I have pasted some interesting research below regarding PTN. I was wondering if anyone else had any thoughts on this one? It looks good to me with the ageing population and lack of accomodation. Trading at a discount to its Net Tangible Assets.
Prime Retirement and Age Care Property Trust (PTN) $0. 86
FKP Property Group and Macquarie Capital Funds have emerged as the largest retirement village providers in Australasia following the acquisition of Zig Inge Group for $641 million. The acquisition implies a EBITDA multiple of 24x.
· If we imply the same multiple to our FY08 estimates for PTN the resulting valuation is $2.61. We believe however, that the Zig Ing transaction was overpriced, reflecting the strong interest in the market and the strategic position the acquisition provides. If we instead apply the average consensus multiple used for valuing Becton's retirement business this implies a valuation for PTN of $1.22.
· Our price target based on NTA and DCF remains $1.04.
· At $0.86 PTN offers a very high 10% yield and 16% discount to NTA and so is very cheap.
· While we are cautious about the risk of underlying income (DMF / development) relative to standard non-stapled LPT's, PTN is very insulated from some of the current macro events at play at the moment. It has no currency risk, low gearing (12%), no sub prime, and very little risk of the NTA falling.
· We believe the recent share price underperformance is a result of original retail investors being scared off by the recent LPT sector underperformance and taking the opportunity to exit now that they have a liquidity mechanism via the trust being listed.
· We maintain our BUY recommendation and believe this is an opportune time to get on board.
Disclosure: Patersons Securities Ltd acted as Broker to the Offer to the IPO that raised $100,000,000 through the issue of 100,000,000 shares at $1.00 per share for The Prime Retirement and Aged Care Property Trust in August 2007. It received a fee for this service.