ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

Mitra Keluarga Karyasehat Tbk / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/mitra-keluarga-karyasehat-tbk" target="_blank" data-smartkarma-citation="entities:288:1" rel="noopener">Mitra Keluarga Karyasehat Tbk (MIKA IJ)</a> announced a robust set of results for 1Q2021 late last week, with revenue growth of +37.6% YoY, mainly driven by COVID-19 cases, which command a higher treatment intensity.
Volume for Non-COVID-19 inpatient days also increased, up +5.6% QoQ compared to 4Q 2020, with occupancy improving to 61% for non-COVID beds. The improvement in non-COVID-19 patients bodes well for this year's outlook. 
Mitra Keluarga continues to add more hospitals, through both greenfield and brownfield expansion plans and has opened one new hospital already this year. It will commence the groundbreaking for its 27th &amp; 28th hospitals in 1H2021. M&amp;A opportunities also remain a potential growth driver with two other hospitals currently in the pipeline. 
Patient numbers declined in 1Q2021 YoY but revenues per outpatient and inpatient days increased significantly due to a significantly higher number of COVID-19 patients being treated. 
<a href="https://www.smartkarma.com/entities/mitra-keluarga-karyasehat-tbk" target="_blank" data-smartkarma-citation="entities:288:1" rel="noopener">Mitra Keluarga Karyasehat Tbk (MIKA IJ)</a> bed Occupancy Ratio reached 63.4% for 1Q2021, compared to 65.7% in 1Q2020, mainly boosts by high COVID-19 bed occupancies, although non-COVID bed occupancies were not far off last year.
<div class="content-highlight">
<a href="https://www.smartkarma.com/entities/mitra-keluarga-karyasehat-tbk" target="_blank" data-smartkarma-citation="entities:288:1" rel="noopener">Mitra Keluarga Karyasehat Tbk (MIKA IJ)</a> trades on 23.9x FY21E EV/EBITDA and 24.2x FY22E EV/EBITDA versus its 5-year average of 29.5x making the company look relatively attractive. It is likely to see a gradual tapering off in terms of revenues from COVID-19 treatments as the vaccination program starts to gain traction but it will still be an important source of revenue in the medium term, together with the fact that it is already seeing a pick-up in its normal elective treatments.
</div>

Mitra Keluarga Karyasehat Tbk (MIKA IJ) announced a robust set of results for 1Q2021 late last week, with revenue growth of +37.6% YoY, mainly driven by COVID-19 cases, which command a higher treatment intensity.
Volume for Non-COVID-19 inpatient days also increased, up +5.6% QoQ compared to 4Q 2020, with occupancy improving to 61% for non-COVID beds. The improvement in non-COVID-19 patients bodes well for this year's outlook. 
Mitra Keluarga continues to add more hospitals, through both greenfield and brownfield expansion plans and has opened one new hospital already this year. It will commence the groundbreaking for its 27th &amp; 28th hospitals in 1H2021. M&amp;A opportunities also remain a potential growth driver with two other hospitals currently in the pipeline. 
Patient numbers declined in 1Q2021 YoY but revenues per outpatient and inpatient days increased significantly due to a significantly higher number of COVID-19 patients being treated. 
Mitra Keluarga Karyasehat Tbk (MIKA IJ) bed Occupancy Ratio reached 63.4% for 1Q2021, compared to 65.7% in 1Q2020, mainly boosts by high COVID-19 bed occupancies, although non-COVID bed occupancies were not far off last year.

Mitra Keluarga Karyasehat Tbk (MIKA IJ) trades on 23.9x FY21E EV/EBITDA and 24.2x FY22E EV/EBITDA versus its 5-year average of 29.5x making the company look relatively attractive. It is likely to see a gradual tapering off in terms of revenues from COVID-19 treatments as the vaccination program starts to gain traction but it will still be an important source of revenue in the medium term, together with the fact that it is already seeing a pick-up in its normal elective treatments.


