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