First REIT’s (FREIT) 4Q14 results came in within our expectations. DPU of 2.04 S cents represented a 3.6% YoY increase on the back of a 4.6% growth in gross revenue. The latter was in turn driven by contribution from Siloam Hospitals Purwakarta which was acquired in May 2014 as well as organic growth. For FY14, gross revenue rose 12.0% to S$93.3m, while DPU gained 7.0% to 8.05 S cents. This matched our forecast of S$93.3m and 8.07 S cents, respectively.

Looking ahead, management remains optimistic on the long-term potential of new Indonesia president Joko Widodo’s reform agenda. Hence, Indonesia would continue to be FREIT’s key focal market for further growth. We believe Indonesia’s manageable fiscal deficits, efforts to carry out structural reforms and boost infrastructure spending would enhance the stability and economic viability of the nation, thus leading to lower risk for FREIT. We will be reviewing our HOLD rating and S$1.18 fair value estimate.

Source: OCBC Research - 16 Jan 2015