Parkway wins bid for URA site, shares drop 8.3%

Parkway Holdings had its steepest decline in more than six years on concern the company’s $1.25 billion bid for a new hospital site was too high. The bid by Parkway, Singapore’s largest private hospital operator, is as much as five times the price offered by rival Raffles Medical Management, the Urban Redevelopment Authority said.

Parkway will be able to build a hospital on the 1.7-hectare site in central Singapore and own it for 99 years, the URA said.

Shares of Parkway tumbled 30 cents, or 8.3 per cent, to $3.30 at the close of trading, its biggest drop since Sept 12, 2001. The benchmark Straits Times Index fell 0.2 per cent.

“Excluding construction cost, Parkway’s gearing could rise to 180 per cent and we will look to revise our estimates when we receive further details,”said Credit Suisse analysts, led by Mr Su Tye Chua, in a report. “For now, management will have to convince the market they did not over-bid for the site, which could dampen near term share price performance.”

Parkway, which reported net income for the three months ended Sept 30 rose to $224.6 million compared with a restated $18.5 million, is marketing treatments of chronic conditions, including cancer and liver failure, to patients in South-east Asia. In August, it said it will build more hospitals in Singapore, upgrade its facilities and add operations in countries including Vietnam and China.

Source : Today – 19 Feb 2008

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