Tuesday, 24 January 2017

FIrst REIT latest earnings

This is not going to be a long piece! As I am sure First REIT is pretty well known to most investors. But just in case: First REIT is an Healthcare REIT mainly based in Indonesia (with small concentrations in Singapore and Korea) listed on the SGX and they currently have a market capitalisation of about $1B, and 18 properties. 

For those of you who have read my blog before, you would know that I am currently holding a small parcel of shares in this REIT (if you are curious you can check out my portfolio tab section)


The latest quarterly (oct-dec) distribution per unit (DPU) amounted to 2.13c, up from 2.12c in the previous quarter. You may also like to note that DPU has risen steadily for the past 12 quarters (from 1.96c to 2.12c currently. Dividend yield stands at 6.47% based on current prices. You can see from the chart below that the DPU has grown together with the REITs' Earnings per share (EPS), which is a good thing.

(image credits: Singapore Exchange Ltd)


To a certain degree, the REIT has experienced growth. We can see this in the chart below; from their  increasing operation cash flows and increasing revenue over the past few years. We should also note that most recently, the REIT has acquired Siloam Hospitals Labuan Bajo, and the deal was completed on the 30th December 2016, and the contributions of this new property has not yet been accounted for in the latest quarter.

(image credits: Singapore Exchange Ltd)


The current PB ratio sits at 1.205 (which is decent compared to historical levels. Gearing is currently at 31% which is decent as well, and provides a little headroom for further acquisitions (SGX REITs have a gearing limit of 45%). For those of you who are unfamiliar with this term, it is a common term used when describing the valuation of REITs, and it is equal to the REITs' debt divided by the total equity value. 

Other thoughts

There was initially panic when the REIT's sponsor, Lippo announced potential plans to shift the REIT (along with Lippo Malls REIT) to Indonesia's exchange. However the news has quietened down for now, and I believe one reason it has not yet happened is due to the risk free rate in Indonesia being far greater than that in Singapore, hence potentially requiring a greater yield to attract investors, which may not be plausible. 

At the same time, it is also encouraging to see that the REITs' managers have been consistently participating in the Dividend Reinvestment Plan (DRP) for First REIT, which to a certain extent demonstrates that they are confident in the REITs' future.

I will just be sitting back and collecting dividends for now, and I believe this is not a counter that I need to monitor daily. 

A 😁

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