Stock Recommendations: Lippo Group's Performance Supported by Healthcare Sector

March 28, 2024, 04.30 AM | Reporter: Pulina Nityakanti

ILUSTRASI. Visitors enjoy Ramadan-themed decorations at Lippo Mall Kemang, South Jakarta, on Sunday (2/4). Welcoming the holy month of Ramadan 1444 H, Lippo Mall Kemang is holding several activities?themed Light of Ramadhan ? The Marrakech Vibes?such as bazaars, Ramadan culinary delights and so on which will accompany visitors until April 30, 2023. (KONTAN/Baihaki)

STOCK RECOMMENDATION - JAKARTA. Lippo Group's performance in 2023 still received significant support from the health sector, especially reflected in the performance of PT Lippo Karawaci Tbk (LPKR).

Quoting information disclosure at the Indonesia Stock Exchange (IDX), LPKR recorded a satisfactory performance in 2023. The net profit recorded by LPKR reached IDR 50.14 billion, reversing from a loss of IDR 2.69 trillion in 2022.

LPKR's revenue also showed a significant increase, reaching IDR 16.99 trillion in 2023, up 14.1% from the previous year which was IDR 14.80 trillion.

If detailed, the largest revenue came from the health business segment which contributed IDR 11.19 trillion, followed by the real estate development business segment of IDR 4.54 trillion, and the lifestyle segment of IDR 1.25 trillion.

However, several subsidiaries of the Lippo Group showed varied performance. For example, PT Siloam International Hospitals Tbk (SILO) recorded a net profit of IDR 1.21 trillion, up 73.91% compared to the previous year which was IDR 696.49 billion, with net revenue reaching IDR 11.19 trillion, up 17.57% from the previous year.

Meanwhile, PT Matahari Department Store Tbk (LPPF) recorded revenue of IDR 6.53 trillion in 2023, growing 1.30% from the previous year, but LPPF's profit decreased by 51.17% from the previous year to IDR 675.36 billion.

On the other hand, PT Lippo Karawaci Tbk (LPCK) recorded revenue of IDR 1.04 trillion, down 15.68% from the previous year, and profit fell 47.63% annually to IDR 161.92 billion, due to a decrease in home sales.

Pilarmas Investindo Securities analyst Arinda Izzaty sees SILO's outpatient visits grew 23% YoY and inpatient grew 15.5% YoY. The increase in SILO's profit was also supported by the changing lifestyle of the community after the Covid-19 Pandemic.

"So this will certainly have a positive impact on the development of the Hospital in the future," she said to Kontan, on Wednesday (27/3).

In 2024, the issuers expected to support the Lippo Group are LPKR, SILO, and LPPF. LPKR is expected to continue to receive DTP VAT incentives for home purchases of up to IDR 5 billion, which is expected to support its pre-sales revenue.

LPKR's marketing sales in 2023 were recorded at IDR 5.12 trillion, exceeding the initial target of 2023 and up 7% from the previous year.

Meanwhile, SILO is expected to continue to utilize technology in health services to attract public interest.

For LPPF, the prospects are quite bright especially in the second quarter of 2024 with the adoption of the shop-in-shop concept at AEON Deltamas Cikarang. However, investors need to consider potential valuations in the future.

Reza Priyambada from Reliance Securities Indonesia recommends holding for LPPF, LPKR, and LPCK with target prices of IDR 1,970 per share, IDR 83 per share, and IDR 660 per share, respectively.

Meanwhile, an equity analyst from Kanaka Hita Solvera, William Wibowo, recommends buying SILO with a target price of IDR 2,500 per share, with stock movements at the support level of IDR 2,000 per share and resistance of IDR 2,500 per share.