RHT Health Trust: 1 Stock With Exposure To India’s Growing Medical Tourism Market

According to data from consulting firm RNCOS, the medical tourism industry in Asia is projected to grow at an annual rate of 22% from 2014 to 2018. Three countries in particular were highlighted as the main beneficiaries, namely, Singapore, India, and Thailand.

There are a number of companies in Singapore’s stock market that are heavily exposed to Singapore’s healthcare industry – many investors may know this.

What some investors may not be aware of is that there’s a listed entity in Singapore that is solely focused on the Indian healthcare market. This entity is RHT Health Trust (SGX: RF1U), a business trust that owns India-based healthcare assets.

Let’s take a closer look at RHT Health Trust.

RHT Health Trust listed on the Singapore stock market in late 2012 and currently has a market capitalsiation of S$840 million. The trust has 18 assets in its portfolio (as of 30 June 2016) that are all located in India. These assets consist of 16 clinical establishments (of which four are currently under development) and two operating hospitals.

From fiscal 2014 (fiscal year ended 31 March 2014) to fiscal 2016, RHT Health Trust has seen its total assets climb by 20% from S$958.4 million to S$1.153 billion.

Revenue has grown from S$107 million to S$143 million over the same period, representing a compound annual growth rate of 15.6%. Its distributable income also grew at a similar annual pace of 14.8% from S$46.7 million to S$61.6 million.

As of 30 June 2016, RHT Health Trust has a debt to asset ratio of 15.3%. Investors may want to know that this ratio has been climbing. It was 11.2% in fiscal 2015 and 14.8% in fiscal 2016.

Moving away from the financials to the operational numbers, the trust has seen the number of operational beds in its portfolio increase from 1,706 at listing to 2,629 in fiscal 2016. RHT Health Trust expects its operational beds to jump to 3,200 by fiscal 2018. The trust has six capacity enhancement and development projects that have expected completion dates stretching from March 2017 to January 2018.

The trust has plans to “expand and enhance” its existing portfolio through both organic and inorganic means. Organic growth refers to the maximisation of the properties that are currently within the portfolio while inorganic growth points to acquisitions of third-party healthcare assets.

Investors may want to note the risk of currency fluctuations. RHT Health Trust does business primarily in India, and so has Indian rupee-denominated cash flows. But, it reports and doles out distributions in the Singapore dollar. To reduce currency risk, RHT Health Trust hedges 100% of its rupee-denominated cashflows receivable every six months.

Foolish Summary

India’s medical tourism market is forecast to have bright future over the medium term and RHT Health Trust has seen its business grow over the past two years.

But, investors should also keep in mind that forecasts can be wrong and that the past is not reflective of the future. The information investors have seen here about RHT Health Trust should only be used as a starting point for further research – more work needs to be done before any investing conclusion can be reached on RHT Health Trust.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Esjay does not own shares in any companies mentioned.