Okay. Good afternoon, everyone. Please welcome the equity investors, bond investors, regulators, credit rating agency to PT Lippo Karawaci Tbk first quarter earnings call. Happy Eid Mubarak for those who celebrates. Today as moderator, I'm Randi, as the Head of Investor Relations.
With me today we have Mr. John Riady as the Group CEO, and Mr. Daniel Phua as the Group CFO. Today, we will present first quarter results, followed by question and answer. During presentations, you may drop your questions on chat box or raise hand during Q&A session. Without further ado, please Daniel to continue with the presentations. The floor is yours, Daniel.
Thank you, Randy. Welcome, investors. Again, very excited to share with you the first quarter 2023 results for Lippo Karawaci. With regard to the performance for Q1, we have seen a strong growth in the both revenue, gross profit, and NPAT. You note that the real estate marketing sales, as previously we have disclosed to the market.
This meeting is being recorded.
At IDR 1.21 trillion, yeah, which represents 25% approximately of the FY 2023 targets. This quarters we have seen the stable continuous growth from the healthcare segment as well, with revenue, EBITDA and net profit are both all growing significantly, anchored by the strong operational results as well. Lifestyle similarly, we have seen benefits from post-COVID recovery, whereby, again, you know, revenue, EBITDA have all improved as a whole.
If we were to look at the quarterly on quarterly performances, you would know that basically a large part of increase in both revenue EBITDA has been coupled at the healthcare, while real estates and has remained relatively flat and a slight improvement on lifestyle as well.
Real estate revenue and EBITDA, as most of you understand, is affected by seasonality of handovers. In Q1 of 2023, we had a higher mix of legacy projects that were handed over, these were at the lower margins. This affected the EBITDA recognized for real estate for Q1. We do expect there to be more current projects handed over in the Q2-Q4, and that we do fully expect the EBITDA from the real estate to therefore be higher than the preceding years as we get closer to the end of the year.
Highlight obviously is that the performances from the healthcare in itself, that has improved by 30% on the top line, 32% on the bottom line. This contributed as a whole to a 14% improvement in the revenue for the group and a 30% improvement in the EBITDA for the group compared to last year.
On CAGR basis, we are also very pleased to report that if we were to look at the three years consecutively, it has seen the healthy growth with revenue that was rated at 4% CAGR, from 1Q 2021 to 1Q 2023. EBITDA similarly, with a 4% growth and GP at about 2% as well. This year you will also see that is a significant EBITDA recognized of IDR 1.1 trillion.
A large part of that again coming back is due to the contributions from the liability managements on the tender offers related to the bonds and the gains that was recognized as a result of the tender offer. Even if we were to strip out the gain on bond buyback, which we booked IDR 1.2 trillion, which included IDR 947 billion from the gain of the redemptions, plus IDR 261 billion related to the FX gain of the bonds that were retired. Even if we were to exclude the IDR 1.2 trillion gain from bond buyback, you will notice that the underlying NPAT has improved as well by over 54% compared to 1Q22.
This is obviously as a result of a 30% improvement in EBITDA as demonstrated earlier, along with also improvement in interest and appreciation expenses. Tax increase is in line with the increase in EBITDA and the others category, as most of you know, is basically mainly related to the rental, support investment, and obviously that increases year-on-year, due to the rental investments.
By segment, healthcare contributed IDR 673 billion, in EBITDA, with real estate contributing IDR 135 billion, and lifestyle contributed IDR 59 billion. Healthcare's margins has improved and stabilized for the last three consecutive quarters, sitting at a 25% EBITDA margin compared to the goal, the revenue.
Real estate margin as mentioned is slightly lower this quarter compared to last year, due mainly to the mix of higher mix of legacy projects that were handed over in 1Q of 2023. This quarter we also benefited slightly from the unrealized FX gain. You recall last year, every quarter we booked an unrealized FX loss. Due to positive movement in rupiah for 1Q 2023, we have a slight FX gain as well. As a whole, this result in spoken an NPAT of IDR 1.138 positive for 1Q of 2023. We do believe that this will allow us to book a positive NPAT for what?
For 2023, for full year as well going forward based on the latest forecast to date. Cash flow as main topic. Cash flow from operating activities are sitting at IDR 154 billion. And there are increased investing spend mainly due to investment from Siloam in medical equipments and into new hospital openings as well. We are in a net position of IDR 21 billion.
