Pent-up demand to lift KPJ's earnings in 2H
PETALING JAYA: KPJ Healthcare Bhd is expected to post stronger earnings momentum in the second half of this year (2H25) on the back of pent-up demand, the ramp up of its newer hospitals and growing case complexity, analysts say.
Four of KPJ's expanded hospitals are already in the black in terms of earnings before interest tax depreciation and amortisation (Ebitda), said Maybank Investment Bank Research (Maybank IB).
Maybank IB is positive on KPJ's revenue and earnings potential near to mid-term as the roll-out of diagnosis-related group costing method takes a backseat for now.
During a recent analyst briefing, KPJ's management also reaffirmed that the healthcare group remains on all major insurance panels.
It alleviated concerns over volume attrition amid the government's 10% cap on medical insurance premium hikes, said the research house.
It added that it also continues to see potential upside from medical tourism.
Maybank IB maintained KPJ's Ebitda margin forecast of 24% for this year to 2027 and three-year earnings compound annual growth rate of 17%.
The research house said its target price of RM3.24 and 'buy' call on the stock implies an enterprise value to Ebitda of 13 times for next year.
Maybank IB said it believes the recent sell-off in KPJ was overdone, and could provide a good buying level for KPJ, which was backed by healthy fundamentals, expectations of stronger earnings in 2H25, and positive sector outlook.
It also indicated that some near-term weakness could persist.
This is as KPJ's recent rebound has been relatively mild.
A stronger buy signal would be triggered if the price breaks above the previous support-turned-resistance level at RM2.82 a share, Maybank IB said.
Despite a bigger overlap of festivities and holidays for Chinese New Year and Ramadan, the first-quarter results for this year came broadly in line with revenue, Ebitda, net profit growth forecasts of 7%,7% and 12% year-on-year.
Largely driven by improved case-mix and a healthy bed occupancy rate of 63%, this indicates continued structural strength and reinforces 1Q25 seasonal drag's transitory nature.
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Pent-up demand to lift KPJ's earnings in 2H
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