KPJ Healthcare Berhad (KPJ) has posted robust financial results for the second quarter of 2024, reflecting a solid performance that has surpassed initial expectations. The company reported a net profit of MYR147 million for the first half of the year, marking a significant 50% increase year-on-year. This figure accounts for 51% of the full-year forecast and 47% of consensus estimates. Analysts have responded positively to these results, with upgraded earnings forecasts for FY24 and FY25. Specifically, net profit projections have been raised by 12% for FY24 and 7% for FY25, with a new forecast introduced for FY26. The target price has been adjusted to MYR2.10, up from MYR1.42, reflecting a potential 14% increase from the current share price.
In terms of analyst recommendations, KPJ Healthcare has seen a notable shift in sentiment. While some analysts have maintained a 'Market Perform' call with a target price of MYR1.95, reflecting the expected incremental revenue from new beds and hospitals, others have upgraded their recommendations. One analyst, noting the promising outlook, has raised their recommendation to 'Buy' with a revised target price of RM2.13, up from RM2.14, indicating a potential 15% upside.
Key highlights from the second quarter include a 62% year-on-year increase in net profit and a 19% rise in EBITDA. This performance is largely attributed to a substantial 18% increase in revenue from the higher-margin inpatient segment. The company has also benefitted from improved bed utilisation, up by 6 percentage points year-on-year, driven by aggressive domestic expansion and strong demand from both local and international patients. Notably, the first half of 2024 saw KPJ's highest revenue contribution from health tourism since 2016, amounting to 5.8% of total revenue.
Looking ahead, analyst remain optimistic about KPJ's growth prospects. The company is targeting an expansion of its bed capacity by 350 to over 1,000 beds between FY24 and FY26, including the launch of a new 60-bed hospital in Kuala Selangor by the first half of 2025. The company's strategic focus on increasing bed capacity and improving operational efficiency is expected to drive continued earnings growth, with a pick-up in patient volumes and a larger market share of foreign patients. KPJ is also implementing cost-optimisation initiatives to enhance margins.
Source: Maybank, Kenanga, RHB
Title: Slightly ahead, Losses Narrowed at New Hospitals, Still Hungry For Growth; Maintain BUY