KPJ Healthcare Berhad

KPJ making progress in medical tourism with 3 hospitals

In the face of rising competition, the lucrative medical tourism industry could be the key to sustainable long term growth.

In the face of rising competition, the lucrative medical tourism industry could be the key to sustainable long term growth.

Highlights
IN THE face of rising competition, the lucrative medical tourism industry could be the key to sustainable longterm growth.

KPJ Healthcare Bhd is focused on transforming three existing hospitals into reference centres for oncology, while extracting value from its 23.6% stake in Vejthani Hospital.

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

No plans to slow down. Management reaffirmed that KPJ will continue with its expansion plans of opening at least two new hospitals pa,which had thus far helped the company maintain its dominance in the local healthcare sector.

Penetrating the medical tourism market through introduction of new facilities. In order to grow the medical tourism business further, KPJ intends to focus 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 1Q13.

Development of a medical tourist hub in Johor. Construction of a new flagship 390 bed hospital in Bandar Dato' Onn is slated to begin in early2014, in order to meet the
targeted opening by end 2014

Upon completion, the hospital will house six Centres of Excellences in the field of oncology, women & child, cosmetics and reconstruction, orthopedic, cardiology and
geriatrics.

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

Forecasts
No change to our earnings forecasts.

Investment Case
Moving forward, we expect KPJ to deliver a stronger set of results in CY13 with the additional beds arising from the scheduled opening of two new hospitals as well as the new Sabah Medical Centre. We, thus, reiterate our 'Buy' call on the stock with an unchanged fair value of RM6.45 (CY13 PER of 23.5x).