KPJ Healthcare Berhad

Alliance Research expects KPJ to post decent earnings growth on good prospects

Alliance Research expects KPJ Healthcare BM (KPJ) to post decent growth in its 2013 earnings on the back of good financial prospects and positive outlook.

KUALA LUMPUR: Alliance Research expects KPJ Healthcare BM (KPJ) to post decent growth in its 2013 earnings on the back of good financial prospects and positive outlook. In a note yesterday, the research house projected the group's core Malaysian operations to continue to report healthy growth due to favorable demographic patterns, strong presence in suburban states and targeted expansion plan. It also expected losses from the group's Indonesian operations to narrow significantly in this year's financial results, supported, by earnings contribution from its newly acquired RS Medika Permata Hijau. Alliance Research noted the healthcare services provider's outlook was also likely to be positive this year backed by various industry dynamics. It said the group was well positioned to benefit from the favourable demographic changes in Malaysia such as an ageing population and strong population growth, particularly within the Bumiputera community. "In addition, a reduction in the government's budgeted healthcare development expenditure for 2011 and 2012 is expected to stress the public healthcare system going forward, resulting in stronger demand of private healthcare services. "We foresee this to be accentuated by the proliferation of medical insurance, which will drive patients to the KPJ Group of hospitals that targets the midtohigh income population," it added. Alliance Research had initiated coverage on KPJ with a 'neutral' recommendation at a target price of RM6.07 per share. The recommendation placed on KPJ had included the longer than expected gestation period for the new hospitals to be profitable and potential restructuring of the healthcare system. — Bernama