Religare Health Trust

CIMB Research, May 22

AVERAGE revenue per occupied bed (ARPOB) rose 2.7 per cent q-o-q in rupee terms as the increase in higher-fee paying patients more than offset the drop in occupancy. Religare Health Trust (RHT) continues to grow its ARPOB through introduction of medical programmes and fee increments as its assets ramp up operationally, shifting the patient mix to one that is higher-fee paying. This came despite the drop in occupancy from 78 per cent in Q3 FY2014 to 73 per cent in Q4, which is largely seasonal in nature and near the historical average 75 per cent.

Both the spot price and hedging cost of the Indian rupee have come down from the previous quarter, providing upside to our estimates. RHT will be hedging its upcoming semi-annual distributions soon, and we estimate a contract rate of circa 50.5 rupees/S$1. This is more favourable than the more conservative estimate of 52 rupees/S$1 that we have factored in our model, providing upside potential of about 3.5 per cent to our target price FY2015-FY2017 distributions per unit respectively.

We maintain our "add" rating. RHT's balance sheet remains strong with a gearing ratio of below 20 per cent. Its FY2015-16 dividend yields of 9 per cent also remain attractive versus yields of 6-7 per cent for S-Reits.

ADD