KPJ Healthcare Berhad

KPJ on acquisition and expansion drive

KPJ Healthcare Bhd (KPJ) is on an acquisition drive withtherecent proposal to acquire Rawang Specialist Hospital Sdn Bhd (RSHSB) via its wholly owned subsidiary Kumpulan Perubatan (Johor) Sdn Bhd (KPJ

KPJ Healthcare Bhd(KPJ) is on an acquisition drive with the recent proposal to acquire Rawang Specialist Hospital Sdn Bhd (RSHSB) via its wholly owned subsidiary Kumpulan Perubatan (Johor) Sdn Bhd (KPJSB). According to MIDF Amanah Investment Bank Bhd (MIDF research) in a report on the group yesterday, KPJSB had entered into a sale and purchase agreement to acquire a 100 per cent equity interest in RSHSB for a total cash consideration of RM50.6 million, expected to be completed by the end of 2013. "RSHSB is in the midst of constructing a hospital building located at Section 16, Bandar Rawang, Gombak, Selangor, with the Certificate of Completion and Compliance / Certificate of Fitness for Occupation (CCC) of the building expected to be obtained by the end of June 2013," outlined MIDF Research in the research note. "Upon completion, RSHSB shall be the only multi discipline specialist hospital catering to Rawang andit ssurrounding areas with population of more than one million people.It has been granted the approval to operate with 159 licenced beds." MIDF Research was positive on this latest addition to KPJ's stable of hospitals as it would enable it to expand its network and solidify its position as the leading private healthcare service provider in Malaysia. "As the first multidiscipline specialist hospital in Rawang, it is tapping into an opportunity to provide healthcare services in a rapidly growing district, with an expanding middle class population. We therefore see huge upside potential for private healthcare services in this area." The research team behind Kenanga Investment Bank Bhd (Kenanga Research) outlined its expectations for KPJ's earnings over the next two years to come from the building of new hospitals as well as expanding its existing capacity and services. "For FY13, the KPJ Pasir Gudang Specialist hospital,(120 beds), which has been fully constructed, is now awaiting the inspection and approval by the Ministry of Health. Expected to be finalised soon, it is likely to commence operations in 2the second quarter of 2013 (2Q13) while both Sabah Medical Centre (250 beds) and KPJ Muar Specialist are expected to start by end4Q13it elaborated. "Looking into financial year (FY14), new hospitals in Bandar Datuk Onn, Johor Bahru (390 beds) and KPJ Pahang Specialist are targeted to start commencement. "Over the longer term, KPJ plans to build a new hospital each in Perlis, and Miri, Sarawak. We expect KPJ to expand into Terengganu and Melaka as well, of which it currently does not have a presence in." Elsewhere, Kenanga Research understood that plans were underway for the development of additional facilities on the remaining balance of a vacant land measuring 30-32 acres in Jeta Gardens. KPJ has also earmarked RM10 million to add an additional 70 beds, bringing the total to 178 in FY13. "Management has also earmarked a RM45 million capital expenditure for the Nilai main campus expansion and the commissioning of a new campus at Bukit Mertajam, Penang. The Penang campus is expected to commence operations by end FY13.Management aims to quadruple its student intake to 10,000 within five years."