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KPJ Healthcare Q2 earnings down 27.3% due to new hospitals

KUALA LUMPUR: KPJ Healthcare Bhd’s earnings fell 27.3% to RM25.29mil in the second quarter ended June 30, 2013 as it was impacted by losses from the newly-opened hospitals in the group.

It said on Friday its revenue rose 11% to RM587.69mil from RM529.29mil a year ago while earnings per share were 4.24 sen compared with 5.98 sen. It declared an interim dividend of 2.0 sen.

For the first half, its earnings fell 26% to RM50.38mil from RM68.13mil in the previous corresponding period. Its revenue rose 7.3% to RM1.132bil from RM1.054bil.

“The higher revenue for the period is mainly due to the increase in revenue of the existing hospitals and newly opened hospitals in the group,” it said.

On the Malaysian segment, it said revenue increased by 5% to RM1.012bil from RM965.8mil due to the increase in revenue of the existing hospitals and newly-opened hospitals in the group.

As for the Indonesian segment, it recorded revenue of RM17.7mil, up 72% from RM10.3mil a year ago due to contributions from PT Khidmat Perawatan Jasa Medika in current quarter.

KPJ’s aged care facility segment recorded revenue of RM17.9mil, up 36% from RM13.2mil due to  the increase in the resale of Retirement Village unit in 2013.

Its support services segment posted revenue of RM287.3mil, up 18% from RM244mil.

via KPJ Healthcare Q2 earnings down 27.3% due to new hospitals – Business News | The Star Online.


JOHOR BAHARU, 11 Jun (Bernama) — KPJ Healthcare Berhad (KPJ), kumpulan

penjagaan kesihatan dan perubatan swasta terbesar di negara ini, mencatat

prestasi kewangan yang membanggakan tahun lepas apabila mencapai keuntungan

melepasi paras RM2 bilion, sekaligus yang pertama dalam tempoh 30 tahun.

Pengerusinya Datuk Kamaruzzaman Abu Kassim berkata keuntungan itu meningkat

sebanyak 10 peratus iaitu RM2.1 bilion tahun lepas berbanding RM1.9 bilion pada

tahun sebelumnya.

“Pencapaian tersebut adalah hasil daripada projek-projek terkini dan

pengambilalihan,” katanya kepada pemberita selepas mesyuarat agung tahunan KPJ

Healthcare Berhad, di sini, hari ini.

Turut hadir, Presiden dan Pengarah Urusan KPJ Healthcare Amiruddin Abdul


Kamaruzzaman berkata pendapatan yang diperoleh KPJ pada tahun lepas

disumbangkan menerusi operasinya di negara ini dengan hasil domestik itu

meningkat sembilan peratus iaitu RM1.87 bilion berbanding RM1.72 bilion pada

tahun sebelumnya.

Beliau berkata keuntungan sebelum cukai dan zakat pada tahun lepas,

bagaimanapun, menunjukkan penurunan empat peratus iaitu sebanyak RM196.9 juta

berbanding RM204.6 juta pada 2011.

“Penurunan tersebut disebabkan oleh pengiktirafan terkumpul pelarasan nilai

saksama yang berkaitan dengan hartanah pelaburan syarikat bersekutu, Al ”Aqar

Healthcare REIT yang berjumlah RM25.9 juta bagi tahun 2011 berbanding RM5.4 juta

pada tahun lepas,” katanya.

Katanya KPJ turut mencatatkan penurunan sebanyak lima peratus dalam

keuntungan bersih tahun lepas iaitu RM146.8 juta berbanding RM154.3 juta pada

tahun sebelumnya.

Sementara itu, Kamaruzzaman berkata pengambilalihan hospital terkini oleh

KPJ adalah 100 peratus kepentingan ekuiti dalam Rawang Specialist Hospital Sdn

Bhd yang memiliki Hospital Pakar Rawang, pada 17 April lepas.

Beliau berkata perkhidmatan yang ditawarkan oleh hospital yang menempatkan

159 katil tersebut adalah dalam bidang kardiologi, pediatrik, ortopedik,

obstetrik dan ginekologi, pembedahan, telinga, hidung dan kerongkong, dialisis

dan mata.

