Old is gold for Perennial with acquisition in China

Jude Chan

SINGAPORE (Sept 14): DBS Bank is keeping Perennial Real Estate Holdings on &ldquo buy&rdquo with a target price of $1.32.

This comes after Perennial on Tuesday said it is acquiring a 49.9% stake in Shanghai&rsquo s largest integrated eldercare services operator through a capital injection of RMB735.5 million ($149.7 million).

Shanghai Renshoutang is a private integrated eldercare company in China, with retirement, nursing and rehabilitation homes, hospital, day care centres, pharmacies and Traditional Chinese Medicine clinics.

It operates under two brands: Yixian Eldercare and Retirement Home, and Xiehe Eldercare and Retirement Home.

(See  Perennial acquires 49.9% stake in eldercare operator Renshoutang)

Post-acquisition, Perennial will have access to Renshoutang&rsquo s portfolio of 11 eldercare facilities with over 2,400 beds and four pharmacies, each with a dedicated TCM clinic.

&ldquo We believe this is a strategic acquisition to expand its healthcare segment via eldercare homes to benefit from an ageing population in China,&rdquo says DBS lead analyst Rachel Tan.

She points out that Renshoutang also has a committed pipeline of over 5,700 beds, on top of another 16,000 beds under negotiation, in locations in the Yangtze River Delta Region over the next few years.

&ldquo We remain positive on Perennial&rsquo s long-term healthcare plans in China,&rdquo Tan adds.

Shares of Perennial Real Estate Holdings closed 0.6% higher at 89 cents.