First REIT - OCBC Investment 2017-03-16: Robust operational performance reported by Siloam Hospitals

First REIT - OCBC Investment 2017-03-16: Robust operational performance reported by Siloam Hospitals FIRST REAL ESTATE INV TRUST AW9U.SI

First REIT - Robust operational performance reported by Siloam Hospitals

  • We note that PT Siloam International Hospitals Tbk (SIH) recently reported robust operational performance for its FY16 results. We believe this augurs well for First REIT (FREIT), as it owns a number of hospitals being operated by SIH. 
  • As a recap, besides base rental income from the hospitals, FREIT is also entitled to a variable rent component which is a function of the revenue growth of the hospitals, subject to certain conditions. 
  • For FY16, SIH saw its gross operating revenue and EBITDA increase by 25% and 17% to IDR5.17t and IDR674b, respectively. 
  • SIH currently has 23 operational hospitals, three completed hospitals awaiting their operational license, two newly acquired hospitals and 40 future developments. Hence, we believe this provides FREIT with a steady pipeline of potential acquisition targets in the future. 
  • However, we maintain our HOLD rating and S$1.32 fair value estimate as we see limited upside potential at current price level.




Wong Teck Ching Andy CFA OCBC Investment | http://www.ocbcresearch.com/ 2017-03-16
OCBC Investment SGX Stock Analyst Report HOLD Maintain HOLD 1.320 Same 1.320



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