Mitra Keluarga Karyasehat (MIKA IJ) - Occupancy and Profitability Rising

Siloam International Hospitals / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/siloam-international-hospital" target="_blank" data-smartkarma-citation="entities:878:1" rel="noopener">Siloam International Hospital (SILO IJ)</a> released an impressive set of FY2020 numbers last week evening with net operating revenues up by +5.3% but EBITDA up by +37.4% and with EBITDA margins increasing to 21.6% versus 16.6% in 2019. Net profit was up by +365.8% YoY to IDR125bn in FY2020, whilst the company's free cash flow increased by +772% to IDR1,068bn in FY2020 as a whole. 
Average revenue per inpatient days increased by +19.1% YoY, whilst average revenue per outpatient visits increased by +39.9% YoY in FY2020, both of which helped to offset lower inpatient and outpatient numbers. 
The company has put in place a number of new initiatives to grow the business and continue to monetize existing assets more effectively. This should continue to drive future revenues and profitability, coupled with more effective pricing across its hospital network and more effective cost savings as procurement.
<a href="https://www.smartkarma.com/entities/siloam-international-hospital" target="_blank" data-smartkarma-citation="entities:878:1" rel="noopener">Siloam International Hospital (SILO IJ)</a> continues to benefit from COViD-19 testing and treatment, which saw a ramp-up during 2020, and has continued into 2021. 
The company also paid a special dividend to recognize its transformation successes on top of a 45% payout ratio bringing the total payout to 181%, with a commitment to payout more than 25% of earnings as a dividend barring unforeseen circumstances.
<a href="https://www.smartkarma.com/entities/siloam-international-hospital" target="_blank" data-smartkarma-citation="entities:878:1" rel="noopener">Siloam International Hospital (SILO IJ)</a> trades on an FY21E EV/EBITDA of 9.9x and FY22E EV/EBITDA of 6.6x making it look attractive both from a historical perspective  and versus local hospital peers <a href="https://www.smartkarma.com/entities/mitra-keluarga-karyasehat-tbk" target="_blank" data-smartkarma-citation="entities:288:1" rel="noopener">Mitra Keluarga Karyasehat Tbk (MIKA IJ)</a> and <a href="https://www.smartkarma.com/entities/medikaloka-hermina-tbk-pt" target="_blank" data-smartkarma-citation="entities:27000:1" rel="noopener">Medikaloka Hermina (HEAL IJ)</a>, as well as its regional peer group. We also expect upward revisions to analyst forecasts.

Siloam International Hospital (SILO IJ) released an impressive set of FY2020 numbers last week evening with net operating revenues up by +5.3% but EBITDA up by +37.4% and with EBITDA margins increasing to 21.6% versus 16.6% in 2019. Net profit was up by +365.8% YoY to IDR125bn in FY2020, whilst the company's free cash flow increased by +772% to IDR1,068bn in FY2020 as a whole. 
Average revenue per inpatient days increased by +19.1% YoY, whilst average revenue per outpatient visits increased by +39.9% YoY in FY2020, both of which helped to offset lower inpatient and outpatient numbers. 
The company has put in place a number of new initiatives to grow the business and continue to monetize existing assets more effectively. This should continue to drive future revenues and profitability, coupled with more effective pricing across its hospital network and more effective cost savings as procurement.
Siloam International Hospital (SILO IJ) continues to benefit from COViD-19 testing and treatment, which saw a ramp-up during 2020, and has continued into 2021. 
The company also paid a special dividend to recognize its transformation successes on top of a 45% payout ratio bringing the total payout to 181%, with a commitment to payout more than 25% of earnings as a dividend barring unforeseen circumstances.
Siloam International Hospital (SILO IJ) trades on an FY21E EV/EBITDA of 9.9x and FY22E EV/EBITDA of 6.6x making it look attractive both from a historical perspective  and versus local hospital peers Mitra Keluarga Karyasehat Tbk (MIKA IJ) and Medikaloka Hermina (HEAL IJ), as well as its regional peer group. We also expect upward revisions to analyst forecasts. 

