KUALA LUMPUR (Nov 29): Analysts remain positive on KPJ Healthcare Bhd’s growth trajectory, and said they favour the medical group’s strategy to further grow its medical tourism business.
KPJ's net profit for the third quarter ended Sept 30, 2023 (3QFY2023) jumped to RM90.31 million, from RM50.69 million a year ago, thanks to a gain of RM41.5 million from the sale of its Indonesian operations, while its Malaysian hospital business improved.
Quarterly revenue rose 15.9% to RM925.39 million from RM798.75 million previously, due to an increase in inpatient visits and bed occupancy rates.
The group announced a dividend payout of 1.30 sen per share.
For the cumulative nine months ended Sept 30, 2023 (9MFY2023), net profit soared 89.3% to RM189.15 million from RM99.90 million previously, as revenue expanded 19.4% to RM2.55 billion from RM2.14 billion.
In a note on Wednesday, Hong Leong Investment Bank (HLIB) said KPJ registered a headline profit after tax and minority interest (Patami) of RM90.3 million, as it recognised a gain of about RM16.3 million from the disposal of its Indonesian operations.
It said stripping out the one-off disposal gain, KPJ reported a 3QFY2023 core Patami of RM74 million (+69.5% quarter-on-quarter; +45.1% year-on-year), which brought the 9MFY2023 sum to RM169.8 million (+67.2%).
HLIB said the performance was a beat, forming 84% of the house's full-year forecast and 76% of the consensus.
“Key deviation to our forecast was due to stronger-than-expected patient footfall. We raise our earnings forecasts by 5%-10%, as we bake in stronger patient volume assumptions.
“Post earnings revision, our sum-of-parts-derived target price (TP) is raised to RM1.57. [We] keep 'buy' [on KPJ],” HLIB said.
Meanwhile, TA Securities said KPJ’s 9MFY2023 net profit of RM189.2 million came in at 83.9% of its full-year estimate, and 85.0% of the consensus.
The research house deemed the results as within expectations, as it expects a drop in patient volumes in 4QFY2023.
“We continue to like the group’s strategy to further grow its medical tourism [business]. Note that medical tourist charges/fees are more expensive (with at least a 20% mark-up) than local patients.
“Moreover, ongoing efforts to recruit more consultants and add new beds would bode well for the group.
“We place our TP of RM1.32 and 'buy' recommendation under review, pending the outcome of Wednesday’s analyst briefing,” it said.