KPJ HEALTHCARE, the largest private hospital group in MalayÂsia, is to focus on its expansion plan now that it has prevailed in its appeal against its MR70.5 mil lion lawsuit.
Last week, the Court of Appeal allowed KPJ Healthcare's appeal against the prior adverse decision of the Johor Baru High Court Âmade on July 26 Â and set aside the decision of the earlier case.The suit was originally filed by KPJ's coÂshareholders in Hospital Penawar SB joint venture (JV). KPJ owns a 30% in the latter and manages the hospital located in PaÂsir Gudang, Johor, which opened in 1995. The suit was filed by the 70% shareholders, following the opening of KPJ's Pasir Gudang Specialist Hospital, on grounds of an alleged breach in the JV agreement. Hospital Penawar SB contributes about RM1 million to KPJ annually.
RHB Research Institute analyst Chong Ooi Ming views the court decision as a positive development for the ealthcare provider. "Now KPJ can focus to its Malay sian hospital openings in 2014Â15 and efforts to turnaround its Indo nesian operations," he added.
RHB Research has maintained its neutral call on KPJ Healthcare with a fair value of RM6.13 as the research house expects the compaÂny's earnings to get back on track after winning its recent lawsuit. However, RHB said it continuesto be cautious on KPJ's earnings outlook. "Its Malaysian expansion plans could be a drag on earnings for 2014Â15, while the turnaround for its Indonesian operation is slow," he said. "We make no change to our fore cast, as this result was within our expectations, but we feel it lifts a major negative — sentimentÂwise — overhang. That said, we under stand that the plaintiffs intend to appeal the court's decision," he added. For 2014- Â2015, KPJ plans to open five hospitals with a total caÂpacity of 780 beds. "While we are positive on the planned expansion, we note that  of these five  four were actually scheduled to open a year earlier. "The delays hurt KPJ's FY13 bot tomline with net debt rising to RM729.9 million in September this year, pushing up net inter est cost and further exacerbating the higher preÂopening costs in curred," he said.
Last month, KPJ Healthcare colÂlaborated with the Nation BangÂabandhu Sheikh Mujibur Rahman Memorial Trust to open the Sheikh Fazilatunnesa Mujib MemoÂrial KPJ Specialised Hospital and Nursing College in Bangladesh. The 250Âbed hospital boasts a qualified and experienced team of hospital managers in place.The hospital also offers firstÂclass healthcare services, providing Bangladeshis, including from among the poor, with greater acÂcess to international standards of treatment
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