Patana Public Company Limited
Thailand
97.62
343.02
444.09
240.87
59.26
7.54
1.86
11.30.2011
Prasit Patana Public Company Limited
Thailand
Bangkok Dusit Medical Services Public Company Limited (SET:BDMS) BBL Asset Management Company Limited; J.P. Morgan
Securities Ltd., Investment Arm; Mitsubishi UFJ Global
Bangkok Dusit Medical Services Public Company Limited (SET:BDMS) Delta Engineering Construction Public Company Limited
3.64
346.57
451.11
237.51
58.73
7.51
1.86
09.07.2012
Clinica las Condes S.A. (SNSE:LAS CONDES)
Chile
-
03.18.2011
Thailand
01.21.2011
Bangkok Chain Hospital Public Company Limited
(SET:BCH)
NovaMed Inc.
05.06.2015
06.11.2015
02.16.2011
Nautic Partners, LLC
82.0
721.2
750.89
240.13
54.61
13.06
2.97
Bumrungrad Hospital Public Company Limited (SET:BH)
Compañía de Seguros CorpVida S.A.; Inversiones
Atlantico Ltda
Land and Houses Public Company Limited (SET:LH)
116.63
466.53
485.7
147.44
45.39
10.79
3.32
United States
Surgery Partners, Inc. (NasdaqGS:SGRY)
-
216.72
105.41
215.1
151.8
42.05
5.12
1.42
Phoenix Healthcare Group Co. Ltd (SEHK:1515)
China
-
Senmart Investments Limited
130.49
1,651.73
1,490.2
202.26
41.0
36.35
7.37
03.11.2011
Mediclin AG (XTRA:MED)
Germany
Asklepios Kliniken GmbH
-
11.08
275.64
337.7
661.48
36.02
9.21
0.502
06.14.2013
OnCure Holdings, Inc.
United States
21st Century Oncology, Inc.
37.5
124.99
101.14
27.09
4.61
1.24
Thailand
Ramkhamhaeng Hospital Public Co. Ltd. (SET:RAM)
16.09
306.56
400.34
108.72
23.31
17.03
3.65
04.07.2011
Vibhavadi Medical Center Public Company Limited
(SET:VIBHA)
National Surgical Care, Inc.
Genstar Capital, LLC; Golub Capital LLC; Ares Capital
Corporation (NasdaqGS:ARCC); Ares Capital Management
-
132.33
12.17.2012
United States
AmSurg Corp. (NasdaqGS:AMSG)
142.0
131.5
142.0
124.5
21.5
6.6
1.14
08.13.2015
Vision Eye Institute Limited
Australia
Jangho Group Co., Ltd. (SHSE:601886)
138.6
145.82
151.06
86.86
20.81
7.59
1.82
07.30.2015
Vision Eye Institute Limited
Australia
Jangho Group Co., Ltd. (SHSE:601886)
Brazos Private Equity Partners, LLC; CCMP Capital
Advisors, LP
AMP Capital Investors Limited; Primary Health Care Limited
(ASX:PRY); Australian Ethical Investment Ltd. (ASX:AEF);
Idameneo (No. 123) Pty Ltd
24.63
126.12
131.3
86.86
20.81
6.67
1.6
04.25.2013
Kindred Healthcare Inc., 16 Non-Strategic Facilities
United States
Vibra Healthcare, LLC
Kindred Healthcare Operating, Inc.
186.5
186.5
186.5
272.0
20.0
9.33
0.686
07.28.2014
Acurity Health Group Limited
New Zealand
Austron Limited; Connor Healthcare Limited
AMP Capital Investors (New Zealand) Limited
03.01.2011
Medical Developers, LLC
United States
Radiation Therapy Services International, Inc.
-
10.29.2013
New Zealand
EHPP Trust
07.24.2012
New Zealand
Royston Hospital Trust Board, Endow ment Arm; Medusa Limited
Accident Compensation Corporation; Milford Asset
Management Limited
AMP Capital Investors (New Zealand) Limited
08.18.2014
Kovai Medical Center & Hospital Ltd. (BSE:523323)
India
-
09.16.2013
Health Management International Ltd (SGX:588)
Singapore
03.04.2011
02.17.2014
Chiang Mai Ram Medical Business Public Company
Limited (SET:CMR)
Chindex International Inc.
