First REIT (FREIT) reported a 14.5% YoY increase in its 2Q14 gross revenue to S$23.0m, driven largely by contribution from its three new hospitals. Distributable amount to unitholders and DPU increased by 13.6% and 8.1% YoY to S$14.4m and 2.00 S cents, respectively. The latter was FREIT‟s highest achieved DPU since its listing in Dec 2006.

For 1H14, revenue and DPU grew 20.9% and 11.1% to S$45.5m and 3.99 S cents, forming 48.8% and 48.1% of our FY14 forecasts, respectively. This was within our expectations as we expect a full quarter of contribution to come in for its recently completed acquisition, Siloam Hospitals Purwakarta, in 3Q14.

Looking ahead, FREIT does not expect the result of the Indonesian presidential elections to impact the healthcare industry in the short to medium term. We will speak with management to obtain more details. Given FREIT‟s strong 14.6% YTD share price appreciation, we are placing our Buy rating and S$1.21 fair value estimate under review.

Source: OCBC Research - 16 Jul 2014