PLife – CIMB

On the road

• PLife non-deal roadshow. We brought PLife REIT on a non-deal roadshow to Singapore, Kuala Lumpur and Hong Kong recently. Management elaborated on its acquisition rationale and strategies, and clarified on tenant concentration risks from Parkway Holdings.

• Acquisition rationale and strategies. Whilst short term acquisitions are likely to remain opportunistic in nature, medium term targets will focus on low-risk countries with quality healthcare assets and transparency in government regulations. The management will also attempt to keep similar leasing arrangements for future acquisitions so as not to erode the defensiveness of the REIT. In the longer term, the management intends to cut down concentration risks from PWAY to 60%.

• Potential acquisitions to be a kicker. An acquisition within the year looks increasingly likely. PLife’s trading yields have been compressed to 7.9%. Offers from cash-strapped healthcare operators continue to grow and capital markets seem to be opening up again. We expect acquisitions to be a kicker for PLife. Maintain Outperform with unchanged target price of S$1.20 (discount rate 8.1%)