Sunday, 20 May 2012

First REIT

First REIT is the first Singapore-based real estate investment trust listed on SGX which provides REIT investors an exposure to the healthcare industry in Indonesia. Over time, First REIT diversified its portfolio to include hospitals and nursing homes in Singapore and South Korea. With the fast growing middle class in Indonesia and the aging population in Singapore, First REIT is well positioned to tap on the increasing demand for healthcare services in this 2 countries.

Indonesia


2008 2009 2010 2011*
Unemployment 8.40% 7.90% 7.10% 6.70%
Inflation 9.80% 4.80% 5.10% 7.10%
Real GDP growth 6.00% 4.60% 4.10% 4.20%
*estimated
GDP per Capita (PPP) - $4,657 International Dollars
Exports as % of GDP - 16.5%
Median Age (2006) - 27.0 year old
Life Expectancy - 70 years
Inequality of wealth distribution - 36.8 (0: Perfect equality, 100: Absolute inequality)

With export and FDI(Foreign direct investment) inflow only contributing 16.5% and 0.0015% of GDP respectively, Indonesia's strong domestic demand will help cushion against the European debt crisis. The strong domestic demand is probably also the reason why Indonesia managed to sustained its real GDP growth during the 2008-2009 economic crisis. This is in stark contrast with the export-orientated Singapore's real GDP growth during the same period. Furthermore, at the beginning of this year, rating agency, Moody had upgraded Indonesia to 'investment grade' by increasing its sovereign credit rating from Ba1 to Baa3. This is likely to attract more foreign investment to Indonesia as money flow from the financially trouble nations in the west to the developing economies in the east.

Singapore


2008 2009 2010 2011*
Unemployment 2.20% 3.00% 2.20% 2.20%
Inflation 6.60% 0.60% 2.80% 3.30%
Real GDP growth 1.80% -0.80% 14.50% 5.20%
*estimated
GDP per Capita (PPP) - $59,124 International Dollars
Exports as % of GDP (2008) - 220.5%
Median Age (2006) - 38.0 year old
Life Expectancy (2009) - 81.3 years
Inequality of wealth distribution - 42.5 (0: Perfect equality, 100: Absolute inequality)

Aging population continue to be a concern for Singapore. In 2007, approximately 1 in 10 is above the age of 60. By 2050, the proportion of those aged 60 and above will be doubled to approximately 2 in 10. Together with the increasing life expectancy of Singaporean, it will continue to fuel the demand for healthcare facilities.


First REIT financial information


2007 (S$'000) 2008 (S$'000) 2009 (S$'000) 2010 (S$'000) 2011 (S$'000)
Price(year end) (S$) 0.5594 0.2942 0.5921 0.705 0.760
Revenue 28,290 30,178 30,162 30,274 54,006
NPI 28,053 29,964 29,850 29,875 53,436
Distribution 19,277 20,831 20,964 21,346 48,311
Current Assets 15,272 14,647 13,742 41,771 42,163
Current Liabilities 11,866 61,357 10,245 81,273 75,731
Non-current Assets 325,600 324,900 340,910 612,800 618,453
Non-current Liabilities 77,664 23,092 73,380 94,206 79,586
Retained earnings 69,620 74,342 91,394 132,742 159,492
Net Cash 13,605 12,417 7,497 27,593 32,725
Borrowing 50,633 50,773 52,800 57,700 98,700
EPU (cents) 10.91 8.41 13.09 18.04 8.15
DPU (cents) 7.09 7.62 7.62 6.63 7.01
Current Ratio 1.29x 0.24x 1.34x 0.51x 0.554x
NAV/unit (cents) 92.38 93.21 98.39 77 80.5
PE ratio 5.13x 3.5x 4.52x 3.91x 9.33x
Dividend yield 12.70% 30.60% 12.87% 9.40% 9.22%
Gearing 15.50% 15.60% 15.50% 9.40% 16.00%
Interest Cover 15x 14.2x 13.5x 11.6x 12.3x

  • First REIT has one of the lowest Gearing ratio compared to other REIT listed on SGX, leaving it with ample headroom for acquisition through debt financing before it reach its gearing limit of 35%.
  • Consistent growth of DPU since 2007, after taking into consideration of the right issue (Ratio: 5 for 4) conducted near end of 2010. Expected DPU of 7.76c for FY2012.
  • Extraordinary high dividend yield for 2008 was due to sharp decline in stock price towards the end of 2008, following the collapse of Lehman Brothers. Revenue and NPI remain intact despite the economic crisis during 2008-2009, suggesting resilience and in-elasticity of demand for the healthcare industry.     

Properties Performance


Indonesia

Siloam Hospital Lippo Village Siloma Hosptial Kebon Jeruk Siloam Hospital Surabaya Siloam Hospital Lippo Cikarang MACCC Imperial Argaduta
Property Value S$153.8m S$85.8m S$30.9m S$41.3m S$217.5m S$35.5m
Revenue (2011) S$13.388m S$7.587m S$3.001m S$3.778n S$18.739m S$3.680m
ROA 8.70% 8.83% 9.71% 9.15% 8.62% 10.37%

 

Singapore South Korea

Pacific Healthcare (Bukit Merah) Pacific Healthcare (Bukit Panjang) Lentor Residence Sarang Hospital
Property Value S$11m S$11m S$14m US$13.2m
Revenue (2011) S$0.991m S$0.966m S$1.071m US$0.636m
ROA 9.01% 8.78% 7.65% 4.83%


Technical Analysis





1-year daily chart. Click to enlarge.

  • Tested the resistance level at $0.885 for about a week before breaking through and is now testing the next Fibonacci resistance at $0.855 level. Long lower shadow indicates strong selling pressure, but managed to close at the resistance level. 
  • Next resistance levels: $0.830-$0.835 and $0.810-$0.815
  • $0.81-$0.815 Resistance level coincide with 200 SMA, the trendline drawn across the 1 year chart and is approximately it NAV level, indicating a very strong support level.
  • RSI and Stochastic showing signs of oversold

Personal opinion
Strong fundamentals with positive economic outlook. Highly attractive dividend yield. Looking forward to enter this counter if the price fell to the range of $0.81-$0.82.





3 comments :

  1. Nice analysis on First Reit. Are you invested in this yet?

    I am lucky to pick it up at around 79-80 cents 6 months ago and as you said if the price goes back to around then, I will definitely be picking up more as well :)

    B

    ReplyDelete
  2. Thank you :)
    I'm not invested in it yet, i onli took notice of this REIT 2 nights ago and find it highly attractive after digging for more information. I really hope i can get into this REIT at a good price haha

    ReplyDelete
  3. very good research done. a blog that i would come back again instead of patronizing articles.

    ReplyDelete