Firstreitrating by Janice Ding
INITIATING COVERAGE
18 January 2010
RECOM PRICE/TARGET PRICE MKT CAPITALISATION BOARD SECTOR
BUY S$0.855/S$1.08 S$235.5m Mainboard REITs
First REIT
Anchored by Indonesian domestic demand
FIRT SP
Janice Ding, (65) 6210-8609 – janice.ding@cimb.com
Initiate with BUY and DDM-based target price of S$1.08. First REIT is a healthcare real estate investment trust with eight healthcare-related assets in Indonesia and Singapore. Its sponsor is PT Lippo Karawaci Tbk, Indonesia's largest broad-based property company listed on the Jakarta and Surabaya stock exchanges with a market capitalisation of Rp.13.8tr. Our DDM-derived target price of S$1.08 represents a prospective total return 35% from a forward yield of 8.7% and potential price upside of 26.3%. We like First REIT for its income resilience anchored by reputable tenants and positive industry prospects. At 0.9x P/BV, First REIT still looks attractive despite its recent price rally. Siloam Hospitals is the leading private hospital group in Indonesia. Siloam Hospitals, operator of First REIT’s Indonesian hospitals, is a subsidiary of the sponsor-cum-master lessee, Lippo Karawaci. Established through a joint venture between Lippo Group and Parkway Holdings, Siloam Hospitals has built a premium brand as the leading private hospital group with world-class facilities in Indonesia. Severe shortage of quality healthcare in Indonesia. Indonesia has one of the largest populations in the world. Yet, its total expenditure on healthcare is the lowest in South-East Asia. Huge domestic demand for quality healthcare augurs well for First REIT’s assets. Forex risks for Indonesian assets averted. The Indonesian assets would be paid in S$ at a pre-determined rate of S$1.00 to Rp5,623.50 for 15 years. This effectively removes all risks of any rupiah devaluation against the S$.
Financial summary
(S$m, FYE Dec) Revenue (S$ m) Net property income (S$ m) Net property income margins (%) Pretax profit (S$ m) Net profit (S$ m)
18 January 2010
RECOM PRICE/TARGET PRICE MKT CAPITALISATION BOARD SECTOR
BUY S$0.855/S$1.08 S$235.5m Mainboard REITs
First REIT
Anchored by Indonesian domestic demand
FIRT SP
Janice Ding, (65) 6210-8609 – janice.ding@cimb.com
Initiate with BUY and DDM-based target price of S$1.08. First REIT is a healthcare real estate investment trust with eight healthcare-related assets in Indonesia and Singapore. Its sponsor is PT Lippo Karawaci Tbk, Indonesia's largest broad-based property company listed on the Jakarta and Surabaya stock exchanges with a market capitalisation of Rp.13.8tr. Our DDM-derived target price of S$1.08 represents a prospective total return 35% from a forward yield of 8.7% and potential price upside of 26.3%. We like First REIT for its income resilience anchored by reputable tenants and positive industry prospects. At 0.9x P/BV, First REIT still looks attractive despite its recent price rally. Siloam Hospitals is the leading private hospital group in Indonesia. Siloam Hospitals, operator of First REIT’s Indonesian hospitals, is a subsidiary of the sponsor-cum-master lessee, Lippo Karawaci. Established through a joint venture between Lippo Group and Parkway Holdings, Siloam Hospitals has built a premium brand as the leading private hospital group with world-class facilities in Indonesia. Severe shortage of quality healthcare in Indonesia. Indonesia has one of the largest populations in the world. Yet, its total expenditure on healthcare is the lowest in South-East Asia. Huge domestic demand for quality healthcare augurs well for First REIT’s assets. Forex risks for Indonesian assets averted. The Indonesian assets would be paid in S$ at a pre-determined rate of S$1.00 to Rp5,623.50 for 15 years. This effectively removes all risks of any rupiah devaluation against the S$.
Financial summary
(S$m, FYE Dec) Revenue (S$ m) Net property income (S$ m) Net property income margins (%) Pretax profit (S$ m) Net profit (S$ m)