Siloam International Hospital (SILO IJ) - A Quickening Metabolism

Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

Johor Corp, <a href="https://www.smartkarma.com/entities/kpj-healthcare-berhad" target="_blank" data-smartkarma-citation="entities:877:1" rel="noopener">KPJ Healthcare (KPJ MK)</a> 's controlling shareholder, is taking concrete steps to increase the returns on its investment in the company. First, there are a new board of directors and CEO who are placing more emphasis on capital efficiency. Second, Bloomberg reports that Johor Corp is evaluating strategic options, most likely in the form of a minority investment or other transaction that would preserve its controlling stake, as opposed to an outright sale. Either way, the increased focus on returns should drive a re-rating of the shares' EV/EBITDA multiple from 10-12x currently to ~15x.

Johor Corp, KPJ Healthcare (KPJ MK) 's controlling shareholder, is taking concrete steps to increase the returns on its investment in the company. First, there are a new board of directors and CEO who are placing more emphasis on capital efficiency. Second, Bloomberg reports that Johor Corp is evaluating strategic options, most likely in the form of a minority investment or other transaction that would preserve its controlling stake, as opposed to an outright sale. Either way, the increased focus on returns should drive a re-rating of the shares' EV/EBITDA multiple from 10-12x currently to ~15x.

KPJ Healthcare: Re-Energizing the Share Price

We had been bearish on the stock for several years because of 1) deceleration in growth, 2) planned significant capacity increases in Singapore, and 3) the launches of two hospitals in China. Now that the market has baked in slower growth in the core business and start-up losses in China should stabilize this year and decline in future years, we think the shares are worth a second look. Further, the lack of a clear succession plan for the Founder/Executive Chairman suggests that we have a path to an exit.

We had been bearish on the stock for several years because of 1) deceleration in growth, 2) planned significant capacity increases in Singapore, and 3) the launches of two hospitals in China. Now that the market has baked in slower growth in the core business and start-up losses in China should stabilize this year and decline in future years, we think the shares are worth a second look. Further, the lack of a clear succession plan for the Founder/Executive Chairman suggests that we have a path to an exit.

Raffles Medical Group: A Path to the Exit

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

<figure>
 <img src='https://api2.sgx.com/sites/default/files/2021-02/Capture_10.PNG' alt='Parkwaylife CEO' />
 </figure>
 <div class='content-caption'>Parkwaylife CEO</div>
<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd">
<html><body>
Prudence, discernment and discipline are watchwords for finance veteran Yong Yean Chau. These values, which constitute the backbone of his management ethos, have been forged by more than a decade at the helm of SGX-listed Parkway Life (PLife) REIT. 
“We're firmly guided by our focus on targeted investment, proactive asset management, as well as prudent capital and financial management,” said Yong, the Chief Executive Officer of the Manager of Parkway Life REIT, one of Asia’s largest listed healthcare REITs by asset size. 
“We’ve adopted a discerning approach, only acquiring assets that are high-quality, yield-accretive and preserve the long-term defensiveness of our overall portfolio.” 
Yong, a Bachelor of Accounting in Honours graduate from the National University of Singapore, joined the Manager of Parkway Life REIT as Chief Financial Officer in February 2008, and was promoted to CEO in December 2008. A Fellow Chartered Accountant of Singapore, he had previously held CFO roles with Singapore Tourism Board and Ascendas Pte Ltd. 
Over the past 13 years, Yong has grown the REIT’s portfolio by more than doubling its value to about S$2 billion today. Distributions per unit (DPU), a closely watched industry metric, have also more than doubled to 13.79 Singapore cents as at 31 December 2020 from its listing in August 2007. 
“I would say that my biggest achievement is having the support of a strong, cohesive and committed team - 75% of whom have been with us for more than five years - to drive the strategy of the REIT,” Yong noted.  
“Their acumen, integrity and adherence to good corporate governance practices of transparency and accountability have ensured the REIT is protected from overexposure risks, yet allows us to tap on opportunities in Asia Pacific’s fast-growing healthcare sector.” 
PLife REIT invests in income-producing real estate and real estate-related assets that are used primarily for healthcare and healthcare-related purposes, including hospitals, healthcare facilities and real estate assets used in connection with healthcare research, education, and the manufacture or storage of drugs, medicine and other healthcare goods and devices.  
The REIT owns a well-diversified portfolio of 54 properties located in the Asia-Pacific region, with a total portfolio size of approximately S$2.02 billion as at 31 December 2020. It owns the largest portfolio of strategically located private hospitals in Singapore, comprising Mount Elizabeth Hospital, Gleneagles Hospital and Parkway East Hospital.  
In addition, the REIT has 49 assets of high quality nursing home and care facility properties in various prefectures of Japan, and one pharmaceutical product distributing and manufacturing facility in Chiba Prefecture. It also owns strata-titled units/lots in MOB Specialist Clinics Kuala Lumpur in Malaysia.  
With approximately 87% of its interest rate exposure hedged, PLife REIT’s interest coverage ratio stood at 18.1 times, while gearing remained optimal at 38.5% as at 31 December 2020. Its weighted average term to maturity has been extended to 3.5 years from 2.4 years, post-refinancing. The Group has also put in place Japanese Yen (JPY) net income hedges till 2Q 2025, as a shield against JPY volatility.  Robust Fundamentals 
The REIT’s portfolio is supported by favourable long-term rental lease structures, where at least 95% of its Singapore and Japan assets have downside revenue protection, Yong said.  
About 58% of its total portfolio is pegged to a Consumer Price Index (CPI)-linked revision formula, ensuring steady rental growth while protecting revenue stability amidst uncertain market conditions. 
The other key achievements of the REIT lie in its growth strategy, consistency, and ability to identify uncapitalised opportunities, such as in Japan, Yong noted. “Back in 2008, although it was the start of a recession, we entered Japan with our first acquisition of a pharmaceutical product distributing and manufacturing facility,” he recalled.  
“Since then, we have capitalised on the country’s unprecedented demographic shifts to grow the REIT, and continue to do so.” 
To ensure that its portfolio continues to expand in an efficient and sustainable manner, the REIT Manager seeks to build strategic long-term partnerships with credible, quality local operators. “Given the specialised nature of healthcare assets, we recognise the importance of working with experienced operators who specialise in their areas of expertise and have deep local knowledge,” he added. 
“We also seek to expand our footprint in growing healthcare markets, particularly in countries in which we have already invested, to achieve economies of scale and more effective portfolio management.” 
Nevertheless, Yong believes that acquisitions should never be viewed as an end in themselves. “We would rather pass up on certain deals than to dilute distributions and reduce the defensive nature of our portfolio,” he said. 
“This philosophy has helped safeguard our unitholders’ interests through the years, making PLife REIT a defensive play that has proven resilient, even in volatile and uncertain times.” 
Looking ahead, the REIT’s outlook remains rosy, driven by the region’s ageing demographics, the rise of lifestyle and chronic diseases, as well as soaring demand for quality healthcare as disposable incomes increase.  
