Perennial kept at ' buy' by DBS with target price of $1.30

SINGAPORE (July 6):DBS Vickers is maintaining its &ldquo buy&rdquo call and target price of $1.30 on Perennial Real Estate Holdings (PREH) following its foray into the healthcare business via a joint venture in China with the Boai Medical Group.

On July 3, PREH announced that it is acquiring a hospital business in Guangzhou, Modern Hospital Guangzhou, via a 40-60 partnership with the Boai Medical Group. PREH&rsquo s share of the acquisition, valued at 12 times Ebitda, is RMB287 million, or $63 million.

&ldquo While this joint venture may appear unrelated to PREH&rsquo s principal real estate business at first glance, we are very positive about the synergies that can be created with the Group&rsquo s property development business in China,&rdquo states DBS Vickers analyst Rachel Tan and Derek Tan in a July 6 note.

For one, having a medical facility within its developments will have the spillover effect of boosting demand for retail, office and hospitality space.

They see PREH benefiting from the expertise and reach of the Boai Medical Group, one of the largest private healthcare providers in China. &ldquo PREH will be able to benefit from the still nascent but rising demand for private healthcare in China, and incorporate medical facilities into its integrated development projects.&rdquo

PREH is seen to reposition one of its properties Perennial Dongzhan Mall as a predominantly healthcare cum retail integrated development, with interests indicated for more than 90% of the net leasable area allocated to healthcare.

The analysts believe that this healthcare business is very scalable and PREH will have immediate access to some 120 hospitals already operating under Boai.

However, they caution that this new business venture by PREH will require significant capital of between $1.8 billion to $3 billion to meet the joint venture&rsquo s target of 30 to 50 hospitals. &ldquo This is a fairly hefty amount for a non-core business, and could potentially detract from the Group&rsquo s real estate focus,&rdquo they write.

PREH shares is up half cent to $1.065 as at 11.17 a.m.

 

 

 

SINGAPORE (July 3): Developer Perennial Real Estate Holdings has entered into a 40-60 joint venture with Guangdong Boai Medical Group Co. to acquire, develop and manage hospital and medical services businesses in China.

Guangdong Boai Medical Group is a subsidiary of the China Boai Medical Group (BOAI), one of the largest private hospital/medical services operators in China.

The Joint Venture will focus on eight core medical fields at its hospitals/medical centres.

These are Oncology, Fertility, Obstetrics and Gynaecology, Plastic Surgery and Aesthetic Medicine, Orthopaedics, Paediatrics, Ear, Nose, Throat and Eye Specialty Medicine, Dentistry, and Cardiology and Cardiovascular Surgery.

The JV will acquire its first operational medical business, Modern Hospital Guangzhou in Guangzhou, from BOAI.

&ldquo Modern Hospital Guangzhou, one of the more profitable hospitals within BOAI&rsquo s portfolio of assets, has established itself as among the leading private tumour and cancer hospitals in Guangzhou,&rdquo says Perennial in a regulatory filing.

The group, through its wholly-owned subsidiary, Perennial HC, will acquire a 40% stake in a joint venture entity for RMB286.7 million ($63 million). The remaining 60% stake will be held by a wholly-owned subsidiary of BOAI.

Modern Hospital Guangzhou has enjoyed steady year-on-year growth of 10% to 12% in Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) since 2011.

The group will fund its 40% stake via internal funds and bank borrowings. The equity injection will be used to fund the expansion plan for Modern Hospital Guangzhou, where in-patient bed capacity is expected to be increased from its current 246 to close to 300, as well as the JV' s future acquisition and growth plans.

Looking ahead, the JV has in place a growth pipeline with immediate access to the group&rsquo s greenfield and completed integrated developments, as well as BOAI&rsquo s existing portfolio of hospitals/medical centres and future acquisition pipeline across China.

Broadly, each greenfield hospital/medical centre would require a gross floor area (GFA) of between 50,000 square metres (sqm) to 80,000 sqm and cater to an in-patient bed capacity of 500 to 800.

Perennial Dongzhan Mall is next to be repositioned from a retail mall to an international medical and healthcare hub and renamed as Perennial International Health and Medical Hub.

The 280,000 sqm GFA development will hold an international hospital, medical suites, and complemented by healthcare and wellness-related services, including Traditional Chinese Medicine (TCM), maternity care centres, rehabilitative centres and medical aesthetic services.

To date, Perennial says Perennial International Health and Medical Hub has received expressions of interest for more than 90% of its leasable area set aside for healthcare services.

Perennial closed unchanged at $1.06 yesterday.

 

 

 

Perennial Real Estate achieves $3.4 million earnings in March quarter

SINGAPORE (May 8): Perennial Real Estate Holdings, which came to market last year following a reverse takeover of St James Holdings, reported earnings of $3.4 million for the third quarter ended March 31.

Revenue came in at $27 million.

The results are not comparable to those for the same period last year as St James was the listed entity then.

Singapore-headquartered Perennial manages CHIJMES, TripleOne Somerset, Capitol Singapore, AXA Tower, the House of Tan Yeok Nee, Chinatown Point and 112 Katong.

It also has malls in China, and recently unveiled plans to acquire and develop a freehold waterfront site in Penang into a mixed-use property.

The main contributors to its March-quarter revenue were CHIJMES and TripleOne Somerset in Singapore, and two malls in Foshan and Chengdu.

The properties in Singapore accounted for about 57.5% of Perennial' s top line, while those in China made up 23.6%. The remaining 18.9% came from its fee-based management businesses.

Perennial shares ended 1.4% lower at $1.065 yesterday.

 

 

 

Perennial teams up with IJM Land for $1.1 billion project in Penang

SINGAPORE (April 21):  Perennial Real Estate Holdings and  IJM Land have teamed up for a large-scale integrated mixed-use development in Penang with a total development cost estimated at more than RM3 billion ($1.1 billion). 

Perennial entered into a 50-50 joint venture with IJM Land to acquire and turn a 1.4 million-sq ft freehold waterfront site into an integrated mixed-use development in Gelugor town, Penang. 

The joint venture will acquire the site from  Jelutong Development, a subsidiary of IJM Land, according to a regulatory filing.  

The integrated development is situated close to the famous Penang Bridge. 

Perennial said the project is being positioned as Penang' s first mega integrated waterfront icon.

The mixed-use development will have retail, entertainment, recreational, residential, business, hospitality and conference features.  

The joint-venture partners intend to fund the development using internal funds, bank loans and proceeds from the sale of the project' s residential and office components.

The project is expected to be completed in phases from 2018, and marks Perennial' s foray into a new market.

Its current core markets are Singapore and China.

Perennial shares closed 5.6% higher at $1.135. 

Perennial' s Penang project gets thumbs-up from analysts but investors indifferent

SINGAPORE (April 22): Investor interest in Perennial Real Estate Holdings appears to have subsided, a day after its share price jumped 5.6%, in what might have been a case of buy on rumour and sell on news.

At 10:38am (0238 GMT), the stock was down 0.4% at $1.13 in thin trading.

Singapore-based Perennial disclosed after the close of trading yesterday that it has formed an equal joint venture with Malaysia' s IJM Land to acquire a freehold waterfront site in Penang and turn it into a mega development with homes, offices, hotels and a mall.

The project is expected to cost more than RM3 billion ($1.1 billion), including RM403 million for the acquisition of the site.

As the development will not be ready until 2018, investors' hesitance to get their hands on more Perennial shares is understandable.

In the meantime, analysts have given their thumbs-up to the deal, which marks Perennial' s maiden foray into Malaysia.

" This provides diversification from its current focus on Singapore and China," CIMB' s Lock Mun Yee wrote in a note.

" We expect this development to be accretive to its earnings and valuation when completed given its prime waterfront location."

Lock has an " add" call and $1.39 price target on Perennial.

" Perennial can tap on IJM&rsquo s deep market experience in developing high-quality residential projects in Malaysia, while the group has expertise in developing integrated projects," DBS Vickers analysts, led by Rachael Tan, said in a note.

" As this will be the first major integrated development in Penang, its successful execution could pave the way for future partnerships in Malaysia," they said.

DBS Vickers has a " buy" call and $1.29 target on Perennial.

Despite the 5.6% run-up yesterday, the stock is still trading below the company' s latest book value of $1.586 a share. 

 

Perennial posts S$21m profit for half year

Earnings, revenue buoyed by fair value gains, income from operational property assets