CGS-CIMB thinks that KPJ is in the pink of health
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00:00 As earnings season ends, CGSCIMB walked away from a post-analyst briefing with KPJ Healthcare
00:07 feeling more optimistic about its profitability.
00:10 It already has an ad call on it but has raised its target price by 20 cent from RM1.50 to
00:15 RM1.70, implying a possible 27% upside.
00:20 It was the combination of increased operational bids and higher bid occupancy rate or BOR
00:25 that drove KPJ's 15.9% year-on-year revenue growth in the third quarter.
00:31 Management said KPJ has put in place plans to increase its bid capacity to 4.1k operational
00:36 bids in FY24 and believes that operational improvements, especially for its gestating
00:42 hospitals, should support better BORs.
00:45 According to management, Health Tourism contributed about 10% of its revenue in the third quarter,
00:50 which is much higher than what was recorded for the entirety of FY2022.
00:55 With the completion of the disposal of its Indonesian ops in the third quarter, management
00:59 mentioned that KPJ is also exploring opportunities to further divest other loss-making foreign
01:05 businesses, including KPJ Taka as well as Jeta Gardens.
01:09 KPJ actually guided for a capex of $450 million in FY24 to support its capacity expansion
01:15 plans and targets to reach an EBITDA margin of 28% in five years' time, with better operating
01:21 leverage across its assets.
01:23 CJSC IMB actually lifts its FY23, 24, 25 EPS by 19.2, 13.8 and 8.2% respectively to reflect
01:33 higher-than-expected bid capacities.
01:35 Following the slew of updates, Bloomberg data shows Tenbuys two holes on KPJ Healthcare
01:39 with the average target price working out to RM1.57, which is 23 cent more than its
01:44 last close.
01:45 [Music]