Katanya, KPJ tidak bercadang untuk membuka hospital di luar negara buat masa

ini kerana ingin memberi tumpuan operasi dalam negara, namun, tidak menolak

kemungkinan berbuat demikian jika ada peluang yang baik.



KPJ keen on overseas expansion

New venture: (from left) KPJ Healthcare corporate adviser Datin Paduka Siti Sadiah Sheikh Bakir, chairman Datuk Kamaruzzaman Abu Kassim and president and managing director Amiruddin Abdul Satar looking at the model of KPJ Specialist Hospital Bandar Dato Onn Johor Baru after the company’s AGM.

JOHOR BARU: KPJ Healthcare Bhd is always on the lookout to expand operations internationally if there are good opportunities and growth prospects, said its president and managing director Amiruddin Abdul Satar.

He said there were several options for the company to do that including acquiring stakes in hospitals or partnering with reliable parties.

“However, we are not rushing in doing things and will only consider the deal if it gives good return of investment to us and our shareholders,” he said after the company AGM.

Amiruddin said while there were many opportunities for the company to acquire more hospitals overseas especially in the Asean region, Malaysia still offered good business to the group.

In the next three or four years, KPJ Healthcare would be focusing on the development of six new hospitals nationwide under the company’s stable, he said. They are the Sabah Specialist Hospital, KPJ Pahang Specialist Hospital, KPJ Specialist Hospital Bandar Dato Onn Johor Baru, KPJ Perlis Specialist Hospital, KPJ Muar Specialist Hospital and Rawang Specialist Hospital.

“We are allocating between RM700mil and RM800mil which includes developing new hospitals, relocation and upgrading of existing facilities,” added Amiruddin.

The company’s corporate advisor Datin Paduka Siti Sa’diah Sheikh Bakir said it would continue to strengthen its position in the country’s private healthcare segment.

She said competition was getting intense as more players including foreign-based private healthcare providers were entering the Malaysian market.

Siti Sa’diah said competition, however, was good as it would help to increase the standard of the private healthcare services in the country and would place Malaysia in the radar of the international medical fraternity.

“Similarly, competition in the private healthcare segment in Iskandar Malaysia is also getting stiffer in years to come as more private hospitals are coming up in South Johor,” she added.

Siti Sa’diah said despite its position as the largest private healthcare provider in the country, KPJ Healthcare would not rest on its laurels and would continue to work even harder to remain in the top position.

For the financial year ended Dec 31, 2012, KPJ Healthcare Bhd registered RM146.79mil net profit on RM2.09bil compared with RM154.25mil and RM1.9bil net profit and revenue respectively a year earlier.

via KPJ keen on overseas expansion.

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KPJ enjoys IHH IPO spillover effect

OVER the past six months, KPJ’s share price has performed exceedingly well, rising by 35% and closing the gap to our fair value of RM6.44. Apart from the stock’s highly defensive nature, we believe the positive share price performance has also been triggered by the spillover effect from the recent listing of IHH Healthcare.

At current price level, KPJ is trading at 19.5 times calendar year (CY) 2013 price to earnings ratio (PER) and 11.7 times EV/EBITDA (enterprise value and earnings before interest, taxes, depreciation and amortisation ratio), which is still below the industry average of 26 times and at a steep discount to IHH’s valuation of 42 times CY 2013 PER and 15.5 times financial year (FY) 2013 EV/EBITDA.

For 2012, we have factored in a moderate 8% growth in the number of outpatients, a modest assumption compared to the 13% outpatient growth registered in FY 2011. Similarly, for inpatients, we factored in a moderate 4% growth in 2012 and 5% growth thereafter, which is modest compared to its 4-year historical average growth of 9%. Given the group’s ongoing expansion plans and occupancy rate of 70%, we believe there is upside potential to our earnings forecasts. Based on our simulation, for every 1 percentage point increase in outpatient and inpatient growth, our earnings forecast would be raised by 0.6%-1.7% per annum.

