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Capitalizing The Opportunity on Healthcare Industry

SRTG reiterates its strategy of deploying annual investments ranging from USD100mn to USD150mn, allocated across various industries and opportunities.

Additionally, the company has disclosed its recent acquisition of a controlling interest in the Brawijaya hospital chain, comprising five hospitals and two clinics, as part of its expanded presence in the healthcare sector following the complete divestiture of its ownership in Primaya Hospital in 2023.

In the first quarter of 2024, SRTG recorded dividend income of IDR114bn, derived from its investment in Bersama Digital Infrastructure Asia (BDIA). Although this dividend amount declined by 89% QoQ, it was largely expected due to the seasonal nature of dividend payouts from the company's investees.

SRTG dividend income forecast and adjusted NAV

Source: Sucor Research

SRTG is anticipated to augment its net debt from IDR258bn in FY23 to IDR885bn in the first quarter of 2024, primarily presumed to finance the Brawijaya investment. Consequently, this adjustment elevates the loan-to-value ratio to 1.8%, up from 0.5% in FY23. Operating expenses surged by 46% YoY, propelled by increases in compensation and professional fees.

SRTG net gearing ratio

Source: Sucor Research

Despite a decrease in net asset value (NAV) during the first quarter of 2024, the costs-to-NAV ratio remained relatively stable at 0.8%, compared to 0.5% in 2023.

SRTG cost ratio forecast and dividend income to interest ratio

Source: Sucor Research

We maintain a BUY recommendation on SRTG, with an unchanged target price of IDR2,340 per share. We believe the upcoming new administration's focus on metal downstreaming, the EV ecosystem, digitalization, and the transition towards green energy positions SRTG well to benefit from these key sector transformations. Currently SRTG trades at a significant 59% discount to our target NAV, presenting an attractive entry point to go long.


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