RHT HealthTrust (formerly: Religare Health Trust)

[GreedandFear]

Sure there are issues.

But specifically on the issue of NAV, the drop in NAV doesnt translate to a change in the earnings power of the assets, imo. The earnings power of the assets and what I can receive in my pocket is what interest me. As a result, this is how I choose to look at it for the moment.

Impact of NAV reduction
The NAV reduction is due to the translation effect of weaker rupee on the asset value. The tangible impact is not on distribution but potentially on the reduction of potential debt headroom and ammo to acquire more assets.

However, if one think about it a bit more, perhaps there is no change in purchasing power of its 'reduced' ammo since the Indian assets have all gotten cheaper too on the weaker rupee? As such, changes in NAV seems immaterial, imo.

The key problem: fx
The weaker rupee which drove NAV down might potentially drive distribution down. But only when the fx hedge runs out. So what will rupee in 2014? Is that risk worth taking? How long do you want to underwrite that risk for? I think that's the key issue at hand.

So there are risks, fx being one of the most obvious ones. But (almost) everything has value at a certain price. Whether the risk/reward is attractive now...well, that's clearly debatable.

Caveat emptor

Some observations. Potential asset purchases are not cheaper in INR terms, only in SGD. The company's earnings and revenues are in INR and the assets that they are likely to purchase are in INR, so the INR/SGD fx rate should, thereoretically, be irrelevant to the company. However, we, as shareholders are impacted as the SGD value is now less. Of course, we can hope that INR will appreciate but who knows. The other issue is that the company funds itself in SGD and enjoys lower SGD interest rates (in INR they would probably pay 8%+). Singapore based lenders will focus on the SGD equivalent earnings power and collateral of the company. As INR depreciates, borrowing capacity becomes less. Having said that, I like the industry and the yield is tempting....will be interesting to see if we get another emerging markets FX sell-off once the Fed starts tapering....

[Snoopy168]

FX risk, plus any foreign government policies change and intervention to protect their coney or vested parties (like Malaysia), terrorist attacks by religious groups, power shortage, bad air pollutions & contaminated waters, crazy manpower productivity etc etc are also the downside to investing in foreign land.

Here so as long as RHT is not cooking the books, are paying good dividends that compensates our risk, I am not too worried.

[ARC]

I would say that this counter is not without risks - some more concerning than others. It is important to manage your risk exposure through position sizing and timing, imo.

[Shrivathsa]

Results announced for Q1 show 30% increase in DPU, current yield is 8% as per Q1 report.

FX risk seems to be hedged 100% at prices higher than current spot prices as per Q1 report.

I am uploading the investor presentation.

My investment thesis is that the current DPU (annualized) is 8.19 cents a share.

At current price of 91 cents a share, that is a yield of 9%.

I estimate that there will be some yield compression, at a pessimistic level to 8% and at a optimistic level to 7%.

Compression to 8% will lead to a price of 1.025, which is a 12.5% upside from her and compression to 7% will lead to a price of 1.17, which is a 28% price upside.

Distribution is likely in November based on last year's distribution.

Chances are that there will be a run up from now till November if this yield compression happens.

Disclosure : I am vested in this stock and am likely to trade out, if I hit my upside target

[greengiraffe]

Religare Health Q2 distribution income up
By
Claire [email protected]@ClaireHuangBT
14 Nov5:50 AM
Singapore

RELIGARE Health Trust has posted an income available for distribution of S$14.35 million in its second quarter for fiscal year 2015, up 22 per cent from S$11.72 million in the corresponding quarter last year.

Total revenue for Q2 FY2015 came in 38 per cent higher at S$31.

[zerobeta]

I just have a few questions on this biz trust:
1) they are currently developing 4 other hospitals... but where do they account these development costs? in their 2Q report, their reported "capex" is merely SGD 445k for the 1H of this year... meanwhile total development costs are estimated at SGD 66 mln!

2) the impact of "non-cash straight lining" (very peculiar item, is this common in India?).... This item as a % of service fees was 12.5% and 14.4% in FY 2014 and FY 2013 respectively... but how come in the 1H2015 it's only 4.4%?

3) the base fee increment is only 3% annually... this is so low compared to average inflation in India... average inflation in the past 5 years is 9.5% and in fact since 1995 (20 years) India has never seen inflation as low as 3%... even during the currently low inflationary period, inflation is still 5% ish... does this imply that the sponsor, being the main lessee of the hospital, try to squeeze them as much as they can?

4) For FY2015, distribution is being hedged at 52.28, for 1H2016 the hedge rate is 50.36... meanwhile the current spot rate is 46.3.... this means for FY2015 we will see DPU dip by 11.4%, lower than it should have been if they have no FX exposure.... is my thinking correct?


Thanks a lot seniors.... honestly I see this company as being very prone to be financially engineered... yield is not attractive for India exposure business...

[GreedandFear]

HI ZEROBETA.

WITH RESPECT TO 1 AND 2, I SUGGEST THAT YOU E-MAIL THE INVESTOR RELATIONS DEPARTMENT. THEY ARE QUITE RESPONSIVE.

