Monday, November 11, 2013

Parkway Life : Steady 3Q as SG Hospitals Benefit from 4.4% Rental Uplift (Citi)

Parkway Life :
Price (07 Nov 13) S$2.40
Target price S$2.30
Steady 3Q as SG Hospitals Benefit from 4.4% Rental Uplift

 Citi's Take — 3Q13 DPU of 2.66 cents (2Q: 2.63 cents) was largely in-line with expectation, rising 1%qoq on the upward rent revision from its Singapore hospitals (+4.4%, commencing 23 Aug), as well as incremental contribution from the acquisition of two nursing homes in Jul-13. We expect further sequential improvement in 4Q13 on the full-quarter impact on the rent revision from the Singapore hospitals, as well as maiden contribution from the recent acquisition of five more nursing homes in Japan (completed end Sep-13).

 Financial Highlights — Group NPI rose by 3.4%qoq to S$21.8m, as NPI from the Singapore hospitals rose by 2.1%qoq to S$14.5m, following a 4.44% upward rent adjustment (per CPI +1 % formula) which commenced 23 Aug 2013. At the same time, NPI from its Japan portfolio rose by 6%qoq to S$7.2m following the acquisition of two nursing homes (c.S$23m) as well as a slight appreciation of the yen during the quarter. On the other hand, the sequential NPI improvement was partially offset by higher financing costs (+9.5%qoq) and mgmt fees, as well as lower FX hedging gains (3Q: S$0.34m. 2Q: S$0.42m).

 Capital Management – P-Life has successfully termed out the debt (S$145m) due in 2014 to 2017/8, resulting in a longer weighted average debt maturity of 3.1 years (Jun-13: 2.1 years). Notwithstanding the lengthening of the debt profile, all-in borrowing cost remained relatively low at 1.54% (Jun-13: 1.52%). As a result of the recent acquisitions in Japan, which were fully debt-funded, gearing has also risen to 35.2% (Jun-13: 31.2%).

Changes to estimates and TP - Post results, we update our earnings estimates to factor in the recent acquisition of the five nursing homes in Japan (completed end Sep-2013) and lower financing costs, though this is partially offset by lower than expected hedging gains. We raise FY13E-15E earnings by ~9-14%. As a result of the changes, we also raise our DDM-derived TP to S$2.30 (from S$2.22).

We derive our S$2.30 target price for PLife REIT using DDM. We have made the following assumptions in our DDM valuation, which are largely in line with those used for S-REITs in our coverage: 1) A risk-free rate of 3.1% based on the average of 10-yr SGS bond yield from 2003 to 2008, a period of normalizing US growth and tightening monetary policy, and cost of equity of 6.7%; 2) Terminal growth of 1%; 3) Zero earnings from Mt Elizabeth beyond 2074 and Gleneagles, Eastshore beyond 2082 when land leases expire; and 4) Potential acquisitions are excluded.

The key downside risks to our investment thesis and target price on PLife REIT include: 1) Loss of master lessee as the properties are specialized medical facilities and have limited uses; 2) The growth of lower-cost medical expertise and facilities in the region might draw medical tourists away from Singapore; 3) Competition from more medical centers and new entrants in Singapore; and 4) Changes in government healthcare regulations. Upside risks include: 1) Higher-than-expected inflation levels which lead to higher revenue for the Singapore hospitals; 2) Stronger than expected rental reversions at its Japan nursing homes; and 3) The acquisition of more assets at yield-accretive levels

Source/Extract/Excerpts/来源/转贴/摘录: Citi-Research,
Publish date: 08/11/13

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.

Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)

乔治·索罗斯(George Soros)



高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo

There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock