PLife – CIMB

Limited downside risks

• Maintain Outperform. PLife’s exposure to the resilient healthcare sector, long lease structures of up to 15 years and built-in rent increases pegged to the CPI give greater clarity to its income streams than for the other REITs under our coverage. With refinancing secured and a surplus war chest, PLife is positioned for stable growth even in a difficult financial climate.

• Outlook for healthcare remains positive. We expect demand for healthcare to grow strongly on the back of a greying Asian population, blooming medical tourism in the region and the Singapore government’s initiatives to establish a biomedical industry.

• Unchanged DDM-derived target price of S$1.30 (discount rate 8.1%). Management had been able to secure very favourable financing terms despite the credit crunch. We continue to like PLife for its attractive forward yields of more than 10% with the least earnings risk among the S-REITs. P/BV of 0.57x is also in line with the average S-REITs’ 0.51x. Maintain Outperform.