Again, part of that is obviously due to the refinance exercise that I have mentioned earlier. The refinance exercise presented this deck in the last month, I probably wouldn't reiterate a lot of that as most of you already know. We basically addressed about 40% of our outstanding loans, 44% of 2025 and 53% of 2026.
That allow us to obviously reduce our interest cost as a whole. It lowers the risk of currency mismatch and also improve the debt to equity ratios. The terms of it again have all been previously disclosed, I wouldn't go into it in a lot of details. Except that this allow us to then book basically a gain of one buyback of IDR 1.2 trillion, yeah, consisting of gain on redemptions of IDR 947 billion, plus the FX gain related to retired bonds of IDR 261 billion.
This again, as I mentioned, brings our debt to equity ratios down to 2.57, push out the maturity wall. The bonds due in 2025 and 2026 obviously has increased by about 50% compared to what it was before.
Just again, just a reminder that the bonds are fully hedged from IDR 15,000 up to IDR 17,500. We're moving into a segment overview, starting with real estate. As mentioned, IDR 1.1 trillion of marketing sales. This basically is on track for us to book a FY 2023 target of IDR 4.9 trillion.
Revenue and EBITDA is flat compared to last year, as mentioned, due largely to the mix of properties handed over. For the full year revenue and EBITDA, we do expect that to exceed the previous, and we will see a pickup in the EBITDA due to more current year projects that will be handed over from Q2 to Q4.
Results from Q3 coming back show that we are on track to achieve the full year target. ASP is stable. Payment profile and the location setting is stable compared to what's been reported previously as well. The locations coming back, IDR 873 billion of that is coming from the Bora Cibubur and IDR 337 billion coming in from the Bora Cikarang.
As mentioned, residential's properties are still leading the majority of the marketing sales. We do believe that again, a lot of this we have shared previously, so I'll skip over that. Not much has changed. We, in terms of the marketing sales schedules, we are planning to have a higher number of launches, especially in Q3 and Q4 this year.
Marketing sales, Q1 would, relatively speaking, be a softer quarter. I mean, despite that, we still have achieved 24.7% of the marketing sales guidance for the year. We are quite positive in regard to our ability to hit our full year sales targets. The properties have been successfully handed over, Cendana Park North with 165 units, Cendana Icon Premier, another 32 units. We do believe that this schedule will continue for the remaining part of the year. John, do you have anything further to add on the property segment?
No, I think, as you mentioned, Daniel, I think it's pretty much in line with expectations. I continue to take a view that the property market is weak-ish in Indonesia. Nothing, you know, we're not seeing signs of a full recovery. Nevertheless, that has all been priced into our guidance. You can see, we are approximately 25% of our full year numbers.
Okay, thank you, John. Moving to the healthcare segment. Healthcare has booked a substantial increase in revenue, EBITDA and net profit. Compared to 1Q of 2022, revenue is 17.2% higher, EBITDA is 27.5% higher, and net profit is 152.3% higher. This also reflects a stable QO Q performances, I mean, for the last three years. If you were to look at it on a KGA perspective, compared to pre-pandemic, from 4Q 2019 up to now, the revenue shows a KGA of 6%, with EBITDA showing a KGA of 14%.
If you were to look at, again, year-on-year, operating cash flow, as you know, from Siloam has closed the level from what we were generating in IDR 19.158 billion up to about IDR 270 billion in the current quarter. Keep in mind that typically quarter one is a softer quarter for healthcare. Q3 and Q4 are usually a stronger quarter.
The fact that, compared to Q4, Siloam was able to maintain a stable performance, which, despite the fact that also there is no one-off factors this year around, there is no dengue fever, there is no COVID, and this was based purely on the operational performances of Siloam for this year, we do believe that that as a whole is positive.
The operating cash flow improvement is also due to the improvement that has been made in working capital. Working capital has decreased significantly from around about 30 to 40 days down to about 10 days currently. That is also key factors in driving the improvement in operating cash flow, along with obviously the improvement in the EBITDA and improvement in profits due to lower depreciations and improved management of tax rate.
The performance as mentioned earlier has been sustained quarter-on-quarter as well. If you look at the EBITDA margins compared to what we call the net operating revenue, basically the revenue net of specialist fee. The last three quarters, Siloam has reported consistent EBITDA margins of around 29%.