“We see opportunities in our key markets, especially in the healthcare and eldercare sectors in Japan,” Yong said. “Japan has the highest proportion of elderly in the world, with 40% of the population set to be aged 65 and above by 2050. With improving healthcare and lower incidence of morbidity in old age, Japan’s life expectancy will increase to 87.92 by 2050, leading to higher demand for nursing home facilities.” 
In Singapore, the private sector must play a key role in increasing the capacity, quality and sustainability of healthcare services, he added. “The growth of medical tourism and accelerating regional healthcare demand lend support to our positive long-term prospects.” 
Globally, demand for quality healthcare is also on the rise. By 2050, it is estimated that one in six people in the world will be over 65, up from one in 11 in 2019. “With that in mind, we’ve been working towards establishing new drivers, beyond our current established markets,” Yong added. 
“We’re constantly identifying new growth engines and avenues for targeted investments, as well as cultivating relationships with local consultants and players to source for quality assets to enhance the REIT’s expansion.” Defensive Resilience  
Nonetheless, grappling with the pernicious effects of COVID-19 remains a challenge, Yong admitted. “The pandemic has affected the global economy and placed pressure on all industries and sectors, including healthcare.” 
To support its tenants through this difficult time, PLife REIT has set aside funds to provide targeted assistance and support measures for affected tenants. “We will continue to monitor the COVID-19 situation closely, particularly in the countries where we operate, and adapt our support measures accordingly,” he added. 
Despite the ongoing volatility and uncertainty which has dampened business sentiment, healthcare assets continue to garner interest, he pointed out. “This is so because healthcare assets are supported by governments as essential infrastructure, and seen to be defensive and resilient.” 
“And if you look at the example of China’s recovery after the worst of the pandemic, there are emerging growth opportunities with potential positive impact for real estate markets, in sectors such as healthcare and real estate technology.” 
Another challenge the REIT faces is ensuring that its Environmental, Social, and Corporate Governance (ESG) policies are carried out in its strategy planning and operations.  
“The REIT’s Singapore hospitals are on master lease arrangements with the subsidiary of IHH Healthcare, where IHH is the ultimate holding company of the REIT Manager, while properties in Japan are leased out to various registered care home operators,” Yong noted. 
“To achieve sustainability at the property level, we work closely with the operators to support them in improving and contributing to an elevated level of ESG performance.” 
Attracting and retaining talent also remains a priority. “As the specialised skills, knowledge and experience of the workforce of the Manager are critical to the REIT, we view human capital as a key contributing factor towards the REIT’s sustainable growth - having and retaining the right talent remains a challenge,” he said. 
Given the disruptive nature of high turnover, the Manager continually invests in building employee satisfaction, well-being, and loyalty to retain staff. “We develop succession planning and career development frameworks, and set clear and established career pathways, while rolling out robust business continuity plans to ensure the REIT’s sustainability,” he added. 
As a result, there is much to keep the 54-year-old occupied till the wee hours. “I’m always reflecting on my actions and the decisions made, to review what could have been done or handled better,” Yong admitted.  
“Of course, one could argue that it is always easy to understand something on hindsight. But to me, it’s more about reflecting to inform my future decisions for the REIT, so as to constantly learn and challenge my own thinking.” Parkway Life REIT 
Parkway Life Real Estate Investment Trust (PLife REIT) is one of Asia’s largest listed healthcare REITs by asset size. It invests in income-producing real estate and real estate related assets that are used primarily for healthcare and healthcare-related  purposes (including but are not limited to, hospitals, healthcare facilities and real estate and/or real estate assets used in connection with healthcare research, education, and the manufacture or storage of drugs, medicine and other healthcare goods and devices). PLife REIT owns a well-diversified portfolio of 54 properties located in the Asia Pacific region, with a total portfolio size of approximately S$2.02 billion as at 31 December 2020. It owns the largest portfolio of strategically located private hospitals in Singapore, comprising  Mount Elizabeth Hospital, Gleneagles Hospital and Parkway East Hospital. In addition, it has 50 assets of high-quality nursing home and care facility properties in various prefectures of Japan. It also owns strata-titled units/lots in MOB Specialist Clinics Kuala Lumpur in Malaysia. 
The company website is: <a href="http://plifereit.com/">plifereit.com</a> 
Click <a href="https://www.sgx.com/securities/equities/C2PU">here </a>for the company's StockFacts page. 
For the year ended 31 December 2020 financial results, click <a href="https://links.sgx.com/1.0.0/corporate-announcements/MGNWDT3PKYQYDAX2/646099_4Q2020%20PLife%20Press%20Release_Klareco_final_v2.pdf">here</a>. 
 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations. 
For previous editions of kopi-C: the Company brew, please click <a href="https://www.sgx.com/research-education/market-dialogues">here</a>.   
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to <a href="https://www.sgx.com/jennifer.t@sgx.com">jennifer.t@sgx.com</a>.
</body></html>


