Stock Evaluation and Commentary: First Reit
First REIT recommends a buy with a target price of 0.31 SGD, closing price at 0.27 SGD (-1.82%). The distribution per unit for the second quarter and the first half of the fiscal year 2025 is 0.55 cents and 1.13 cents, respectively, down 8.3% and 5.8% year-on-year, slightly below expectations. The decline in distributions is mainly due to the depreciation of the Indonesian Rupiah and the Japanese Yen, but rental income calculated in Singapore Dollars has increased. Despite the pressure from foreign exchange fluctuations, the distribution yield per unit for fiscal year 2025 is 8.4%, still attractive
Extended Reading
For the second quarter and the first half of the fiscal year 2025, the trust's distribution per unit was 0.55 cents and 1.13 cents, respectively, down 8.3% and 5.8% year-on-year, slightly below our forecast. The decline in the trust's distribution per unit was mainly due to the depreciation of the Indonesian Rupiah and the Japanese Yen against the Singapore Dollar, although rental income in Singapore Dollars was higher, partially offsetting this impact.
We maintain a "Buy" rating but lower our distribution per unit forecasts for the fiscal years 2025 and 2026 by 3% and 1%, respectively. This is primarily due to headwinds from foreign exchange fluctuations, particularly the weaker Indonesian Rupiah. Nevertheless, the trust's distribution yield for the fiscal year 2025 remains attractive at 8.4%.
First REIT
- Recommendation: Buy
- Target Price: SGD 0.31
- Closing Price: SGD 0.27 (-1.82%)
On the other hand, regarding the acquisition of First REIT's hospital asset portfolio in Indonesia by PT Siloam International Hospitals Tbk (Siloam), the latter is conducting a strategic review and has not provided substantial progress as of the second quarter. Additionally, more Indonesian hospitals are shifting to a performance-based rental structure, which will drive organic growth. (Phillip Capital)