This is a significant improvement compared to last year of 23.4%. We do believe that this trend is likely to continue. As mentioned as well, both revenue and net profit, EBITDA also saw an increase, and net profit margin has been maintained stable at 12.5%-12.6% over the last three quarters in Siloam as well. The payer mix continued to improve as well. From 4Q to 1Q, the BPJS segment has dropped from 18% of payer mix down to 17%. Again, BPJS is the lowest margin segment. An improvement in the private mix does also contribute to an improvement in EBITDA margin for Siloam. A lot of the improvement is driven by operational results. There were no one-off items.
As you can see, 4Q to 1Q, we see inpatient admissions, inpatient days, outpatient visits, all showing steady improvement, with occupancy stable at 61%. The KRAT code, they were contributing the most, in regard to 1Q 2022 to 2023, as you can see, long-term improved by 45%, along with neuro, cardio, orthopedic and urology. A lot of the improvement obviously has no relationship with COVID. Previously, Siloam has benefited from the COVID traffic, but you will see that from 1Q 2022, 1Q 2023, a lot of the improvements in the revenue and EBITDA has been driven by KRAT codes that are not related to COVID.
Some of this improvement in clinical service, for example, we shared previously, Siloam had, you know, it is the only private hospital to be able to do kidney transplants. We have shown a 95.6% survival rate, which is, you know, meeting the improvement as well.
The IVF programs that has been rolled out has also been successful as well, but with a 55% success rate compared to a global benchmark of 30%-45%. These programs that have been rolled out by Siloam are basically anchoring the growth in both the revenue and EBITDA, which positions Siloam to be in a strong position to be able to benefit from post-COVID growth going forward.
Digital remain a very important initiative for Siloam as well. We do believe that there's adjacent market that can be developed by utilizing technologies. MySiloam app has received a continued enhancements, but there is a teleconsult, there is telechat features available. It also allows for online queuing orders and for the patient submissions and records to be tracked centrally through the MySiloam app. Up to date, we have had more than 1.5 million downloads, and 110,000 active monthly users with a 67% engagement rate.
It is an area that Siloam will continue to invest in, it is an area whereby we do believe that it not only improve the seamless access that is being able to enjoyed by our patients, but also open as additional revenue stream going forward.
Moving on to lifestyle, which is mainly our malls and hotels. We do continue to see improved foot traffic in malls and benefiting from the COVID recovery. There are several major malls such as Gajah Mada Plaza, whereby the asset enhancements are close to complete. This will be launched with a new look very soon, which would help improve foot traffic and improve rental income as a result as well. Hotel room rate has increased year-on-year as well.
We do see that the room rate is now sitting at about IDR 557 compared to IDR 123. This was a 9% year-on-year increase. Occupancy and the rate have similarly improved, fueled by the increase in the, what we call leisure travel. Government leisures and also the SOE demand as well. Hotel occupancies currently sits at about 66%. We have seen a month-on-month improvement. Again, the Q1 in hotel is typically a softer quarters. We are pleased to see that month-on-month there is improvement. The mall similarly is sitting at 65% of 2019 visitors.
As John has mentioned earlier, we do see it on a runway basis, in terms of more visitors around in the Q3 or to Q4 this year. On a runway basis, we will return back to pre-pandemic level. That will continue to drive the growth for malls and hotels moving forward. Looking ahead, again, we shared a lot of this last month. Real estate doesn't really move significantly from month to month. We continue to see promises, considering that Q1 typically being a softer quarter. We have fewer launches in Q1 compared to what is planned for the later half of the year. Despite which, we did achieve 25% of the FY 23 targets.
The headwinds as John has mentioned, the innovations that we will continue to drive to deliver new products that is appropriate to the market demand by such as the NX mid rise that we plan to launch in Q2. We do believe we'll continue to anchor our growth moving forward. Healthcare, again, having three quarters of a stable QOQ improvement with stable EBITDA margins, does show that Siloam is well and truly behind the COVID era, is still able to maintain healthy growth going forward.
We have seen continuous improvement in margins, we do see further opportunities to improve margin further. Management is working on various cost efficiency initiatives.
There's an OpEx efficiency drive that we target to be able to achieve IDR 100 billion annual savings this year. We are also continue to drive down the material costs and continue to improve on equipment utilizations in order to reduce the depreciations, the expense that is affecting the businesses. The operational growth I've demonstrated earlier, we do expect that to continue for the rest of the year.
A lot of the growth in Q3 and Q4 will be benefited from an adjustment in BPJS tariff. There is a BPJS tariff adjustment that was announced in February of this year, which basically increased the tariff from BPJS by an average of around 100%. Those will continue to benefit Siloam 's hospitals business going forward.
