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3 Reasons Why You Should Invest In Religare Health Trust
Tradeable, Tradeable Ideas | 27 May 2014
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By: Lim Si Jie
Articles (169) Profile
  1. Growing trend in India’s healthcare spending will bring more revenue for RHT in the future.
  2. RHT’s FY 14 results showed an increase in operating margins due to higher APROB and diligent cost management.
  3. RHT is likely to see a short term bullish run as it rides on its current price momentum.

Growing Trend In India’s Healthcare Spending

Religare Health Trust (RHT) leverages on the immense potential of growth in healthcare in the world’s second most populous country. There are several key drivers of growth notable in India’s healthcare market.

The fast growing and aging population, growing affluence in India and increasing awareness of health-related issues are likely to lead to higher healthcare-related spending.

The Indian government has been actively promoting the health insurance market to make private healthcare more affordable in India. Lifestyle diseases such as cancer and diabetes are affecting more people in India as growing affluence changes peoples’ lifestyle habits and diets.

This will eventually lead to increased patient volume and average revenue per treatment since treatments for such lifestyle diseases aren’t going to come cheap.

There is also a demand and supply gap in India in the healthcare market. India accounts for nearly six percent of hospital beds in the world. However, this six percent of hospital beds has to meet the demand of 20 percent of the world’s disease burden.

In laymen terms, it means that there are more people falling sick and less number of beds available for them. Given the undersupply in hospital beds, RHT will likely to see an increase in patients treated as well as increasing average revenue per operating bed (ARPOB).

Growing Medical Tourism Market In Asia Pacific

The medical tourism industry in the Asia Pacific Region is also seeing a growing trend. India’s medical tourism market is expected to grow more than 30 percent annually to become a $2.1 billion industry by 2015.

Increasing Operating Margin Leads To Higher Net Service Fee and Hospital Income

Net Service Fee and Hospital Income were higher in both the 4th quarter and FY2014. This can be attributed to the increase in operating margins during the year.

Measures were taken to minimise costs while RHT continued to maintain its operating standards and efficiency. In addition, the ARPOB has been on the upward trend since the beginning of FY2014, boosting RHT’s operating margins.

The ARPOB has increased by approximately five percent since the first quarter of FY2014, and by 2.7 percent from the 3rd quarter to the 4th quarter of FY2014.

9.2 Percent Dividend Yield For FY 14

RHT announced a total distributable income of $46.694 million for FY14. The Distribution Per Unit (DPU) was announced as 8.19 cents for FY14. This translates to a dividend yield of 9.6 percent as of announcement date.

Currently, the dividend yield is 9.2 percent as RHT share price saw a slight increase since the announcement date.

Price Momentum

Having recently broken through the consolidation at $0.83 to $0.86, RHT is likely to see a slight uptrend in share prices. Readings from the momentum graph signals that after ranging since beginning of March, RHT is about to go into an uptrend as it breaks away from the middle line on the momentum graph.

Share price is always affected by the trading volume. The strong positive volume in the last few trading days is likely to support the price movement of RHT in the short term.

#Bullish In The Short Run

I am positive about the short term prospects of RHT. Now that RHT has just crossed above its consolidation, I would be more interested to put my focus at the short term gains and make a tidy profit.

 

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Si Jie is no stranger to investing having started his journey at a young age. He is heavily influenced by acclaimed investors such as Benjamin Graham, Peter Lynch, and John Rothchild.

Please click here for more information about this author.

RHT Health Trust  0.018 -- --   
Business: Biz trust comprising of healthcare assets in India.

Insight: May-19, Co ceased to have any operating business a... Read More


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