- A rare jewel amongst S-REITs in a defensive industry, and offers high-quality earnings visibility - Parkway Life REIT (SGX:C2PU) is one of Asia’s largest listed healthcare REITs by asset size and a rare jewel amongst S-REITs that offers highly visible, stable, and sustainable earnings by virtue of its resilient industry and long leases with downside risk protection.
Stable return
- - Read this at SGinvestors.io -
- Top-line and net property income declined by 2.7% y-o-y and 2.5% y-o-y, respectively, to S$72.5mil and S$68.4mil, respectively. The dip was mainly due to the depreciation of the JPY against the S$, offset by the contribution from two nursing homes that were acquired back in Oct 23, and the step up in income from its hospitals in Singapore.
- - Read this at SGinvestors.io -
Our view.
- The stability offered by Parkway Life REIT is a welcome trait in the midst of macro uncertainties and high interest rates, which have impacted returns for most S-REITs. However, Parkway Life REIT’s financials continue to shine and remain resilient on the back of conservative capital and financial management strategies.
- The manager has kept gearing at a consistent level of ~35% and maintains a long-weighted debt expiry of 3.3 years. A substantial portion of its debt is in JPY, of which rate hikes have been more modest and thus resulting in a more gradual rise in overall interest rates.
- While we anticipate cost of debt would increase over time (from the current ~1.3% to an estimated ~1.8% in FY25F onwards), we continue to see resilient returns for Parkway Life REIT. While the headline of 4.3% appears to be the sharpest amongst S-REITs, we believe that the income visibility and step-up in growth offered by the REIT is a combination that is second to none.
- Maintain BUY rating on Parkway Life REIT, with Parkway Life REIT's target price at S$4.50.
Exercising ROFR on Mount Elizabeth Novena Hospital or expanding into a third pillar of growth.
- Read more at SGinvestors.io.
Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @ https://www.dbs.com/insightsdirect/.
Derek TAN DBS Group Research | https://www.dbs.com/insightsdirect/ 2024-07-29
Read also DBS's most recent report:
2024-11-25 Parkway Life REIT - Prescription For Growth.
Price targets by 2 other brokers at Parkway Life REIT Target Prices.
Listing of research reports at Parkway Life REIT Analyst Reports.
Relevant links:
Parkway Life REIT Share Price History,
Parkway Life REIT Announcements,
Parkway Life REIT Dividends & Corporate Actions,
Parkway Life REIT News Articles
