Fund managers’ portfolio rebalancing in-line with Parkway’s removal fromthe index could result in near-term weakness in Parkway’s share price.Parkway shares closed at S$1.31 today (down S$0.12 or 8.4% fromyesterday’s close) upon news of its removal from MSCI Singapore.
We like Parkway's strong franchise and successful foray into the region butremain cautious on the stock due to funding requirements ($500m and$850m loans due in 2011 and 2013 respectively). Success marketing itsmedical suites will be critical to plug financing needs.
Parkway reports 1Q09 results on Friday, 15 May 2009 and we expect theresults to be in-line with consensus forecasts. Note that sharp earnings cutsby the street over the past few quarters have brought expectations to moremanageable levels.
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