SINGAPORE (May 9): DBS Vickers Securities is maintaining its “buy” rating on Perennial Real Estate holdings with a target price of $1.05, following its strong 1Q17 set of results boosted by gains from its partial divestment of TripleOne Somerset in Jan this year.
(See also: Perennial-led consortium divests 70% stake in TripleOne Somerset)
(See also: Perennial 1Q earnings more than quadruple to $38.7 mil on one-off divestment gain)
In a Tuesday report, analysts Rachel Tan and Derek Tan have identified Perennial’s strategically-located landbank in China, with partial exposure to the healthcare industries of China and Singapore, as areas which the stock could unlock further development value from.
“The Perennial International Health and Medical Hub has started to handover progressively some of the units to medical tenants for fit out,” say the analysts, adding that construction works for the Beijing and Xi’an North HSR Integrated Development are also “progressing well” for completion in 2019/20 and 2018/19 respectively.
They also note good demand with waiting lists and reservations made until Jan 2018 for the group’s 136-bed Shekou medical facility in Shenzhen, which soft opened in late March this year.
Key catalysts would include the successful opening and execution of the Perennial International Health and Medical Hub in Chengdu; the potential en-bloc sale / divestment of properties; improvement in sentiment on the property market in China when project developments are near launch or completions; as well as the launch of Perennial’s potential healthcare fund, which the group’s management is currently opportunities to set up.
“We remain optimistic on [Perennial’s] medium- to long-term development plans as these are slowly coming to fruition in China, despite potential near-term financial risks as it rides through the gestation period of its development projects. We believe the strength of its stakeholders play an integral role to execute and mitigate potential financial risks,” conclude the analysts.
As at 10.33am, shares of Perennial are trading 1 cent higher at 87 cents.
