Parkway’s New Novena suites see strong demand


KUCHING: Singapore based Parkway Holdings Pte Ltd (Parkway) company is expected to climb up the chart since the current response for its Parkway’s new Novena Hospital medical suites are above expectations.AmFraser in its research report stated that Parkway is expected to launch Phase One, comprising 80 units (for a total net saleable area of about 60,000 square feet) in first quarter this year.

At an expected price of S$3500 per square feet (psf), Parkway will start selling the units if the building plans are officially approved by the end of this month.

However, Parkway’s management previously indicated that it would be launching the remaining phases of the Novena Hospital medical suites at higher prices.

The research house said the prices closer to S$3,800 to S$4,000 may be achievable for Phases Two and Three given the dearth of prime medical space available (that is tied to a premier private hospital).

It raised its assumption for the average selling price of Parkway’s Novena Hospital medical suites from S$3,500 psf to S$3,700 psf for the entire project.

This will increase the pretax contribution to S$192.6 million (from S$152.6 million) from the project.

Further, gross proceeds are now expected to total S$740 million (from S$700 million). AmFraser maintained its assumption that 50 per cent of the total units would be sold this year with the rest next year.

Meanwhile, positive response to the medical suites will support the sentiment for its shares and expected sales are expected to bring gearing down from 40 per cent (September 2009) to 29 per cent by end-2011 and 23 per cent by the end-2012.

AmFraser pointed out that the latest data from the Department of Statistics indicate that average monthly admissions to Singapore private hospitals for October and November last year rose 3.8 per cent to 9296 compared with the average of 8,954 for 3Q09.

With a market share of 45 per cent, Parkway would have benefited from the recovery in patient admissions.

Parkway was expected to double the number of clinics in Shanghai (from six) within three years – it recently signed an memorandum of understanding (MoU) to set up two new hospitals.

AmFraser adjusted its earnings per share (EPS) forecast for Parkway by plus 3.5 per cent for financial year (FY) this year and plus 9.0 per cent for FY11. However, its FY10 and FY11 forecasts for Parkway’s core net profits and EPS remain unchanged.

The research house raised its fair value to S$3.63 per share which implied an upside of 19.7 per cent based on a Sum-of-Parts (SOP) valuation method.