WRT 3, I AGREE THAT THE 3% INCREMENT IS VERY LOW AND LIKELY TO REMAIN SIGNIFICANTLY BELOW INFLATION IN INDIA BASED ON HISTORICAL LEVELS. HOWEVER, DO NOTE THAT THEY ALSO RECEIVE A VARIABLE FEE OF 7.5% OF NET OPERATING INCOME ON TOP OF THE BASE FEE.

WRT 4, I THINK YOU GOT YOUR DATES WRONG. BASED ON THE Q2 FINANCIAL PRESENTATION, THE DECEMBER 2014 DIVIDEND IS HEDGED AT INR 53.19 AND THE JUNE 2015 DIVIDEND AT INR 51.38. THEY NORMALLY HEDGE THE DIVIDEND 12 MONTHS IN ADVANCE, SO I WOULD EXPECT THAT THEY HAVE NOW HEDGED THE DECEMBER 2015 ONE AND PRESUMABLY AT SOMETHING CLOSER TO INR 46 OR SO.

I AM CURRENTLY VESTED (BUT AT A VERY LOW COST) AND HAVE CONSIDERED SELLING. HOWEVER, WHAT IS HOLDING ME OFF ARE THE FOLLOWING :

(1) IF YOU LOOK AT PAGE 3 OF THE Q2 PRESENTATION, THEY STATE THAT THE ANNUALISED FY 2015 YIELD WOULD HAVE BEEN 8.8% INSTEAD OF 7.6% HAD AND FX RATE OF INR 46.77 BEEN USED. THEY FURTHER STATE THAT THEY USED SGD 0.95 PER SHARE FOR THIS CALCULATION. BACKING OUT THE INR AMOUNT OF THE DIVIDEND (0.95 x 8.8% x 46.77) GIVES US ABOUT INR 3.9 DIVIDEND PER SHARE OR SGD 0.085 (USING A SPOT FX RATE OF INR 45.5 WHICH IS THE CURRENT ONE). SO, ASSUMING THAT THE INR/SGD FX RATE STAYS STABLE, FOR FY 2016 (IE JUNE 2015 TO JUNE 2016), WE ARE LOOKING AT A DIVIDEND YIELD OF 8.1% (8.5 CENTS DIVIDED BY CURRENT SHARE PRICE OF $1.05) WHICH IS DECENT. OF COURSE, THIS IGNORES ANY HEDGING COST AND ALSO ASSUMES THAT INR WILL NOT SELL OFF. I AM WILLING TO TAKE THAT CURRENCY BET (AT THE MOMENT) AS OIL PRICES HAVE HALVED WHICH HAS SIGNIFICANTLY REDUCED THE AMOUNT OF USD THAT INDIA HAS TO BUY EVERY MONTH TO PAY FOR IMPORTED OIL AND THAT IN TURN HAS HELPED THE INR STRENGTHEN. FURTHERMORE, GLOBAL INVESTORS ARE VERY POSITIVE ON INDIA LEADING TO USD INFLOWS (IE FOREIGN INVESTORS HAVE TO SELL USD TO BUY INR). FINALLY, MAS SEEMS TO BE HAPPY TO LET THE SGD DEPRECIATE MORE AGAINS THE USD, SO THAT ALSO HELPS.

I AM NOT SAYING THAT FX SHOULD BE IGNORED, SIMPLY STATING THAT WITH A 6 - 12 MONTHS VIEW, I AM ACTUALLY QUITE BULLISH ON INR.

(2) ALTHOUGH RHT HEDGES THE DIVIDEND 12 MONTHS FORWARD, IT DOES NOT HEDGE ITS ASSETS (WHICH ARE ALL IN INR). GIVEN THAT INR /SGD IS NOW 45.7 VERSUS AROUND 48 IN JUNE 2014, THE SGD VALUE OF THESE ASSETS HAS ALSO INCREASED AND AS RHT HAS LITTLE DEBT, THE FX LOSSES ARE SMALL.

(3). RHT CURRENTLY HAS VERY LITTLE DEBT (15% GEARING), SO HAS SIGNIFICANT HEADROOM TO ADD MORE DEBT FINANCED ACQUISITIONS WHICH WILL BE VERY ACCRETIVE AND COULD ALLOW THE DIVIDEND TO GROW. THE FACT THAT RHT HAS SET UP AN MTN PROGRAMME LATE LAST YEAR, TO ME, SUGGESTS THAT SOMETHING IS COOKING.

(4) IF YOU STRIP OUT THE HEDGES AND FOCUS ON THE FY 2016 NON-HEDGED YIELD OF 8.1%, RHT IS STILL YIELDING SIGNIFICANTLY MORE THAN FIRST REIT (6.8%) AND PARKWAY LIFE REIT (4.8%). THERE CLEARLY NEEDS TO BE A PREMIUM FOR RHT GIVEN ITS FX EXPOSURE (WHICH THESE OTHER TWO REITS DO NOT HAVE) BUT HOW MUCH ?