KPJ Healthcare has opened KPJ Klang with an initial 30 beds this year. The hospital has a capacity for 150 beds. We gather that KPJ Pasir Gudang is on track for completion by the fourth quarter with a bed capacity of 120 beds. Recently, the group has finalised the acquisition of the remaining 49% stake in SMC Healthcare from Sabah Medical Centre for RM54.8mil which will be paid through internal funds.

We are upbeat on KPJ’s ongoing expansion, as it allows the group to capture the growing middle-income population and also the rising demand for private healthcare. KPJ is also well positioned to capture the growing market of medical travellers. The Malaysia Health Tourism Council and Association of Private Hospitals Malaysia estimate the number of medical travellers to grow by a compound annual growth rate of 14% to 1.1 million travellers in five years (2011 to 2016).

Despite an annual capital expenditure of RM200mil for its expansion programme, we expect KPJ to continue generating positive free cash flow of about RM50mil to RM100mil a year. The group has a healthy cash balance of about RM200mil and a very low gearing of 0.2 times. As such, we believe KPJ is able to maintain its dividend payout ratio of about 35% which translates into a net yield of 2%.

Pending its second quarter results this month, we maintain our forecasts at this juncture, but with an upward bias. For exposure to the domestic defensive and growing healthcare sector, we continue to like KPJ Healthcare for its sound fundamentals, ongoing expansion plans and undemanding valuation in comparison to its peer IHH. Our target price is unchanged at RM6.44 based on 20 times CY 2013 PER.

The Star

KPJ will spend RM2b to build, expand hospitals

JOHOR BARU: KPJ Healthcare Bhd will spend RM2 billion in the next five years to build new and expand existing hospitals locally and abroad.

“We receive a lot of enquiries (from overseas) but we have been successful in Malaysia, and our priority is here,” KPJ Healthcare chairman Kamaruzzaman Abu Kassim said after the group’s shareholders meeting yesterday.

He added that the group will look to investing overseas as and when the opportunity arises.

Kamaruzzaman, who is also Johor Corp president and chief executive officer, said these plans will be funded mainly by selling its hospitals once completed, into the Al-Aqar healthcare Real Estate Investment Trust (REIT).

Almost all of its 21 hospitals are already parked in the REIT.

According to its annual report, KPJ Healthcare has some RM252 million of cash in its coffers and about RM443 million in borrowings.

This year itself the company has allocated RM100 million for upgrades of its hospitals.

The development include six new hospitals, namely KPJ Sabah Specialist Hospital, KPJ Pasir Gudang Specialist Hospital, KPJ Pahang Specialist Hospital, KPJ Specialist Hospital Bandar Dato’ Onn, KPJ Perlis Specialist Hospital and KPJ Muar Specialist Hospital.

Its expansion plans, which will see it investing RM867 million, will increase the number of beds in its hospitals to 3,400 from 2,600 now.

KPJ Klang, with an initial capacity of 100 beds was opened last month, while another two hospitals are to be completed by the end of the year. These are KPJ Pasir Gudang Specialist Hospital and Sabah Medical Centre.

Works on the first phase of KPJ Specialist Hospital Bandar Dato’ Onn is expected to start this year. Its first phase will encompass about 280,000 sq ft with a bed capacity of 150 and cost RM150 million.

For the financial year ended December 31 2011, about 76 per cent of the healthcare company’s profits came from its hospital operations. During the year, the group made RM154.3 million net profit on RM1.9 billion revenue.

Read more: BusinessTimes

PublicInvest starts KPJ with ‘outperform’

PublicInvest Research started KPJ Healthcare Bhd with an “outperform” call and target price of RM7.14 per share, citing plenty of room for growth for the Malaysia’s largest healthcare provider going forward.

“We like KPJ for its proven track record of growing its revenue and earnings consistently for the past ten years, the recession-proof nature of its business and promising long-term growth prospects,” the broker said in a research note on Tuesday.

PublicInvest said KPJ enjoyed the benefits of a captive market as patients do not have other choices for private healthcare unless they travel to other places.