Continue obviously with the fact that with strong operating cash flow-generating capabilities from Siloam , below that, there is plenty of opportunities to explore non-organic growth going forward as well. The lifestyle segment is also continue to be exciting. We do believe that 2023 will see a full recovery from COVID. A lot of tenants have started to come back, I mean, towards the end of 2022. It does takes, you know, five to six months for these stores to properly fit out, to open, and so forth. From our forecast, we do see a pickup, especially coming in Q3 and Q4 this year.
That along with a few of the new malls that we'll be launching with a new look, such as Gajah Mada, as mentioned, we do believe we'll continue to enhance the performances for malls going ahead. Hotels, again, we mentioned the value is continuing to do well. We do see improvement in basically all the hotel segments, especially with the EBITDA margins that hotel teams is being able to drive. With the revenue coming in, we do see that this year's EBITDA for hotels will be at least, you know, 10%-20% higher than what it was before the pandemic.
In all, we do believe that there is some headwind, as mentioned, due to macroeconomic environment that will affect the real estate segments. We still believe that we could see the four point actually that has been released to the market. Lippo Karawaci is in a unique circumstance in that our real estate business, which obviously will always be affected by the macro swings and so forth, is anchored by a very stable operational business in terms of Siloam, which is showing quarter-on-quarter improvement in all of everything from revenue down to EBITDA, down to operating cash flow.
It provides a very stable base for the group in terms of its operating environment and its ability to cover its interest expense payments. That's all for me with regard to the presentation for today. Again, they're coming back a month in from our last earnings calls. Not a lot of change. We are pleased with results. Report that the 1 Q is showing a strong year-on-year improvement. I will hand time back to Pak Randi for, I guess, Q&A sessions.
Yes, thank you. Thank you, Daniel. Pak John, do you have any additional comments?
I concur with everything that Daniel has mentioned. Overall, I'm pleased to see that the businesses, all of our units continue to recover. The performance is strong, not only in healthcare but also in our malls and hospitality businesses that also grew 19% year-over-year in the first quarter. Overall, things are looking reasonably as expected, despite the headwinds that, you know, we've shared. That's that. Like Daniel mentioned in our last call was less than a month ago, I don't have much updates to share. I will just preempt two topics before we open it up to.
First is on a number of questions on the chat box here on Lumi, also a number of questions probably to me. Look, overall, my comments remain as what I had communicated to you three weeks ago, which is we will continue to support as much as we can. You know, it's a work in progress, we hope to provide more clarity or hope to be able to provide more clarity closer to the 12 month, sort of, mature, 12 months out from the maturity, sometime closer to June, July of 2023. We'll keep you posted on that. The second group of questions on Siloam, especially, you know, whether we're continuing to buy, you know, et cetera.
There was a question from Monday blog. We can't comment on, you know, any of these discussions. Whatever we buy and we continue to buy, we have reported. We will continue to disclose as we as regulations require us to. Beyond that, we can't comment except that, as I've always said, you know, I think I see a lot of value in Siloam. As you can see today, the performance continues to be very strong, it continues to be a very important and a core part of our overall group's business. Happy to take any other questions that the audience might have.
I'm just getting through the questions as well. Probably just let me try to address a few questions, probably heading towards the same directions. With regard to the local cash flow, I think we're still positive on it. There are a few transactions that some of you have noted, obviously, such as, for example, the land sales to Siloam, that has been reported by Siloam as well. That was a IDR 90 billion sale of a plot of land in Surabaya. Again, we are very excited about that because Surabaya is a top tier city whereby Siloam does not have adequate presence at the moment. Siloam only has one hospital there, whereas Mitra Keluarga has four.
You know, those land plot sales is going to be beneficial for Siloam's businesses, but obviously it also bring cash into Lippo Karawaci as well. With regard to the whole co-cash flow on the operating cash flow perspective, for this year, we're definitely targeting for something that will be close to breakeven, yeah, compared to negative that we've experienced in the past few years.
This will be anchored by, you know, both land plot sales and performance from the property markets. Also, you know, a few of the business units has been performing well as well. San Diego Hills, despite coming out of COVID, had just booked IDR 100 billion+ of plot sales.
