Parkway Life

Parkway Life: Reported 3Q12 results slightly ahead of estimates. Distributable income of $15.6m (+7.1% yoy, 4.0%qoq) or a DPU of 2.58c (+7.1% yoy, +4.0% qoq). The total DPU for 9M12 at 7.62c (+6.8% yoy). 9M12 revenues increased 8.0%yoy to $70.1m and Net Property Income increased 8.2%yoy to $64.3m, driven by the CPI+1% (6.3%) rental growth for SG portfolio, the full-quarter’s revenue contribution from the three Japan properties acquired in Mar-2012, and two-months contributions from its units at Gleneagles Medical Centre KL. PLife continues to benefit from low financing costs due to its substantial (78%) JPY-denominated debt with an all-in cost of 1.61%, which is largely unchanged from 2Q12 (at 1.60%). PLife has also hedged its JPY exposure, with five-yr forward hedging contracts to ensure the stability of the income stream. WALE is 2.68 yrs, with no refinancing requirements until 2014. At its current gearing level of 36.4% (unchanged qoq), PLife has a debt headroom of $88m before reaching 40% gearing. UOB Kay Hian maintains Buy with $2.37 TP.