Parkway Life REIT walloped Raffles Medical share price

While Temasek-linked REITs had been hogging the limelight amid the current bull run in the sector, Parkway Life REIT had been under the radar of many investors. The 3-month average trading volume amounted to a mere 8.29mm! Despite the extremely poor liquidity, the unit price of Parkway Life REIT had been on a roll and even stormed to a record high of $3.36 recently.

The stunning form of Parkway Life REIT unit price completely knocked the wind out of Raffles Medical share price, which had been in goofy form in recent years. I know, I know. It is not fair to compare price performance of a REIT to a share. But let’s face it. Both Raffles Medical and Parkway Life REIT operate in the same sector (private hospital) and both entities share basically the same challenges. But their destinies are remarkably different.

Parkway Life REIT

With a market capitalization of $2 billion, Parkway Life REIT is the largest healthcare REIT in Singapore. The other healthcare REIT is First REIT, which pale in comparison to Parkway Life in terms of scale. The latter has a diversified healthcare businesses sprawling across Singapore (59.8%), Japan (39.8%) and Malaysia (0.4%).

Listed on SGX in 2007, Parkway Life REIT is 35% indirectly owned by Malaysia sovereign wealth fund, Khazanah Nasional Berhad. Since IPO, this counter has a solid track record of delivering value for unitholders. In fact, the DPU has grown steadily by 103.6% (till YTD Q42018) since IPO! But of course, investors should not invest in REITs merely based on the DPU track record. Thus, in this article, I am going to highlight the unique investment merits of Parkway Life REIT.

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in Parkway Life REIT before. Whether Parkway Life REIT unit price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.

Parkway Life REIT unit price in red hot form

Looking back, revenue for the past five years had increased steadily from $100 million in FY2014 to $113 million in FY2018. Net income increased from $121 million to $151 million during the corresponding period. The good financial results provided the basis for the bull charge of Parkway Life REIT unit price.

In 2019, the low interest rate environment had set the whole S-REIT industry on fire and inadvertently turbo-charged the unit price of Parkway Life REIT. Whether the bull run will carry on the momentum in 2020 remains to be seen but based on recent business performance, it is likely that the unit price will [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: January 14, 2020 — 4:08 am

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