Buy call on KPJ

OSK said KPJ Healthcare Bhd, a medical and specialist healthcare service provider, was expected to record a group revenue growth of RM623.2mil this year, climbing 6.8% from RM583.4mil for financial year ended Dec 31, 2004. A net profit of RM33.8mil from RM31.8mil achieved previously.
KPJ plans to spend about RM70mil to expand and relocate Tawakal Hospital to a two-acre piece of land situated near the existing building.
The company also plans to invest RM26mil to establish a new building for the Ipoh Specialist Hospital.
“These projects are expected to be completed within the next two years,” said chief finance officer Alvin Lee Swee Hee.
KPJ has invested RM17mil for the Kuching Specialist Hospital and RM55mil for the Seremban Specialist Hospital which were launched in 2003 and 2004 respectively.
According to OSK, these hospitals are expected to break even in 2007, and it will further boost KPJ’s market position and capture a larger market share from the current 14%. “Additionally, we have also proposed to acquire our first foreign hospital, namely PT Khasanah Putera, in Jakarta, Indonesia.
“The hospital is targeted to start operations by year-end, and it is expected to break even in 2008,” said Lee.
Apart from hospital management in Indonesia, the company has also tied up with Continental Hosp Ltd to provide management services on a five-star hospital in Dhaka, Bangladesh. KPJ is also planning to expand its hospital management services in the Middle East, China and other Asean countries in the near term.
“OSK Research is maintaining a buy call on KPJ with a 12-month target price of RM1.79,” Lee said. KPJ’s share prices closed at RM1.53 on Friday.
source