RHT Health Trust - CIMB Research 2016-10-14: Completes divestment; special distribution of 24.8 Scts | SG Investors.io

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RHT Health Trust - CIMB Research 2016-10-14: Completes divestment; special distribution of 24.8 Scts

RHT Health Trust - CIMB Research 2016-10-14: Completes divestment; special distribution of 24.8 Scts

RHT HEALTH TRUST RF1U.SI

RHT Health Trust - Completes divestment; special distribution of 24.8 Scts

Completes sale of CCDs and CCPS to Fortis Healthcare.
Special distribution of 24.8 Scts to unitholders.
Maintain Add and DDM-based target price of S$1.11.

Completion of sale

RHT has announced that the proposed disposal of 51% of the compulsorily convertible debentures (CCDs) in Fortis Hospotel Ltd and 100% of the compulsorily convertible preference shares (CCPS) in Escorts Heart Institute and Research Centre Ltd to Fortis Healthcare Ltd have been completed on 14 Oct 2016.
The gross consideration totalled Rs14,566.7m (S$301m) while the net proceeds from the disposal amounted to Rs9,602.7m (S$198.5m).

Special distribution from sale amounts to 24.8 Scts

The latter translates into a special distribution of 24.8 Scts to unitholders. The stock will trade ex-special distribution on 19 Oct 2016 while the book closure date is on 21 Oct 2016 and payment date on 28 Oct 2016.
Unitholders are not subject to Singapore income tax on the special distribution. This one-off distribution is on top of the income distribution expected for 1HFY17.

Our FY17-18 DPU estimates factor in the change in stake

Post the transaction, RHT will retain a 49% stake in the Gurgaon and Shalimar Bagh hospitals and continue to enjoy these associated contributions.
Our FY17 and FY18 DPU estimates were adjusted earlier to factor in this change in ownership. RHT plans to add another 379 beds to its hospital portfolio over CY17, including for mother & child programmes, oncology and orthopaedics, and this should partly fill the income vacuum post the transaction.

Maintain Add

We leave our FY17-19 DPU estimates and DDM-based target price of S$1.11 unchanged pending the upcoming 2QFY17 earnings announcement.
Looking ahead, we think a key upside catalyst for further share price performance is more new acquisitions.
Maintain Add. Downside risks are continued weakening of the Indian Rupee.

LOCK Mun Yee CIMB Research | YEO Zhi Bin CIMB Research | http://research.itradecimb.com/ 2016-10-14

CIMB Research SGX Stock Analyst Report ADD Maintain ADD 1.110 Same 1.110