weekly market outlook - uniphillip · sarang hospital korea dr park ki ju fixed base rental (usd)...
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Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
1
Market Strategists Kenneth Koh, Market & Equity Analyst
Soh Lin Sin, Macro | Equities Economist
Osama Bakhteyar, Macro | Equities Economist
SG & US Equity Analysts Wong Yong Kai, US Equities
Caroline Tay, Real Estate
Benjamin Ong, Finance | Offshore Marine
Richard Leow, Transport & Logistics
Dehong Tan, REITs
Shane Goh, Consumer
By Phillip Securities Research Mr. Chan Wai Chee, CEO
Jaelyn Chin, Operations Exec
4th May 15, 8.15am/11.15am Morning Call/Webinar
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
Disclaimer
2
This presentation is provided to you for general information only and does not constitute a recommendation, an offer or solicitation to subscribe
for, purchase or sell the investment products mentioned herein. It does not have any regard to your specific investment objectives, financial
situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss
arising whether directly or indirectly as a result of you acting based on this information. Investments are subject to investment risks including the
possible loss of the principal amount invested. The value of the units in any fund and the income from them may fall as well as rise. Access to
services and your account may be affected by market conditions, system performance and other reasons.
The information contained in this presentation has been obtained from public sources which PSPL has no reason to believe are unreliable and
any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in this presentation are based on such
information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is
made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research
contained in this presentation is subject to change, and PSPL shall not have any responsibility to maintain the information or Research made
available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect,
incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been
advised of the possibility of such damages.
You may wish to seek advice from a qualified financial adviser, pursuant to a separate engagement, before making a commitment to purchase
any of the investment products mentioned. In the event that you choose not to seek advice from a qualified financial adviser, you should
consider whether the investment product is suitable for you before proceeding to invest and we do not offer advice in this regard unless
mandated to do so by way of a separate engagement.
You are advised to read the Conditions governing Phillip Securities Trading Accounts and the Risk Disclosure Statement carefully before
investing in this product.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
Initiation: First REIT (TP $1.55, Last Close $1.45)
Ramping up presence at most opportune time
3
Portfolio of 16 hospitals and nursing homes, primarily in Indonesia
• Ramping up presence in Indonesia at most opportune time
Healthcare insurance to cover all Indonesians by 2019 – expected to boost
healthcare demand
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
Initiation: First REIT (TP $1.55, Last Close $1.45)
Ramping up presence at most opportune time
4
• Leverage off sponsor’s synergistic business and experienced hospital operator
Siloam, the biggest private hospital operator in Indonesia to spearhead Lippo
Karawaci (LPKR)’s expansion plans in healthcare sector
• Master Leases provide stability; Forex Risks also mitigated
All of First REIT’s properties are on Master Leases. Indonesian hospitals rentals
in SGD
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
Initiation: First REIT (TP $1.55, Last Close $1.45)
Ramping up presence at most opportune time
5
Leverage off parent’s aggressive expansion in Indonesia healthcare sector
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
Initiation: First REIT (TP $1.55, Last Close $1.45)
Ramping up presence at most opportune time
6
Leverage off parent’s aggressive expansion in Indonesia healthcare sector
2010: 4 hospitals
Current: 20 (11 already sold to First REIT)
TARGETED 2017: 40-50
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
Initiation: First REIT (TP $1.55, Last Close $1.45)
Ramping up presence at most opportune time
7
Part I: Huge Capacity in Indonesia to absorb increased supply of beds
• Increased Demand: New healthcare insurance under Jokowi government
First phase (January 2014) covers 120m citizens.
Expected to cover all citizens (240m) by 2019
Healthcare demand expected to surge
• All First REIT hospitals registered onto plan
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
Initiation: First REIT (TP $1.55, Last Close $1.45)
Ramping up presence at most opportune time
8
Part I: Huge Capacity in Indonesia to absorb increased supply of beds
• Low Bed/population Ratio in Indonesia
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
Initiation: First REIT (TP $1.55, Last Close $1.45)
Ramping up presence at most opportune time
9
Part I: Huge Capacity in Indonesia to absorb increased supply of beds
• Low Bed/population Ratio in Indonesia
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
Initiation: First REIT (TP $1.55, Last Close $1.45)
Ramping up presence at most opportune time
10
Part II: Siloam’s operating model
• Problem of Attracting doctors
• Collaboration with Universitas Pelita
Harapan’s Faculty of Medicine to
provide pipeline of doctors
Other attractive factors:
• Doctors earn bigger fees (Raffles
model)
• State-of-the-Art Medical Equipment
• Modern facilities
• Brand prominence and scale
(Aggressive first mover advantage)
• Won numerous awards
Frost & Sullivan “Indonesian Healthcare Services Provider of the
Year” - 2012, 2013, 2014
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
Initiation: First REIT (TP $1.55, Last Close $1.45)
Ramping up presence at most opportune time
11
Part III: Master Lessee’s Financial Health
• 88% of Rental Income from Sponsor, LPKR
• Largest property developer listed in Jakarta by revenue and total assets
• Gearing (Debt/Equity) at 0.4-0.6 for past 5years
• Liquidity ratios improved over last 4years
• Healthcare already one of LPKR’s main business (30-40% of revenue)
• Healthcare helps LPKR derive cashflow independent of property cycle
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
Initiation: First REIT (TP $1.55, Last Close $1.45)
Ramping up presence at most opportune time
12
COMPANY ANALYSIS
• Master Leases Provide Stability
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
Initiation: First REIT (TP $1.55, Last Close $1.45)
Ramping up presence at most opportune time
13
COMPANY ANALYSIS
• General Lease terms
Property Location Master Lessee General Lease Rental Terms
The Lentor Residence Sphere Investment Pte. Ltd.