“As the main private hospital in Malaysia, KPJ also stands to benefit from the spillover effect of overcrowded public hospitals,” it added.

By 9.32am, KPJ’s shares was unchanged at RM5.78 per share, as compared with the Malaysia’s benchmark stock index that dropped 1 percent. — Reuters

Read more: BusinessTimes

KPJ in JV with Naim Land for hospital project

KUALA LUMPUR: KPJ Healthcare Bhd is teaming up with Naim Land Sdn Bhd to build and operate a hospital in Miri.

KPJ said on Thursday both parties had signed a joint venture agreement for the hospital which would be built on a four-acre site owned by Naim Land.

It said the proposed JV was in line with KPJ and its subsidiaries’ objective to increase its network of hospitals to locations where private healthcare is in demand, enlarge the customer base as well as other areas of healthcare services.

“The proposed JV shall leverage on KPJ and Naim Land’s capabilities to successfully operate as a private hospital,” KPJ said, adding the proposed JV would lower KPJ’s initial start-up cost, including land and construction cost of the hospital building, and lower maintenance spend.

Read More: The Star

RAM: KPJ profit may be affected if 1Care fees standardised

PETALING JAYA: KPJ Healthcare Bhd’s profitability may be affected if the proposed new healthcare system (1Care) for Malaysians imposes a standardised fee schedule, said RAM Ratings.

At present, the healthcare industry and KPJ are subject to regulatory controls, although this may evolve over time. The Health Ministry is looking to implement 1Care for Malaysians, which RAM Ratings said could change the landscape of the industry. At this point, details of the scheme have yet to be finalised.

KPJ is an investment-holding company with subsidiaries involved in the operation of hospitals and the provision of healthcare services.

“Following the implementation of 1Care, public and private hospitals may be integrated under a common network.

“Should a standardised fee schedule be imposed, KPJ’s profitability may be affected if operating costs are not effectively managed. As such, the impact of such a restructuring, including its effect on KPJ’s competitive position, can only be assessed upon more clarity of the said scheme,” said RAM Ratings head of consumer and industrial ratings Kevin Lam.

Lam also noted that KPJ remained exposed to persistent cost increases such as higher staff salaries and more expensive medical supplies and pharmaceuticals.

Overall, RAM Ratings does not expect these cost increases to exert overwhelming pressure on the group’s financial profile at this juncture, as the lack of a standardised fee schedule for pharmaceuticals and medical supplies charged by private hospitals allows for some pricing flexibility.

Meanwhile, RAM Ratings maintains a cautious view on the potential impact that a further debt-funded expansion could have on KPJ Healthcare Bhd’s balance sheet and debt-protection measures.

RAM Ratings was making reference to Point Zone Sdn Bhd, a special purpose vehicle set up as a wholly-owned subsidiary of KPJ to undertake the issuance of the Islamic commercial papers/medium term notes (ICP/IMTN) programme for KPJ.

RAM Ratings recently reaffirmed Point Zone’s RM500mil ICP/IMPTN (2011/2018) as AA3(s) and P1(s) for its long and short term ratings respectively.

The long term rating was given a stable outlook.

While RAM Ratings noted KPJ’s position as Malaysia’s leading private healthcare provider with steady operations and cashflow, strong liquidity and financial flexibility, it said KPJ’s aggressive expansion had resulted in a highly leveraged financial profile.

“The group’s lease-adjusted gearing ratio, although improved, was still relatively high at 1.26 times as at end-December 2011 compared to 1.4 times in the previous year,” said RAM Ratings’ head of consumer and industrial ratings Kevin Lam.

He added that KPJ’s adjusted gearing ratio is expected to peak at about 1.5 times over the next 3 years following the expansion of its hospital network.

Lam expects its adjusted funds from operations debt cover (FFODC) to remain at around 0.2 to 0.25 times.

For KPJ’s financial year ended Dec 31, 2011, the group’s revenue rose 14.3% to RM1.89 billion, while operating profit rose 20.1% to RM229.32mil

The group’s adjusted FFODC strengthened to 0.23 times as at end December 2011 from 0.9 times in the previous year.

Read More: The Star

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