KUALA LUMPUR: A better-than-expected recovery in patient volume and operational efficiency is bolstering KPJ Healthcare Bhd
's prospects, even as it comes off a stellar set of financial results.
KPJ reported a core profit after tax and minority interest (Patami) of RM54.6mil in Q3, which was double that of the immediate preceding quarter.
The healthcare group declared an interim dividend of one sen, going ex on Dec 12, 2022, as compared with a payout of 0.3 sen in the same quarter last year.
According to Hong Leong Investment Bank (HLIB) Research, the results were above its and consensus expectations at 95% of full-year forecasts.
"The stellar results were achieved mainly due to stronger-than-expected recovery in hospital operations post-pandemic.
"We raise our FY22-24f earnings forecasts by 20-36%, to better reflect the strong rebound in patient volume and operational efficiency," said the research firm in a note.
It reiterated its "buy" call on KPJ while raising its target price to RM1.27 from RM1.13 previously.
On outlook, HLIB noted that KPJ as entered into a sale and leaseback agreement with Al-Aqar Healthcare REIT for three of its hospitals - KPJ Pasir Gudang, and the two new buildings of KPJ Seremban Specialist Hospital and KPJ Penang - for a total consideration of RM192mil satisfied in cash and new Al-Aqar shares.
It said the disposal is expected to result in a one-off gains of about RM3.8mil.
"Cash proceeds received will mainly be used to repay sukuk (RM90m) and bank facilities (RM45m).
"The debt repayment is expected to lower KPJ’s net gearing to 0.61x, from 0.68x. The proposed sale is expected to complete by 1Q23," said HLIB.
In a separate report, CGS-CIMB Research noted that patient volume and bed occupancy rates have surpassed even pre-pandemic levels, possibly owing to underlying demand and pent-up demand from patients who had deferred surgeries during the COvid lockdowns.
"Post-3Q22 results, we raise FY22-24 forecast core earnings per share by 8.6-27.4%, mainly to factor in lower opex and depreciation, as well as higher associates earnings.
"We raise our FY22-24F payout ratio assumption to 70%, leading to yields of 2.5-3%.
"Our target price rises to RM1.18, after our earnings upgrade and rolling over to 2024 forecast price-earnings of 32 times (still 10-year mean)," it added.
