Parkway Life REIT (PREIT SP), Medtecs International Corp (MED SP), Delfi Limited (DELFI SP)
🏢 Parkway Life REIT (PREIT SP)
Recommendation: BUY
Target Price: S$5.07
Current Price: S$3.86
Stop Loss: S$3.76
Broker: UOB Kay Hian
Date of Recommendation: 6th September 2024
Investment Thesis: Parkway Life REIT – Robust Growth in Healthcare Real Estate
Parkway Life Real Estate Investment Trust (PREIT) continues to demonstrate resilience in the healthcare real estate sector, benefiting from long-term demand for healthcare services in the Asia-Pacific region. The stock has maintained a strong uptrend, trading well above the cloud, with conversion and base lines showing a bullish crossover. The REIT’s operational stability is supported by a strong portfolio of properties, which include hospitals and healthcare facilities.
- Bullish Technical Indicators:
The stock’s MACD is rising, further strengthening the case for price momentum. With the price comfortably above S$3.82, we anticipate further gains towards the target price of S$4.05 in the short term, with a long-term target of S$5.07.
- Operational Performance:
PREIT’s portfolio of healthcare properties across Japan and Singapore continues to enjoy high occupancy rates, benefiting from rising healthcare demand and an aging population. Additionally, the REIT’s stable income stream, underpinned by long-term lease agreements, makes it a defensive play in times of market uncertainty.
Valuation:
With the stock currently trading at S$3.86, our target price of S$5.07 offers a significant upside potential of around 31%. The REIT’s forward P/E ratio of 18x and a strong dividend yield of 3.8% makes it a compelling buy.
Share Price Catalysts:
- Continued expansion into the Asia-Pacific healthcare real estate market.
- Further acquisitions of high-quality healthcare assets.
- Stable income streams from long-term lease agreements with hospitals.
💊 Medtecs International Corp (MED SP)
Recommendation: BUY
Target Price: S$0.157
Current Price: S$0.145
Stop Loss: S$0.136
Broker: UOB Kay Hian
Date of Recommendation: 6th September 2024
Investment Thesis: Medtecs International – Benefiting from Post-Pandemic Growth
Medtecs International Corp, a leader in personal protective equipment (PPE), has formed a base low at S$0.12 and rebounded from the middle Bollinger band (20-day moving average), signaling a potential uptrend. The company continues to benefit from strong demand for PPE products, which has persisted even as the global economy normalizes post-pandemic.
- Technical Strength:
MACD remains bullish and is rising, indicating potential for further price appreciation. The stock’s next upside target is set at S$0.157, with a protective stop at S$0.136.
- Business Outlook:
Medtecs continues to benefit from a stable demand for its healthcare-related products, including PPE and medical consumables. The company is expanding its distribution networks in Southeast Asia and capitalizing on its strong reputation as a reliable supplier in times of crisis.
Valuation:
Trading at S$0.145, Medtecs offers upside potential towards S$0.157, providing a short-term gain of around 8.3%. The company’s solid balance sheet, combined with a strong cash position, ensures its ability to meet future demand surges.
Share Price Catalysts:
- Further government contracts for PPE supply.
- New product launches in the healthcare consumables sector.
- Strengthening distribution networks in key markets such as Singapore, the Philippines, and Taiwan.
🍫 Delfi Limited (DELFI SP)
Recommendation: HOLD
Target Price: S$0.83
Current Price: S$0.81
Broker: UOB Kay Hian
Date of Recommendation: 6th September 2024
Investment Thesis: Delfi Limited – Facing Challenges Amid Commodity Headwinds
Delfi, a major player in the chocolate and confectionery industry in Southeast Asia, reported weaker-than-expected results for 1H24, impacted by currency depreciation and rising cocoa prices. The company’s revenue and PATMI fell 8% and 22% YoY, respectively, with revenue in Indonesia taking a significant hit due to weaker consumer demand and the termination of an agency brand.
- Weaker Margins Due to Rising Cocoa Prices:
Cocoa futures continue to trade at elevated levels, weighing on Delfi’s margins. Despite implementing pricing adjustments and cost management strategies, margins are expected to remain under pressure.
- Strategic Investments:
Delfi remains focused on building its brands and expanding its market reach. The company has committed US$25 million to US$30 million in capex for 2024 to expand its capacity and explore inorganic growth opportunities through potential acquisitions.
Valuation:
Delfi’s target price has been revised downward to S$0.83 from S$1.07, reflecting the challenging environment. While the company remains a strong player in the region, the current headwinds warrant a more cautious approach. We maintain a “Hold” recommendation, with a lower P/E multiple of 10x for 2024.
Share Price Catalysts:
- Recovery in cocoa prices, easing pressure on margins.
- Successful product launches or premiumisation efforts.
- Strengthening regional currencies to offset raw material costs.
Conclusion:
These companies – Parkway Life REIT, Medtecs International, and Delfi – offer varying opportunities for investors. Parkway Life REIT provides a stable, defensive play in the healthcare real estate sector, while Medtecs International is well-positioned to capitalize on post-pandemic demand for healthcare products. Delfi faces near-term challenges due to rising cocoa prices but remains a solid long-term play in Southeast Asia’s confectionery market.
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