We observed that while the prices of Parkway’s new packages for day surgeries are below the median prices of similar procedures at most of the costly public facilities and those at Raffles Hospital, inpatient procedures, especially those requiring a longer length of hospital stay, are priced higher than the 90th percentile bill size.
With the discounted prices lasting till end of March 2010, our findings reaffirm Parkway’s near-term focus on driving day-case volume growth to partly mitigate falling inpatient admissions. Similarly, we see Parkway strategising on maintaining its premium franchise in complex procedures within the global medical travel context.
We have kept our earnings forecasts and investment thesis intact, and assume that Parkway would likely launch the sale of its Novena hospital medical suites in FY10E. Our SOTP-based target price is S$2.85. We maintain our OUTPERFORM rating.
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