Those has not been fully reflected as well in the cash flow, but it will be reflected at a later part of the year. All in all, I think we are still positive on our liquidity positions and our ability to service that as well. The stoppage of dividends from Lumi again, that has been factored in in our cash flow forecast as well. I mean, you know, it's IDR 120 billion in there from the unit distributions, as I mentioned, Sam, San Diego, we just booked another IDR 100 billion + of sales that pretty much neutralize that effect.
We do have other upsets as well, but we do believe that with the marketing sales coming in, with the marketing sales that were booked last year and the collections coming in this year, overall, it should put our whole co-cash to be in a good position.
There is a question from Omar, Daniel, about Siloam.
Sorry, which one?
Omar Manzoor.
Cash flow at the whole co-
At the bottom. From Omar Manzoor.
What was the reason for the sharp increase in revenue or which appears to have been maintained? Between 2Q 2022 to 3Q 2022, am I reading this right? Are you referring to last year? Last year, 2Q 2022 to 3Q 2022 is very simple. I mean, 2Q 2022 was bad. It was also still affected by COVID. Yeah. Last year, as I mentioned before, 1Q and 2Q of last year was not a good quarter because it was Omicron, whereby mobility was affected, but we did not have the extra COVID revenues that occurred during Delta.
Very good from a healthcare perspective, don't get me wrong, from a financial perspective, obviously it trends lower. 3Q 2022 basically is where our first post-COVID recovery quarter, if you like. That is why I think you saw a sharp increase in 2Q 2022 to 3Q 2022.
What is important, I guess, is that whatever you saw in 3Q 2022 was maintained to 4Q and to 1Q of this year. Yeah. Which shows that the post-COVID recovery is definitely not a one-off, it is a sustained performance improvement. Is there a long-term plan to transfer leases to Siloam? Well, as I mentioned earlier, last year, Siloam has completed its purchase of the Sri Ratu hospitals back from First REIT.
Now as a result of Siloam buying back the hospitals, well, the lease does not become an issue. Yeah. Obviously, the subsidies that LK pays also, you know, does not become issues anymore. During Siloam's earnings call, I've always stated that Siloam is open to continue to purchase further hospitals back on First REIT. Obviously, this has to be at a price that is gonna be beneficial. Obviously on account that that's First REIT is also open. We have to have those discussions. We do believe that over time, there will likely to be more buyback from Siloam of the hospitals from the First REIT.
As to how many, when, those are items that the management internally will evaluate to decide what is the best deployment of the capital from Siloam in order to maximize shareholder value. Property sales margins. You know, the what we call the legacy projects, the earlier projects, the margins were sitting at around about 20%.
The projects that we have launched in terms of the affordable housing projects are generally sitting at a margin of 40%. Hence, I guess this is where we're coming in with the differences in mix here. These marketing sales were obviously booked earlier, but as you understand, the revenue and EBITDA is only booked when we hand the properties over.
In different quarters, there's different schedules in terms of which sort of properties are handed over. There will always be a differences in quarter-on-quarter margins depending on the mix of handover. Okay. Better profitability due to actually due to a number of items is due to improvement in the EBITDA margin management.
Previously, 2019, Siloam was doing a 16% EBITDA margin. We're now doing 29% EBITDA margin. Definitely the improvement in EBITDA margin is due to improved mix of customers, improved cost management, and that has improved profitability. Along with, if you were to look at the Siloam debt has more information, but we continue to improve what we call the average revenue per occupied bed.
Siloam's average revenue per occupied bed is substantially higher than our competitors, and it's something that we continue to push on. Basically, what we're saying is that what we call revenue intensity, yeah, the revenue intensity has improved over time. That has also drove profitability.
I think we have covered everything, Daniel and John. Oh, there is another question about the dividends. Daniel?
Well, dividends, dividend board we just announced in the Siloam earnings call. It's gonna be IDR 255 billion dividends that will be paid. Of which I guess of that, IDR 150 billion will be attributed to LK. Not very different to last year. Slight increase from last year due to a higher impact from Siloam for 2022.
We'll probably expect a similar dividend payout ratio going forward.
Yeah. We kept that ratio at 36%, exactly the same as the year before.
Yep.
Timing, June.
Timing in June, Amir, please refer to my earlier comments.
I think we have covered, every questions. Do you have any, closing remarks, John or Daniel?
Thank you for everyone's time.
Yeah. Okay. Thank you very much. Thank you, Pak John. Thank you, Pak Daniel. Thank you also for everyone for your participation today for Lippo Karawaci first quarter results presentations. See you again on the next earnings call. Have a good day.
Thank you.