11.27.2012
12.05.2014
30.6
104.33
132.44
88.8
19.31
7.2
1.57
91.61
119.4
127.32
47.64
14.39
8.85
2.67
3.38
78.28
105.51
65.83
14.04
7.58
1.62
73.2
81.66
110.72
63.86
13.56
8.32
1.77
-
0.012
59.19
83.57
55.76
12.48
6.8
1.52
Nam See Investment (Pte) Ltd
-
7.74
73.27
101.35
77.65
12.33
8.56
1.36
Thailand
Vibhavadi Medical Center Public Company Limited (SET:VIBHA)
95.62
59.84
103.39
60.53
12.1
8.48
1.69
United States
TPG Capital, L.P.; Fosun Industrial Co., Ltd.
Thonburi Hospital Plc; Ramkhamhaeng Hospital Public Co.
Ltd. (SET:RAM)
Archon Capital Management LLC
384.92
434.29
449.63
183.36
12.08
37.24
2.45
Behavioral Centers of America, LLC
United States
Acadia Healthcare Company, Inc. (NasdaqGS:ACHC)
149.93
137.25
149.88
60.77
11.07
13.54
2.47
Woodleigh Community Care
United Kingdom
Care Aspirations Developments Limited
98.25
-
98.25
28.38
10.6
9.26
Siguler Guff & Company, LP; Linden LLC; Health
Enterprise Partners
-
Median
Source: Capital IQ
9.35
3.46
1.86
19
Lokman Hekim
March 28, 2016
RESEARCH
M&A transactions in Turkish Health Sector
Announced
Com pleted Target Com pany
Date
Date
Bidder Com pany
Bidder Country
Kemer Medical Center Ozel
Saglik Hizmetleri Turizm ve
Ticaret
A.S.Yatırımları A.S
Fiba Saglık
Turkey
PineBridge Investments
Middle East B.S.C.
Bahrain
Reported Revenue
Multiple
Reported EBITDA
Multiple
Deal Value EUR(m )
28/01/2015
28/01/2015
Lara Anadolu Hastanesi
23/04/2014
30/05/2014
25/03/2014
25/03/2014
Florence Nightingale
Hastaneleri Holding A.S
(50%
Stake)
Romatem
(50% Stake)
21/01/2014
13/02/2014
Avrupa Goz Hastanesi (50% Reaya Holding; Nesmal
Stake)
Yatirim Holding AS
Saudi Arabia,Turkey
24/12/2013
12/05/2014
Medical Park Hospital Group
(65% Stake)
Turkven Private Equity
Turkey
26/03/2012
09/04/2012
Acibadem Saglik Hizmetleri
ve Ticaret AS
Consortium Bidco for
Acibadem
Turkey
82
Jinemed Saglik Hizmetleri A.S Acibadem Saglik Hizmetleri
(65% Stake)
ve Ticaret AS
Turkey
6
Malaysia;Malaysia
02/02/2012
Turkey
0.9
23/12/2011
24/01/2012
Acibadem Saglik Hizmetleri
ve Ticaret AS
Khazanah Nasional Berhad;
IHH Healthcare Berhad
06/12/2011
06/12/2011
Istanbul Cerrahi Hastanesi
Mineks International; Melih Us Turkey;Turkey
18/07/2011
17/10/2011
Kent Hospital Group (65%
Stake)
Mid Europa Partners LLP
United Kingdom
01/07/2011
01/07/2011
Ozel Universal Ege Saglik
Hastanesi (82.92% Stake)
Universal Hospitals Group
Turkey
4
03/06/2011
30/09/2011
6
04/05/2011
Lokman Hekim Engurusag
Saglık Turizm Egitim
Hizmetleri
veInternational
Insaat Taahhut
PGGM N.V.;
Turkey
04/05/2011
Safi Saglık Sanayi ve Ticaret
A.S.; Van Divan Saglık Egitim
Turizm
Sanayi
ve Ticaret
Universal
Hospitals
GroupA.S.
