PLife – Phillip

Full Year Results

Company Overview

PLife REIT is one of the largest listed healthcare REITs in Asia by asset size. Its mandate is to invest in income producing real estate and/or healthcare-related assets primarily used for healthcare and/or healthcare-related

purposes in Singapore and Asia.

• 4Q11 (FY11) revenue $22.8mn ($87.8mn), NPI $20.8mn ($80.3mn), distributable income $14.9m ($58.1mn)

• DPU for 4Q11 (FY11) at 2.47 cents (9.60 cents)

• Incorporate 95% payout ratio from 2012 to2016

• Upgrade to ACCUMULATE though with a lowered target price of $1.880

What is the news?

PLife REIT delivered another spectacular report card for FY11, with DPU grew 9.2% from 8.79 cents to 9.60 cents. The key performance indicators – gross revenue, net property income, and distributable income for FY11,

together rose in the range of 9.1%-9.6% to $87.8mn, $80.3mn and $58.1mn respectively compared to the preceding year.

How do we view this?

DPU was largely in-line with our expectations, amounting to 99.5% of our full year estimates. The increase in DPU was mainly due to: (1) yield-accretive acquisitions made in 2010/11, (2) upward rental revision of Singapore properties and (3) lower financing costs.

Investment Actions?

High inflationary environment has prompted us to raise our CPI rental review assumption for FY12 from 2.5% to 6% with respect to Singapore properties. While the retention distributable income to take effect in FY12 will net off the gains in the rental growth. FY12 DPU is expected to dip first before heading north in the following years. We rollover our estimates to FY16 and arrive a lower target price of $1.88. Nevertheless, it would be good to accumulate PLife REIT against the backdrop of global uncertainties and high inflationary environment given its resilient and sustainable model.