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KPJ Healthcare

KPJ is well positioned to benefit from the fast-growing healthcare sector in Malaysia.

05-12-2011

MAYBANK KIM ENG (NOV 30) KPJ is well positioned to benefit from the fast-growing healthcare sector in Malaysia.

As a defensive play, KPJ also offers limited revenue downside, given its domestic dominance and a wide array of positive demand factors.

KPJ operates 20 private hospitals in Malaysia, the largest network among local private hospital operators, and has a 19% share of total private hospital beds. It stands to reap the greatest benefits from the rising healthcare needs of the local population. KPJ plans to add one to two hospitals each year.

By end-2013, KPJ could have added up to five new hospitals, and expanded its bed capacity by up to 35%. We also expect the company to compete more aggressively for foreign patients in the medical tourism sector.

KPJ is the cheapest hospital stock vis-a-vis its regional peers, trading at FY2012F PER of 18.1 times versus the peer average of 22.3 times. Nevertheless, it offers the highest yield at 2.4% net. We expect revenue growth of 13% to 18% over FY2O11 to FY2013 as its hospital network expands and it becomes a bigger player in medical tourism, corresponding net profit would grow 8% to 19% over the same period.







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