It has been a strong quarter for Parkway Life REIT (PREIT), which recorded a 4.9% and 5.3% y-o-y increase in 2Q20 gross revenue and net property income (NPI) respectively. Yet despite this bullish performance as well as distributions per unit (DPU) performing to expectations, CGS-CIMB analysts Lock Mun Yee and Eing Kar Mei have maintained their “hold call” on the stock due to its relatively low return potential. 

“While we like PREIT for its stable yield backed by its defensive income structure, our recommendation remains a ‘hold’ given the 5.5% total return potential based on its current share price,” remark the analysts. Nevertheless, they adjusted FY20-22 distribution per unit (DPU) upwards by 0.8% due to lower average debt cost and raised its target price from $3.38 to $3.43. 

PREIT’s 2Q20 gross revenue and net property income (NPI) came in at $30.3 million and $28.2 million respectively. Much of this growth stems from the additional contributions of three new assets in Japan acquired in December in 2019, an appreciation in the Japanese Yen (JPY) and stronger hospital income in Singapore. Hospitals in Singapore saw 2Q20 revenues and net property income rise 1.7% and 1.9& respectively to $17.3million and $16.5million respectively. 

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