      
    
    Parkwaylife CEO


Prudence, discernment and discipline are watchwords for finance veteran Yong Yean Chau. These values, which constitute the backbone of his management ethos, have been forged by more than a decade at the helm of SGX-listed Parkway Life (PLife) REIT.  
“We're firmly guided by our focus on targeted investment, proactive asset management, as well as prudent capital and financial management,” said Yong, the Chief Executive Officer of the Manager of Parkway Life REIT, one of Asia’s largest listed healthcare REITs by asset size.  
“We’ve adopted a discerning approach, only acquiring assets that are high-quality, yield-accretive and preserve the long-term defensiveness of our overall portfolio.”  
Yong, a Bachelor of Accounting in Honours graduate from the National University of Singapore, joined the Manager of Parkway Life REIT as Chief Financial Officer in February 2008, and was promoted to CEO in December 2008. A Fellow Chartered Accountant of Singapore, he had previously held CFO roles with Singapore Tourism Board and Ascendas Pte Ltd.  
Over the past 13 years, Yong has grown the REIT’s portfolio by more than doubling its value to about S$2 billion today. Distributions per unit (DPU), a closely watched industry metric, have also more than doubled to 13.79 Singapore cents as at 31 December 2020 from its listing in August 2007.  
“I would say that my biggest achievement is having the support of a strong, cohesive and committed team - 75% of whom have been with us for more than five years - to drive the strategy of the REIT,” Yong noted.   
“Their acumen, integrity and adherence to good corporate governance practices of transparency and accountability have ensured the REIT is protected from overexposure risks, yet allows us to tap on opportunities in Asia Pacific’s fast-growing healthcare sector.”  
PLife REIT invests in income-producing real estate and real estate-related assets that are used primarily for healthcare and healthcare-related purposes, including hospitals, healthcare facilities and real estate assets used in connection with healthcare research, education, and the manufacture or storage of drugs, medicine and other healthcare goods and devices.   
The REIT owns a well-diversified portfolio of 54 properties located in the Asia-Pacific region, with a total portfolio size of approximately S$2.02 billion as at 31 December 2020. It owns the largest portfolio of strategically located private hospitals in Singapore, comprising Mount Elizabeth Hospital, Gleneagles Hospital and Parkway East Hospital.   
In addition, the REIT has 49 assets of high quality nursing home and care facility properties in various prefectures of Japan, and one pharmaceutical product distributing and manufacturing facility in Chiba Prefecture. It also owns strata-titled units/lots in MOB Specialist Clinics Kuala Lumpur in Malaysia.   
With approximately 87% of its interest rate exposure hedged, PLife REIT’s interest coverage ratio stood at 18.1 times, while gearing remained optimal at 38.5% as at 31 December 2020. Its weighted average term to maturity has been extended to 3.5 years from 2.4 years, post-refinancing. The Group has also put in place Japanese Yen (JPY) net income hedges till 2Q 2025, as a shield against JPY volatility.   Robust Fundamentals  
The REIT’s portfolio is supported by favourable long-term rental lease structures, where at least 95% of its Singapore and Japan assets have downside revenue protection, Yong said.   
About 58% of its total portfolio is pegged to a Consumer Price Index (CPI)-linked revision formula, ensuring steady rental growth while protecting revenue stability amidst uncertain market conditions.  
The other key achievements of the REIT lie in its growth strategy, consistency, and ability to identify uncapitalised opportunities, such as in Japan, Yong noted. “Back in 2008, although it was the start of a recession, we entered Japan with our first acquisition of a pharmaceutical product distributing and manufacturing facility,” he recalled.   
“Since then, we have capitalised on the country’s unprecedented demographic shifts to grow the REIT, and continue to do so.”  
To ensure that its portfolio continues to expand in an efficient and sustainable manner, the REIT Manager seeks to build strategic long-term partnerships with credible, quality local operators. “Given the specialised nature of healthcare assets, we recognise the importance of working with experienced operators who specialise in their areas of expertise and have deep local knowledge,” he added.  
“We also seek to expand our footprint in growing healthcare markets, particularly in countries in which we have already invested, to achieve economies of scale and more effective portfolio management.”  
Nevertheless, Yong believes that acquisitions should never be viewed as an end in themselves. “We would rather pass up on certain deals than to dilute distributions and reduce the defensive nature of our portfolio,” he said.  
“This philosophy has helped safeguard our unitholders’ interests through the years, making PLife REIT a defensive play that has proven resilient, even in volatile and uncertain times.”  
Looking ahead, the REIT’s outlook remains rosy, driven by the region’s ageing demographics, the rise of lifestyle and chronic diseases, as well as soaring demand for quality healthcare as disposable incomes increase.   
