Parkway Holdings Limited: Continues on a good growth trajectory

Brightening outlook. Parkway Holdings (Parkway) reported its 2Q09 results with topline of S$258.6m (+10% YoY, +8.7% QoQ) and PATMI of S$40.3m (+47.6% YoY, +89% QoQ). Excluding exceptional items, 2Q09 bottomline would have been S$30m (+7% YoY, +28% QoQ). The results were better than expected as its Singapore operations were not as bad as expected and its International Hospital and Healthcare segments delivered strong double digit growth. The taint in the results was the writeback of only S$17.2m (final settlement) out of S$34m bad debt provision.

Hospitals: International buffers Singapore performance. Singapore hospitals' showed encouraging QoQ improvements (but still down YoY) in both patient admissions and days stayed. The well-received 40 elective surgeries helped buffer revenue. Therefore FY09 might be able to show a flat performance. Parkway's international hospitals continued on its topline growth trajectory (+33% YoY, +11% QoQ), driven by its Pantai Hospitals, increased patient loads at its cardiac centre in Brunei and consolidated revenue of Gleneagles KL.

Healthcare: keeps up performance. The segment's good showing (+23% YoY, +9% QoQ) was driven by Parkway Shenton's clinic network as it secured new corporate contracts as well as a government contract for temperature screening at all border points. Fees were also accreted from its management project in the Abu Dhabi Hospital. Cost containment and government incentives helped accentuate Healthcare's EBITDAR growth by 66% YoY.

Crystal balling Novena. Parkway management has updated that changes in the construction schedules will push the Novena Hospital opening to 1H12 (prev. 2H11). The move is a double edged sword as Parkway expects to save S$100-150m in construction costs with lower construction costs but pushes Novena's breakeven far out to 2017. Parkway will only obtain the Building Permit and the right to sell its suites in 1Q10. Therefore, we have pushed the sale of medical suites back to 2010, albeit at the same prices (S$3500psf) and number of suites (80 units).

Upgrade to BUY. We have raised our estimates with its brightened outlook and re-peg Parkway to 20x (prev. 15x) FY10F as risk appetite returns. Our fair value is now S$2.22 (prev. S$1.28). Parkway did not declare any dividends in a bid to conserve cash. We have cut our dividend forecast to 1.25 S cents for both FY09 and FY10. H1N1 proliferation will pose significant risk to our estimates as people travel less and avoid elective procedures in hospitals.

Sponsored Links

Related Posts by Categories