PLife – DBSV

Still going strong

• Management shared updates and growth plans at our well-attended conference in Singapore last week

• Affirmed our beliefs that management will deliver growth through acquisitions and AEI

• Separately, we expect 4Q10 DPU to be at least 2.28 Scts (+11% yoy); results due on 24 Jan

• Raised FY11F/12F DPU by c.2%/3%; Maintain Buy, TP: S$1.90

Growth through acquisitions and AEI. PREIT’s investor meetings during our Pulse of Asia conference last week were very well attended by almost 40 fund managers/analysts. The meetings reaffirmed our views that PREIT’s growth will be from acquisitions in Japan and Malaysia, as well as higher rentals in Singapore amid higher CPI. Management has been evaluating possible entry into Australia but has yet to finalize any suitable deal. Asset enhancement will also be part of management initiatives going forward. With its active debt management, further lowering of their funding cost is possible. We believe many investors were pleased to hear from management that fund raising, if any, will be timed with acquisition, rather than pre-emptively to the market.

4Q results preview; we expect 2.28 Scts DPU. Separately, PREIT will announce their 4Q/FY10 results on 24 Jan. We do not expect any surprises. Based on our estimates, we are expecting 4Q DPU to be at least 2.28cts (+11% yoy, +3% qoq), totaling 8.7 cts for FY10 (FY09: 7.74cts).

Maintain Buy, TP: S$1.90. At current price, shares are trading at a premium c.1.3x P/NAV. This, in our view, arises from a scarcity of quality healthcare assets, as well as expectations on management to deliver on acquisitions. We are confident that management will meet market expectations. We raised our FY11F/ 12F DPU by 2%/ 3% on higher CPI assumption of 3.2% for 2011, lower all-in interest costs and lower potential dilution from equity raising due to the higher share price since our last report on 6 Oct’10. We are still assuming acquisition of S$200m around mid-2011, funded by 70%/30% equity/debt.