KPJ Healthcare Berhad

KPJ Healthcare likely to post stronger results for FY2013

RHB Research expects KPJ Healthcare Bhd to deliver a stronger set of results for its year ended Dec 31, 2013

PETALING JAYA: RHB Research expects KPJ Healthcare Bhd to deliver a stronger set of results for its year ended Dec 31, 2013 due to additional beds arising from the
scheduled opening of two new hospitals as well as the new Sabah Medical Centre.

It reiterates its "buy" call on the stock with an unchanged fair value of RM6.45, based on a priceearnings ratio of 23.5 times for 2013.

RHB Research is forecasting total turnover and recurring net profit of RM2.43bil and RM178.3mil, respectively, for 2013. For 2014, it is forecasting revenue and net
profit to increase to RM2.8bil and RM193.4mil, respectively.

The brokerage said that in the face of rising competition, the lucrative medical tourism industry could be key to sustainable longterm growth. KPJ is focused on transforming three existing hospitals into reference centres for oncology while extracting value from its 23.6% stake in Vejthani Hospital in Thailand.

"Efforts to replicate Vejthani's successful medical tourism strategy in Malaysia could pay off over the longer term," said RHB Research.

It added that management reaffirmed that KPJ would continue with its expansion plans of opening at least two new hospitals per annum, which had thus far helped
the company maintain its dominance in the local healthcare sector.

"In order to grow the medical tourism business further, KPJ intends to focus its efforts on transforming three of its existing hospitals into reference centres for oncology treatment.

"These hospitals would be upgraded to include new facilities in oncology and radiotherapy treatment, while an additional nuclear medicine facility would be introduced at the KPJ Johor Specialist hospital by the first quarter of 2013," said RHB Research.

It said the construction of a flagship 390bed hospital in Bandar Dato Onn was slated to begin in early 2014, in order to meet the targeted opening by end2014. Upon completion, the hospital will house six Centres of Excellences in the field of oncology, women and child, cosmetics and reconstruction, orthopedic, cardiology and geriatrics.

Services would be priced competitively in order to tap into the more price sensitive
foreign community from Singapore.