Monday, February 10, 2014

Religare Health Trust - Proposed Mohali acquisition (CIMB)

Religare Health Trust -
Current S$0.76
Target S$0.94
Proposed Mohali acquisition

Written By Stock Fanatic on Tuesday, February 4, 2014
RHT announced its proposed acquisition of The Mohali Clinical Establishment (Mohali) and interested person transaction to be entered into with Fortis Healthcare. We expect the acquisition to be yield accretive and come through in FY15. While we view the acquisition positively, we expect the higher funding cost to limit its positive impact. Our DDM-based target price increases by 1% and FY15 DPU by 1.3% as we factor in the potential acquisition.We maintain our Add rating.


What Happened
RHT announced its proposed acquisition of Mohali in Punjab, which is operated by Fortis Healthcare and owned by Radha Soami Satsang Beas, a non-profit philosophical organisation. The total costs to be incurred are estimated at S$68.8m, of which S$65m will be funded by debt and the remainder by cash. RHT proposes to enter into a Hospital and Medical Services Agreement (HMSA) with Fortis Healthcare, similar to RHT’s existing HMSAs, with base fee with 3% annual increment and variable fee at 7.5% of the operating income. There will be a non-recurring base fee of S$0.7m for the first year and S$0.5m for the second as the oncology block ramps up.

What We Think
Yield accretive. We view this deal positively as it is yield accretive and there is growth potential from the new 55-bed oncology block in Mohali, which is expected to be functional in 2HFY14. We estimate the initial net fee yield to be 7.3% and an impact on FY15 DPU of 1.3%, limited by the higher funding cost of 5.8%.

Balance sheet to remain healthy
Gearing is expected to increase to 13.3% post the acquisition. Factoring in potential capital expenditures, RHT’s FY14 and FY15 asset leverage of 11-20% remains one of the lowest among S-REITs/business trusts. There is also ample debt headroom of about S$374.7m assuming gearing limit of 40%.

What You Should Do
The yield-accretive acquisition is a positive and RHT continues to offer stability through its base fee (70% of FY14 revenue) and growth through the variable fee and hospital income. Its FY14 and FY15 dividend yield of about 10.7% on average remains one of the highest among S-REITs/business trusts. We maintain our Add rating.


Source/Extract/Excerpts/来源/转贴/摘录: CIMB-Research,
Publish date: 04/02/14

No comments:

Post a Comment

Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock