DBS Vickers initiated coverage of Religare Health Trust with a 'buy' rating and a target price of S$0.97, citing an attractive dividend yield and exposure to the fast-growting Indian healthcare sector.
By 0402 GMT, Religare Health shares were up 3 percent at S$0.82, but still 8.9 percent lower than the initial public offer price of S$0.90. Religare Health made its market debut last month.
The brokerage expects Religare Health, which has 17 assets and is backed by India's healthcare services provider Fortis Healthcare, to pay a distribution yield of around 10 percent at its current price, and is structured to offer upside potential through variable fees.
As 96 percent of Religare Health's assets are operational, distribution income can be sustained till 2014, providing assurance that it will be able to meet DBS' distribution per unit forecasts, it said in a report.
"Healthcare industry outlook in India looks promising," DBS said, citing Frost and Sullivan's estimates that the market will grow at an annual average rate of 15 percent from 2010-2015 on the back of rising and aging population and growing affluence.
1205 (0405 GMT)
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