Hong Kong;USA;Netherlands
94
(26% Stake)
Finance Corporation; Asia
Debt Management
Hong
Acibadem
Saglik Hizmetleri
Turkey
27
28/04/2011
01/06/2011
JFK Kennedy Hospital;
Goztepe Safak Hospital
3.2
17
17.5
1171
45
ve Ticaret AS
28/04/2011
20/04/2011
Alanya Can Hastanesi
Antalya Anadolu Hastaneleri
Turkey
02/03/2011
02/03/2011
An-Deva Saglik Grubu
(62.5% Stake)
Memorial Health Group
Turkey
12/10/2010
30/10/2010
6
11/08/2010
Hygeia Diagnostic &
Therapeutic Center of
AthensCapital
SA Group Limited;
Argus
Greece
06/08/2010
JFK Kennedy Hospital;
Istanbul Safak Hospital;
Goztepe Safak
Memorial
HealthHospital
Group (40%
United Kingdom;Qatar
90
Stake)
Qatar First Bank
11/01/2010
01/06/2010
Dunya Goz Hastanesi Sanayi Sw an Holding
ve Ticaret A.S. (30% Stake)
Luxembourg
02/01/2010
02/01/2011
Anadolu Hastaneleri (50%
Stake)
New con
USA
10/12/2009
07/12/2009
Medical Park Hospital Group
(40% Stake)
The Carlyle Group
USA
14/10/2008
27/03/2009
International Hospital Istanbul Acibadem Saglik Hizmetleri
(40% Stake)
ve Ticaret AS
Turkey
2.0
06/05/2008
08/12/2008
Safak Group (50% Stake)
Greece
1.5
25/11/2007
25/11/2007
Hygeia Diagnostic &
Therapeutic Center of
Athens
SA Ltd
Ozel Safak Hastaneleri (60% GAM
Holding
Stake)
Sw itzerland
40
15/10/2007
15/10/2007
Italyan Hastanesi
Universal Hospitals Group
Turkey
25
19/04/2007
19/04/2007
Dentistanbul
Global Environment Fund
USA
06/09/2005
06/09/2005
International Hospital Istanbul Acibadem Saglik Hizmetleri
(50% Stake)
ve Ticaret AS
68
Turkey
24
12.0
31
40
Source: Mergermarket
20
Lokman Hekim
March 28, 2016
RESEARCH
PPP is a big risk?
Turkey has undertaken an ambitious Healthcare PPP Program in which a
total of 35 health campuses and city hospitals will be built using the buildlease-transfer model. The health campuses and city hospitals will add
between 40,000-50,000 beds to Turkey’s existing healthcare
infrastructure.
The company believes that government’s strategy to build large hospital
complexes will have not have a major impact on private hospitals. Those
complexes effectively replace the state run hospitals within the city
centres. Those hospitals cater to a different segment and do not pose
threat to the private hospitals in the city centres. There is a city hospital
construction in Etlik, Ankara (where Lokman Hekim generates 20% of
revenues) with 3,566 beds which is expected to be completed in couple
years.
PPPs
City
Adana
Ankara Bilkent
Ankara Etlik
Antalya
Aydın Physical Treatment
Aydın
Bartın
Bursa
Denizli
Diyarbakir Kayapinar
Diyarbakir Yenişehir
Elazig
Eskişehir
PTRs
Gaziantep
Isparta
Istabul Basaksehir
Istabul Sancaktepe
Izmir Bayraklı
Izmir Yenisehir
Kahramanmaras
Kayseri
Kocaeli
Konya
Kutahya
Manisa
Mersin
Ordu
Samsun
Sanlıurfa
Tekirdag
Trabzon
Yozgat
Source: MoH
Bed-Capacity
1550
3660
3566
1000
150
800
400
1355
1000
750
705
1040
1081
2400
1875
755
2682
3800
2060
1200
500
1584
1180
838
600
560
1250
600
900
1700
480
600
475
Current Situation of Tender
Completed
Completed
Completed
Pending for approval
Preperation process
Completed
Tender process
Completed
Completed
Completed
Completed
Completed
Completed
Completed
Preperation process
Completed
Completed
Completed
Tender process
Completed
Completed
Tender process
Signing phase
Signing phase
Pre-feasibility process
Completed
21
Lokman Hekim
March 28, 2016
RESEARCH
Turkish Health Sector
All health care and related social welfare activities in Turkey are
coordinated by the Ministry of Health (MoH). The Ministry is responsible
for providing health care for its citizens and organizing preventive health
services, building and operating state hospitals, supervising private
hospitals, training medical personnel, regulating the price of medical
drugs nationwide and controlling drug production and all pharmacies.
MoH founded in 1920, is the largest healthcare provider and is still the
country’s only preventative healthcare services provider. The MoH is also
the main provider of primary and secondary care. Health policy and
services are MoH’s responsibility at the national level. At a provincial
level, health services provided by MoH are administered by provincial
health directorates, which are accountable to provincial governors. The
healthcare system in Turkey has entered a long period of development
under the 2003-2013 Health Transformation Program. The purpose of this
program was to increase the quality and efficiency of the healthcare
system and enhance access to healthcare facilities.
