Perennial Real Estate Holdings (PERH): PERH has tied up a JV to acquire Modern Hospital Guangzhou and will be repositioning its Perennial Dongzhan Mall into an international medical hub. The price tag for PERH’s 40% share works out to be Rmb 286.7m and will be funded through internal funds and bank borrowings. This 40/60 JV with Guangdong Boai Medical Group (GBMG) will focus on 8 core medical fields. GBMG is a subsidiary of China Boai Medical Group (BOAI), one of the largest private hospital/medical services operators in China.
This venture into the Chinese healthcare sector is beneficial on 2 fronts: 1) as a new asset class, it would complement the existing real estate business through greater demand for its commercial space, and 2) enable the group to ride on the rapid growth of an industry that is underpinned by favorable fundamentals.
CIMB maintains its ADD rating with TP: $1.39 and maintain their current profit estimates as the initial impact from this acquisition is not significant.
DBSV also reiterates its BUY rating with TP: $1.30, pegged to a 40% discount to RNAV of $2.16.
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