“We see opportunities in our key markets, especially in the healthcare and eldercare sectors in Japan,” Yong said. “Japan has the highest proportion of elderly in the world, with 40% of the population set to be aged 65 and above by 2050. With improving healthcare and lower incidence of morbidity in old age, Japan’s life expectancy will increase to 87.92 by 2050, leading to higher demand for nursing home facilities.”  
In Singapore, the private sector must play a key role in increasing the capacity, quality and sustainability of healthcare services, he added. “The growth of medical tourism and accelerating regional healthcare demand lend support to our positive long-term prospects.”  
Globally, demand for quality healthcare is also on the rise. By 2050, it is estimated that one in six people in the world will be over 65, up from one in 11 in 2019. “With that in mind, we’ve been working towards establishing new drivers, beyond our current established markets,” Yong added.  
“We’re constantly identifying new growth engines and avenues for targeted investments, as well as cultivating relationships with local consultants and players to source for quality assets to enhance the REIT’s expansion.”  Defensive Resilience   
Nonetheless, grappling with the pernicious effects of COVID-19 remains a challenge, Yong admitted. “The pandemic has affected the global economy and placed pressure on all industries and sectors, including healthcare.”  
To support its tenants through this difficult time, PLife REIT has set aside funds to provide targeted assistance and support measures for affected tenants. “We will continue to monitor the COVID-19 situation closely, particularly in the countries where we operate, and adapt our support measures accordingly,” he added.  
Despite the ongoing volatility and uncertainty which has dampened business sentiment, healthcare assets continue to garner interest, he pointed out. “This is so because healthcare assets are supported by governments as essential infrastructure, and seen to be defensive and resilient.”  
“And if you look at the example of China’s recovery after the worst of the pandemic, there are emerging growth opportunities with potential positive impact for real estate markets, in sectors such as healthcare and real estate technology.”  
Another challenge the REIT faces is ensuring that its Environmental, Social, and Corporate Governance (ESG) policies are carried out in its strategy planning and operations.   
“The REIT’s Singapore hospitals are on master lease arrangements with the subsidiary of IHH Healthcare, where IHH is the ultimate holding company of the REIT Manager, while properties in Japan are leased out to various registered care home operators,” Yong noted.  
“To achieve sustainability at the property level, we work closely with the operators to support them in improving and contributing to an elevated level of ESG performance.”  
Attracting and retaining talent also remains a priority. “As the specialised skills, knowledge and experience of the workforce of the Manager are critical to the REIT, we view human capital as a key contributing factor towards the REIT’s sustainable growth - having and retaining the right talent remains a challenge,” he said.  
Given the disruptive nature of high turnover, the Manager continually invests in building employee satisfaction, well-being, and loyalty to retain staff. “We develop succession planning and career development frameworks, and set clear and established career pathways, while rolling out robust business continuity plans to ensure the REIT’s sustainability,” he added.  
As a result, there is much to keep the 54-year-old occupied till the wee hours. “I’m always reflecting on my actions and the decisions made, to review what could have been done or handled better,” Yong admitted.   
“Of course, one could argue that it is always easy to understand something on hindsight. But to me, it’s more about reflecting to inform my future decisions for the REIT, so as to constantly learn and challenge my own thinking.”   Parkway Life REIT   
Parkway Life Real Estate Investment Trust (PLife REIT) is one of Asia’s largest listed healthcare REITs by asset size. It invests in income-producing real estate and real estate related assets that are used primarily for healthcare and healthcare-related  purposes (including but are not limited to, hospitals, healthcare facilities and real estate and/or real estate assets used in connection with healthcare research, education, and the manufacture or storage of drugs, medicine and other healthcare goods and devices). PLife REIT owns a well-diversified portfolio of 54 properties located in the Asia Pacific region, with a total portfolio size of approximately S$2.02 billion as at 31 December 2020. It owns the largest portfolio of strategically located private hospitals in Singapore, comprising  Mount Elizabeth Hospital, Gleneagles Hospital and Parkway East Hospital. In addition, it has 50 assets of high-quality nursing home and care facility properties in various prefectures of Japan. It also owns strata-titled units/lots in MOB Specialist Clinics Kuala Lumpur in Malaysia.  
The company website is: plifereit.com  
Click here for the company's StockFacts page.  
For the year ended 31 December 2020 financial results, click here.  
 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file  kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.  
For previous editions of kopi-C: the Company brew, please click here.    
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to jennifer.t@sgx.com.



Parkway Life REIT Harnesses Shifting Healthcare Dynamics

Malaysia

IHH Healthcare Bhd provides healthcare services. The Company operates hospitals as well as medical centers, clinics and ancillary healthcare businesses across multiple countries, including Singapore, Malaysia, Turkey, The Peoples Republic of China, India, Hong Kong,  Macedonia, the Netherlands and Brunei.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

IHH Healthcare (IHH MK)

Mitra Keluarga Karyasehat (MIKA IJ) - Occupancy and Profitability Rising

Mitra Keluarga (MIKA IJ) is probably the best quality listed hospital player in Indonesia, with good governance and throwing off the highest...

Angus Mackintosh

Siloam International Hospital (SILO IJ) - A Quickening Metabolism

Siloam Hospital's recent results demonstrate the management's ability not only to cope with COVID-19 and to benefit from it but also to adjust its...

Angus Mackintosh

Raffles Medical Group: A Path to the Exit

We were bearish for several years because of slowing growth and expected drags from new facilities. We are turning bullish now that the market...

Kemp Dolliver, CFA

Parkway Life REIT Harnesses Shifting Healthcare Dynamics

Prudence, discernment and discipline are watchwords for finance veteran Yong Yean Chau. These values, which constitute the...

Singapore Exchange Ltd (SGX)

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Mitra Keluarga Karyasehat (MIKA IJ) - Occupancy and Profitability Rising

Mitra Keluarga (MIKA IJ) is probably the best quality listed hospital player in Indonesia, with good governance and throwing off the highest...

Angus Mackintosh

Siloam International Hospital (SILO IJ) - A Quickening Metabolism

Siloam Hospital's recent results demonstrate the management's ability not only to cope with COVID-19 and to benefit from it but also to adjust its...

Angus Mackintosh

KPJ Healthcare: Re-Energizing the Share Price

KPJ Healthcare's controlling shareholder is taking steps to drive a re-rating by placing more emphasis on capital efficiency and evaluating some...

Kemp Dolliver, CFA

Raffles Medical Group: A Path to the Exit

We were bearish for several years because of slowing growth and expected drags from new facilities. We are turning bullish now that the market...

Kemp Dolliver, CFA

Parkway Life REIT Harnesses Shifting Healthcare Dynamics

Prudence, discernment and discipline are watchwords for finance veteran Yong Yean Chau. These values, which constitute the...

Singapore Exchange Ltd (SGX)