Parkway has proposed a renounceable underwritten rights issue of up to
360.4m new shares at S$2.18 per share, on the
basis of seven rights shares for every 15 existing shares, to raise net
proceeds of S$760.1m. Assuming that all the
new shares pursuant to the rights issue are subscribed, the company
will have an enlarged issued and paid-up share
capital of 1131.6m shares. The joint financial advisers and
underwriters have agreed to underwrite the rights issue,
while TPG Asia, who currently has aggregate shareholding interest of
24% in Parkway, has agreed to purchase and/or
procure of such number of rights shares not successfully applied for
under the rights issue.
We recommend accepting the offer as: 1) the offer price is at a 24%
discount to our target price of S$2.85; 2) the
offer P/E is below the lower-end of its 6-month historical forward P/E
range of 28.7 ? 45.1x; and 3) fundamentals
remain strong with population growth, aging population, rising
affluence and increase in medical tourism leading to
greater demand for quality healthcare in Singapore and the region.
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