Turkey’s health care system was very complex because of the existence
of different plans and departments. The social security system in Turkey
was composed of three different major organizations:
•
•
•
Social Insurance Institution (SSK)
Pension Fund for Civil Servants (Emekli Sandigi)
Social Security Institution for the Self-employed (Bag-Kur)
However, the government unified all these institutions under one roof in
2008. Today, health care in Turkey is better than it was in the past, but
has still not reached the expected quality, especially in most of the state
hospitals. Private hospitals lately do a better job increasing the quality of
their physicians and medical equipment. Most of the hospitals and doctors
are concentrated in the cities and large towns, where there are more
people and thus more profit to be had. Meanwhile, there are limited health
services in the countryside and rural areas unfortunately. Consultations
and treatments at private hospitals and clinics are on an upward trend
mainly in developed and large cities on the back of: i) lagging health
outcomes as compared to other OECD and middle-income countries, ii)
inequities in access to health care, iii) fragmentation in financing and
delivery of health services, which contributes to inefficiency and
undermines financial sustainability and iv) poor quality of care and limited
patient responsiveness.
Total health spending accounted for 5.4% of GDP in Turkey in 2014, well
below the average of 8.9% across the OECD countries. The U.S. is by far
the country that spends the most on health as a share of its economy
(with 16.4% of its GDP allocated to health) followed by the Netherlands
and Switzerland.
22
Lokman Hekim
March 28, 2016
RESEARCH
Total health expenditure share in OECD countries' GDP (2014)
18
16
14
12
10
8
6
4
2
Turkey
Mexico
Estonia
Korea
Poland
Hungary
Luxembourg
Chile
Israel
Finland
Slovania
Slovakia
Australia
Ireland
Italy
Iceland
OECD
Norway
Japan
Czech Republic
Source: OECD
United Kingdom
Sweden
Spain
New Zealand
Greece
Belgium
Portugal
Australia
Denmark
Canada
Switzerland
France
Germany
Holland
United States
0
The public sector continues to be the main source of health funding in all
the OECD countries, except Chile, the U.S. and Mexico. In Turkey, 73%
of health spending was funded by public sources, slightly above the
OECD average of 72.
Health Expenditures by breakdow n in OECD countries
Source: OECD
Public
Pocket
Mexico
United States
Chile
Korea
Israel
Greece
Slovakia
Hungary
Switzerland
Portugal
Australia
Ireland
Poland
Canada
OECD
Turkey
Slovenia
Spain
Finland
Belgium
Austria
Germany
France
Estonia
Italy
Iceland
Japan
Sweden
United Kingdom
New Zealand
Czech Republic
Luxembourg
Denmark
Holland
Norway
100
90
80
70
60
50
40
30
20
10
0
Other
23
RESEARCH
Lokman Hekim
March 28, 2016
Health expenditure per capita in OECD countries
10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
Source: OECD
As a percentage of total government expenditure, healthcare spending
followed an upward trend in line with the decision by the Turkish
government to implement a Universal Health Insurance (UHI) system.
Public healthcare spending has tended to overshoot budget targets in
recent years relating to wider access in spite of effective measures to limit
the increase in spending on pharmaceuticals. In 2007, under the Health
Budget Law (SUT), the SSI developed a bundled price for outpatient and
inpatient health services. The introduction of the same price across all
health insurance funds and public and private hospitals was the first step
in moving towards a prospective-payment system in which money would
follow the patient .
Share of health expenditures from pocket in household consum ption
7
6
5
4
3
2
1
0
Source: OECD
24
Lokman Hekim
March 28, 2016
RESEARCH
Healthcare spending per capita in mature markets is relatively much
higher than in emerging markets, mainly as result of higher income per
capita in the mature markets.
Healthcare spending per person is expected to increase at a faster rate in
Turkey and other developing countries like China and India than in many
developed countries. This is mainly a result of the increase in annual per
capita income, a gradual rise in life expectancy and improvements in
healthcare.
The main indicators, such as population growth, demographic ageing and
treatment demands from patients, along with an economic recovery, are
expected to generate an acceleration in healthcare spending growth.