I AM NOT CONVINCED ENOUGH TO ADD TO MY POSITION BUT I AM CONVINCED ENOUGH TO KEEP MY CURRENT EXPOSURE WITH A VIEW TO ANOTHER 15 - 20 CENTS UPSIDE

VESTED

I just have a few questions on this biz trust:
1) they are currently developing 4 other hospitals... but where do they account these development costs? in their 2Q report, their reported "capex" is merely SGD 445k for the 1H of this year... meanwhile total development costs are estimated at SGD 66 mln!

2) the impact of "non-cash straight lining" (very peculiar item, is this common in India?).... This item as a % of service fees was 12.5% and 14.4% in FY 2014 and FY 2013 respectively... but how come in the 1H2015 it's only 4.4%?

3) the base fee increment is only 3% annually... this is so low compared to average inflation in India... average inflation in the past 5 years is 9.5% and in fact since 1995 (20 years) India has never seen inflation as low as 3%... even during the currently low inflationary period, inflation is still 5% ish... does this imply that the sponsor, being the main lessee of the hospital, try to squeeze them as much as they can?

4) For FY2015, distribution is being hedged at 52.28, for 1H2016 the hedge rate is 50.36... meanwhile the current spot rate is 46.3.... this means for FY2015 we will see DPU dip by 11.4%, lower than it should have been if they have no FX exposure.... is my thinking correct?


Thanks a lot seniors.... honestly I see this company as being very prone to be financially engineered... yield is not attractive for India exposure business...

[greengiraffe]

DBS maintain HOLD:

Last Traded Price: S$0.98 (STI : 2,886.08)
Price Target : S$0.97 (1% downside)
Potential Catalyst: Acquisitions and strengthening of INR
Where we differ: In line with consensus
Analyst
Derek Tan +65 6682 3716 [email protected]
Mervin Song CFA +65 6682 3715 [email protected]
Price Relative
Forecasts and Valuation
FY Mar (S$ m) 2014A 2015A 2016F 2017F
Gross Revenue 96 131 136 154
Net Property Inc 52 73 78 88
Total Return 29 32 47 52
Distribution Inc 47 58 64 70
EPU (S cts) 3.7 4.0 5.9 6.5
EPU Gth (%) nm 9 46 9
DPU (S cts) 8.2 7.3 8.0 8.7
DPU Gth (%) 131 (11) 9 9
NAV per shr (S cts) 89.2 96.5 94.3 92.0
PE (X) 26.5 24.3 16.6 15.2
Distribution Yield (%) 8.4 7.5 8.2 8.9
P/NAV (x) 1.1 1.0 1.0 1.1
Aggregate Leverage (%) 7.5 12.3 14.7 15.3
ROAE (%) 4.1 4.3 6.2 6.9
Distn. Inc Chng (%): - -
Consensus DPU (S cts): 8.0 9.0
Other Broker Recs: B: 1 S: 0 H: 3
Source of all data: Company, DBS Bank, Bloomberg Finance L.P
Fairly priced
Strong outlook is priced in. We maintain our HOLD
recommendation with TP of S$0.97. While we are positive on
Religare Health Trust (RHT)’s expansion plans and exposure to
the growing demand for healthcare services in India, we
believe these attractive attributes have largely been priced in.
Development and asset enhancement initiatives to drive future
growth. Looking ahead, we expect RHT to continue to deliver
decent organic growth on the back of a robust outlook in the
Indian healthcare sector and steady increase in average
revenue per operating bed (ARPOB). Inorganic initiatives
include (i) ongoing development projects at BG Road and
Ludhiana will add another 279 beds (investment value of
S$48.2m) by FY17, and (ii) planned asset enhancement
initiatives at various clinical establishments, adding 292 beds
(investment cost of c.S$20m) over FY16-17.
Low gearing. RHT has significant balance sheet headroom,
with gearing at only 12.1% as at end-Sept 2015. This is
among the lowest in the S-REIT/property business trust space.
This would allow RHT to easily support its expansion plans
and/or pursue accretive acquisitions.
Valuation:
We maintain our DDM-based TP of S$0.97. Given limited
upside to our TP, we reiterate our HOLD recommendation.
Key Risks to Our View:
The key risk to our neutral stance is stronger than expected
earnings and/or INR. Additional upside could also arise from
acquisitions.

[cyclone]

Fortis Healthcare said to be mulling buyout of RHT Health Trust

By: Bloomberg
27/03/17, 12:27 pm

(March 27): Fortis Healthcare, India’s second-largest private hospital chain by market value, is weighing a buyout of the Singapore-listed business trust that owns some of its clinics, people with knowledge of the matter said.

The New Delhi-based company is considering making an offer for all the units it doesn’t already own in RHT Health Trust, which has a market value of $726 million, according to the people. Deliberations on the potential take-private deal are at an early stage, and Fortis Healthcare could decide not to proceed with a bid, the people said, asking not to be identified because the information is private.

RHT rose as much 5.8% Monday in Singapore, the biggest intraday gain in more than a month, prompting an exchange query. Units of the trust were up 4% before RHT requested a trading halt, pending a response to the bourse operator. The benchmark Straits Times Index fell 0.5% at 11.31 am in the city-state.

More details in http://www.theedgemarkets.com.sg/article...alth-trust