Wednesday, October 30, 2013

First REIT: 3Q13 DPU below expectations (OCBC)

First REIT:
Fair value S$1.18
add: 12m dividend forecast S$0.084
versus: Current price S$1.125

3Q13 DPU below expectations
• 3Q13 DPU rises 16.7% YoY
• Largely unaffected by weakening IDR
• Lower FV to S$1.18

First REIT (FREIT) reported 3Q13 revenue of S$22.8m and DPU of S$0.0196, representing an increase of 60.7% and 16.7% YoY, respectively. For 9M13, revenue jumped 43.1% to S$60.4m and was within our expectations.
However, DPU of S$0.0555 (+14.2% after excluding exceptional distributions) was below due to higher-than-estimated expenses. Looking ahead, FREIT will continue to seek opportunities at expanding its footprint in Indonesia, given her growing healthcare market and the strong pipeline of possible acquisition targets from its sponsor Lippo Karawaci. We maintain our revenue estimates but tweak our DPU forecasts for FY13 and FY14 downwards by 4.4% and 1.9%, respectively. This correspondingly lowers our DDM-derived fair value estimate from S$1.20 to S$1.18. Given a decent FY14F dividend yield of 7.5%, we maintain our BUY rating for FREIT.

Revenue in-line but DPU came in below expectations
First REIT (FREIT) reported 3Q13 revenue of S$22.8m, representing an increase of 60.7% YoY. This was driven by contribution from four new Indonesian properties, of which two were acquired in Nov 2012 and the remaining two in May 2013. DPU rose 16.7% YoY to S$0.0196, and is payable on 29 Nov 2013. For 9M13, revenue jumped 43.1% to S$60.4m and was within our expectations (72.6% of our FY13 projection). After stripping out exceptional distributions paid out in 1Q12 and 2Q12, distributable amount to unitholders and DPU rose 24.6% and 14.2% to S$38.1m and S$0.0555, respectively, with the latter forming 70.4% of our full-year forecast. We view this as below our expectations due to higher-than-estimated expenses. On a positive note, FREIT’s financial performance was largely unaffected by the recent weakening of the IDR, given that the base rental for its ten Indonesian properties are denominated in SGD.

Will continue to seek quality asset acquisitions
FREIT highlighted that it will continue to seek opportunities at expanding its footprint in Indonesia, given her growing healthcare market and the strong pipeline of possible acquisition targets from its sponsor Lippo Karawaci. Following Siloam International Hospital’s successful IPO recently in Sep 2013, we believe proceeds raised would allow it to embark on a more aggressive hospital development programme, thus further providing FREIT with assets that may be purchased in the medium to long term horizon. FREIT will also look out for healthcare assets in other parts of Asia to expand its portfolio.

Maintain BUY
We maintain our revenue estimates but tweak our DPU forecasts for FY13 and FY14 downwards by 4.4% and 1.9%, respectively. This correspondingly lowers our DDM-derived fair value estimate from S$1.20 to S$1.18. Given a decent FY14F dividend yield of 7.5%, we maintain our BUY rating for FREIT.



Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 28/10/13

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