Royston Foo

Equity Bottom-Up

On 15th January 2019, <a href="https://www.smartkarma.com/entities/13447" target="_blank" data-smartkarma-citation="entities:13447:1">RHT Health Trust (RHT SP)</a> announced the completion of the disposal of RHT’s entire asset portfolio of clinical establishments and hospitals in India to Fortis.The balance net cash proceeds of S$32.52 mil will be retained as undistributed proceeds to cover on-going expenses of RHT following Completion. This translates to a cash NAV of S$0.04 per unit.RHT’s closing unit price today was S$0.029 per unit, translating to a 28% discount to its cash NAV of S$0.04 per unit.Taking Saizen REIT’s premium as a reference, RHT could potentially trade up to a 20% premium to its cash NAV, implying a unit price of S$0.048 per unit, or an upside potential of 65.5% when it announces progress in acquiring new assets/business.Key risk is the suspension in trading of RHT units if it is unable to acquire new business.Recommended investment strategy is to acquire RHT at current price (steep discount to cash NAV), hold out till a re-rating upon the announcement of a potential acquisition, and divest at a premium to cash NAV.

On 15th January 2019, RHT Health Trust (RHT SP) announced the completion of the disposal of RHT’s entire asset portfolio of clinical establishments and hospitals in India to Fortis.The balance net cash proceeds of S$32.52 mil will be retained as undistributed proceeds to cover on-going expenses of RHT following Completion. This translates to a cash NAV of S$0.04 per unit.RHT’s closing unit price today was S$0.029 per unit, translating to a 28% discount to its cash NAV of S$0.04 per unit.Taking Saizen REIT’s premium as a reference, RHT could potentially trade up to a 20% premium to its cash NAV, implying a unit price of S$0.048 per unit, or an upside potential of 65.5% when it announces progress in acquiring new assets/business.Key risk is the suspension in trading of RHT units if it is unable to acquire new business.Recommended investment strategy is to acquire RHT at current price (steep discount to cash NAV), hold out till a re-rating upon the announcement of a potential acquisition, and divest at a premium to cash NAV.

RHT Health Trust

RHT Health Trust – Cash on Sale