Turkey’s healthcare spending per capita, USD1,011 (OECD data), is still
at a low level relative to more developed countries. However, it is
expected to grow in line with:




The gradual introduction of the universal healthcare insurance
scheme,
Increase in per capital annual income,
Growing health awareness,
A steady rise in life expectancy and the size of the elderly
population
TURKISH HEALTH SECTOR SWOT ANALYSIS
Strength
-Falling morbidity & mortality rates
-Grow ing population and improving demographic indicators
-Improving healthcare aw areness
- Availability of a skilled w orkforce
-Grow ing healthcare investments, including grow ing foreign investment in recent years
-Market regulations increasingly in line w ith EU
-Government's commitment to healthcare industry improvements
Opportunities
-Harmonization w ith the EU and sector modernization leading to a considerable potential
-Significant scope for grow th, given the size of the population and current low consumption
rate
-Recent introduction of new R&D legislation, designed to facilitate investment
-One of the fastest grow ing markets in the w orld
-Healthcare reforms, such as centralized health insurance/social security, leading to better
and w ider access to healthcare
Weakness
-Low per capita healthcare spending of USD1,011, putting Turkey in a position behind many
European countries
-Domestic patent law and intellectual property remaining below international standards
-High dependence on the import of hi-tech drugs
Threats
-Negative effect of government price controls/reimbursement lists on market attractiveness
-The costs of modernization to potentially deter the harmonization of the domestic regulatory
infrastructure and industry standards w ith international norms
-Need to address the substantial deficit of the healthcare system
25
Lokman Hekim
March 28, 2016
RESEARCH
# of Hospitals
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0
200
400
Ministery of Health
600
800
1000
University Hospitals
1200
1400
Private
1600
Other
Source: MoH
# of beds
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
-40000
10000
Ministery of Health
60000
110000
160000
Private
210000
Other
Source: MoH
26
Lokman Hekim
March 28, 2016
RESEARCH
# of beds per 10K
60 %
50
40
30
20
10
0
WHO Europe High Income
Countries
European
Union
Upper Middle
Income
Countries
World
Turkey
Source: MoH
# of MDs per 100k
350
300
250
200
150
100
50
0
WHO Europe
High income countries
Mid-High income
countries
Turkey
Source: WHO, MoH
27
Lokman Hekim
March 28, 2016
RESEARCH
Bed occupancy rates (%)
90
80
70
60
50
40
30
2002
2003
2004
Source: MoH
2005
2006
2007
Ministery of Health
2008
2009
2010
2011
2012
2013
2014
Private
Turkey is getting older
90 000
80 000
70 000
60 000
50 000
40 000
30 000
20 000
10 000
12.0%
10.0%
8.0%
6.0%
4.0%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016E
2016E
2018E
2019E
2020E
2021E
2022E
2023E
2.0%
65+
Total
0.0%
65+ share in total
Source:Turkstat
28
RESEARCH
Disclaimer
Price Perform ance (TL)
3.00
2.80
2.60
2.40
2.20
LKMNH
03.16
02.16
01.16
12.15
11.15
10.15
09.15
08.15
07.15
06.15
05.15
04.15
03.15
02.15
01.15
2.00
BIST-100
Definition of Stock Ratings
OUTPERFORM (OP)
The stock's return is expected to exceed the return of the BIST-100 in the next 12 months.
MARKET PERFORM (MP) The stock's return is expected to be in line with the BIST-100 in the next 12 months.
UNDERPERFORM (UP)
The stock's return is expected to fall below the return of the BIST-100 in the next 12 months.
RESEARCH
Disclaimer
This document and the information, opinions, estimates and recommendations expressed herein,
have been prepared by Garanti Securities Research Department, to provide its customers with
general information regarding the date of issue of the report and are subject to changes without prior
notice. All opinions and estimates included in this report constitute our judgment as of this date and
are subject to change without notice.
This document and its contents do not constitute an offer, invitation or solicitation to purchase or
subscribe to any securities or other instruments, or to undertake or divest investments. Neither shall
this document nor its contents form the basis of any contract, commitment or decision of any kind.
Investor who have access to this document should be aware that the securities, instruments or
investments to which it refers may not be appropriate for them due to their specific investment goals,
financial positions or risk profiles, as these have not been taken into account to prepare this report.
Therefore, investors should make their own investment decisions considering the said circumstances
and obtaining such specialized advice as may be necessary. The information in this report has been
obtained by Garanti Securities Research Department from sources believed to be reliable. However,
Garanti Securities cannot guarantee the accuracy, adequacy, or completeness of such information,
and cannot be responsible for the results of investment decisions made on account of this report.
The market prices of securities or instruments or the results of investments could fluctuate against
the interests of investors. Investors should be aware that they could even face a loss of their
investment. Transactions in futures, options and securities or high-yield securities can involve high
risks and are not appropriate for every investor. Indeed, in the case of some investments, the
potential losses may exceed the amount of initial investment and, in such circumstances, investors
may be required to pay more money to support those losses. Thus, before undertaking any
transaction with these instruments, investors should be aware of their operation, as well as the rights,
liabilities and risks implied by the same and the underlying stocks. Investors should also be aware
that secondary markets for the said instruments may be limited or even not exist.
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Garanti Securities
Etiler Mah. Tepecik Yolu
Demirkent Sokak No:1
34337 Besiktas, Istanbul / Turkey
Phone: +90 (212) 384-1155
Fax: +90 (212) 352-4240

Lokman Hekim Outperform

Transcription

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