Pacific Healthcare Nursing Hom @ Bukit Merah Pacific Healthcare Nursing Home Pte. Ltd.
Pacific Healthcare Nursing Home II @ Bukit Panjang Pacific Eldercare adnd Nursing Pte. Ltd.
Sarang Hospital Korea Dr Park Ki Ju Fixed Base Rental (USD) and Annual increment of 2%
Siloam Hospitals Lippo Village LPKR
Siloam Hospitals Kebon Jeruk LPKR
Siloam Hospitals Surabaya LPKR
Imperial Aryaduta Hotel and Country Club LPKR
Mochtar Riady Comprehensive Cancer Centre LPKR
Siloam Hospitals Lippo Cikarang LPKR
Siloam Hospitals Manado & Hotel Aruaduta Manado LPKR
Siloam Hospitals Makassar LPKR
Siloam Hospitals Bali LPKR
Siloam Hospitals Tb Simatupang LPKR
Siloam Hospitals Purwakarta PT. Metropolis Propertindo Utama (PT MPU)
Siloam Sriwijaya PT. Metropolis Propertindo Utama (PT MPU)
Singapore
Indonesia
Fixed Base Rental (SGD) and Annual increment of
2%
Annual rental increment (SGD): Base (2x percentage
increase of Singapore CPI, subject to floor of 0% and
cap of 2%) plus variable components
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
Initiation: First REIT (TP $1.55, Last Close $1.45)
Ramping up presence at most opportune time
14
COMPANY ANALYSIS
• Forex and Interest Rate Risks mitigated
Indonesian rentals in SGD
Indonesian properties appraised in SGD terms (since income is in SGD)
95% of debt on fixed interest rate basis
No refinancing need until 2017
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
Initiation: First REIT (TP $1.55, Last Close $1.45)
Ramping up presence at most opportune time
15
COMPANY ANALYSIS
• Key Risks
LPKR’s healthcare expansion plans fail to gain traction (poor quality of medical
service/failure to attract quality doctors
Chokes off pipeline of acquisition targets for First REIT
LPKR’s financial health runs into problems: 88% of rental income from LPKR
CONCLUSION
• Initiate with “ACCUMULATE”, with TP $1.55 (Last close $1.44, upside 14% incl
div)
We like First REIT’s affiliation with LPKR and Siloam. Well-established property
developer/largest private hospital operator to drive expansion plans
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
The week ahead
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
Disclaimer
17
This presentation is provided to you for general information only and does not constitute a recommendation, an offer or solicitation to subscribe
for, purchase or sell the investment products mentioned herein. It does not have any regard to your specific investment objectives, financial
situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss
arising whether directly or indirectly as a result of you acting based on this information. Investments are subject to investment risks including the
possible loss of the principal amount invested. The value of the units in any fund and the income from them may fall as well as rise. Access to
services and your account may be affected by market conditions, system performance and other reasons.
The information contained in this presentation has been obtained from public sources which PSPL has no reason to believe are unreliable and
any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in this presentation are based on such
information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is
made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research
contained in this presentation is subject to change, and PSPL shall not have any responsibility to maintain the information or Research made
available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect,
incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been
advised of the possibility of such damages.
You may wish to seek advice from a qualified financial adviser, pursuant to a separate engagement, before making a commitment to purchase
any of the investment products mentioned. In the event that you choose not to seek advice from a qualified financial adviser, you should
consider whether the investment product is suitable for you before proceeding to invest and we do not offer advice in this regard unless
mandated to do so by way of a separate engagement.
You are advised to read the Conditions governing Phillip Securities Trading Accounts and the Risk Disclosure Statement carefully before
investing in this product.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
18
Market Strategists Kenneth Koh, Market & Equity Analyst
Soh Lin Sin, Macro | Equities Economist
Osama Bakhteyar, Macro | Equities Economist
SG & US Equity Analysts Wong Yong Kai, US Equities
Caroline Tay, Real Estate
Benjamin Ong, Finance | Offshore Marine
Richard Leow, Transport & Logistics
Dehong Tan, REITs
Shane Goh, Consumer
By Phillip Securities Research Mr. Chan Wai Chee, CEO
Jaelyn Chin, Operations Exec
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