KPJ in excellent health with robust 4Q results, aggressive expansion growth Read more: http://www.theborneopost.com/2012/02/28/kpj-in-excellent-healt

Borneo Post KUCHING: KPJ Healthcare Bhd (KPJ) is on solid ground as seen by its latest quarterly results, solid fundamentals and aggressive expansion plans to provide healthcare to the ever-growing Malaysian healthcare segment moving forward.
The group’s fourth quarter financial year 2011 (4QFY11) core net profit of RM39.5 million, up 62.6 per cent year-on-year (y-o-y) and 20 per cent quarter-on-quarter (q-o-q) came in within expectations, making 102 per cent of consensus full-year estimates.
Revenue for FY11 came in at RM1.89 billion, yielding a y-o-y jump of 14.3 per cent, driven by the higher number of patients and heightened activities at its hospitals.
Q-o-q, revenue grew by 6.4 per cent due to higher number of in-patients and out-patients throughout KPJ’s hospitals across Malaysia.
Due to a better utilisation rate per patient, 4Q core earnings before interest and tax (EBIT) margin expanded by 0.5 percentage point q-o-q to 10 per cent from 9.5 per cent in the 3Q.
OSK Research Sdn Bhd (OSK Research) opined in a research report, “Moving forward, we expect the group’s hospital in Jakarta to register further improvement in its financial performance, driven by growing recognition of its brand, which will enable it to draw a higher number of patients.
“The counter is an excellent long term investment and the current price weakness presents a good opportunity to accumulate KPJ shares.”
In a concurrent report, RHB Research Sdn Bhd (RHB Research) noted, “KPJ is on track to open three hospitals (two new hospitals and one replacement) this year. It is set to open its first phase (comprising 90 beds) of the 200-bed Bandar Baru Klang Specialist by 1H (first half) FY12 while construction of the Pasir Gudang hospital is targeted for completion by end-2012.
“In addition, we understand that the construction of the first phase (comprising 100 beds) of the new Sabah Medical Centre (replacement to the existing facility) would be completed in 2HFY12 and thus, should begin contributing from 2HFY12 onwards.
“We view the company’s aggressive growth strategy of two new hospitals per annum positively given its high occupancy rate of 70 to 75 per cent currently (optimum level at 80 per cent) and the need to accommodate the growing number of patients.
“We remain positive on KPJ’s aggressive expansion plans which should help it maintain its dominance in Malaysia’s growing healthcare market. In addition, we expect the stock to benefit from a possible sector rerating from the listing of IHH in mid-2012.”
RHB Research noted the risks to KPJ’s earnings including lower than expected patient numbers which could be due to slower-than-expected economic recovery and serious disease outbreaks (such as SARS or swine flu) in Malaysia as well as slower than expected turnaround in loss-making hospitals.
The group declared a third interim gross dividend per share (DPS) of 2.5 sen (less 25 per cent tax), bringing the year-to-date net DPS to 12.4 sen, thus translating to a net payout of 55.8 per cent and net yield of 2.6 per cent respectively.
OSK Research maintained the fair value pegging at RM5.84 per share, based on 23.1 times price earnings ratio (PER) on FY12 earnings per share.
Likewise, RHB Research made no change to its fair value derivation of RM5.09 per share, which was based on an unchanged 2012 PER of 20.5 times.