Religare Health Trust - DBS Research 2015-11-19: Fairly priced

Religare Health Trust - DBS Research 2015-11-19: Fairly priced RELIGARE HEALTH TRUST RF1U.SI 

Religare Health Trust - Fairly priced 

Strong outlook is priced in. 

  • We maintain our HOLD recommendation with TP of S$0.97
  • While we are positive on Religare Health Trust (RHT)’s expansion plans and exposure to the growing demand for healthcare services in India, we believe these attractive attributes have largely been priced in. 

Development and asset enhancement initiatives to drive future growth. 

  • Looking ahead, we expect RHT to continue deliver decent organic growth on the back of a robust outlook in the Indian healthcare sector and steady increase in average revenue per operating bed (ARPOB). 
  • Inorganic initiatives include 
    1. ongoing development projects at BG Road and Ludhiana will add another 279 beds (investment value of S$48.2m) by FY17, and 
    2. planned asset enhancement initiatives at various clinical establishments, adding 292 beds (investment cost of c.S$20m) over FY16-17. 

Low gearing. 

  • RHT has significant balance sheet headroom, with gearing at only 12.1% as at end-Sept 2015. This is among the lowest in the S-REIT/property business trust space. This would allow RHT to easily support its expansion plans and/or pursue accretive acquisitions. 

Valuation: 

  • We maintain our DDM-based TP of S$0.97. 
  • Given limited upside to our TP, we reiterate our HOLD recommendation. 

Key Risks to Our View: 

  • The key risk to our neutral stance is stronger than expected earnings and/or INR. 
  • Additional upside could also arise from acquisitions.



Derek Tan DBS Vickers | Mervin Song CFA DBS Vickers | http://www.dbsvickers.com/ 2015-11-19
DBS Vickers SGX Stock Analyst Report HOLD Maintain HOLD 0.97 Same 0.97


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