PETALING JAYA: KPJ Healthcare Bhd
’s new luxurious hospital KPJ Damansara Specialist Hospital 2 (DSH2) is expected to breakeven in two years.
Analysts who attended a company briefing and tour of the new hospital recently noted that DSH2 targets the upmarket enclave of the Klang Valley.
“DSH2 appears to be a state-of-the-art and massive in size that boasts a lobby with five-star hotel ambience and an encompassing calming green view,” said Kenanga Research.
The hospital was launched in September 2022 and is seeing a gradual ramp-up in activities with bed occupancy rate of 20% to 25%, it said.
The DSH2 property is located at the Sungai Pencala area near the Empire building that is surrounded by affluent residential neighbourhoods, including Taman Tun Dr Ismail, Bandar Utama, Mutiara Damansara and Desa Park City, which provides a vast captive market, Kenanga noted.
“KPJ is hopeful that DSH2 will turn earnings before interest, taxes, depreciation and amortisation-positive by end-2023 and break even by end-2025. It plans to ramp up the bed capacity from up to 123 beds this year to up to 265 beds in 2025,” it said.
“The strategy is to deploy 50% of capacity towards health tourism coupled with offering high revenue intensity services to reduce the gestation period. Typically, foreign patients or medical tourists pay a 25% premium compared to locals,” it added.
Kenanga said it kept its “outperform” call and earnings forecasts unchanged with a target price of RM1.16 based on a 27 times financial year 2023 forecast earnings per share.
Meanwhile, RHB Research said DSH2 infuses a luxurious design into the healthcare atmosphere and will become an iconic symbol towards KPJ’s rebranding exercise in 2023.
“Apart from specialising in seven niche medical services, DSH2 will also play a crucial role in providing patient traffic to complement KPJ Damansara Specialist Hospital, particularly radiology services,” RHB Research said.DSH2 is expected to contribute various value added services, mostly on non-medical related and from healthcare tourism as well.
RHB Research noted KPJ is expected to undergo a rebranding exercise in 2023 by transforming several existing hospitals into tertiary care centres.
It maintained its “buy” call on the counter with an unchanged target price of RM1.20.
RHB Research noted KPJ’s valuation as compelling as it is at 25 times the one year forward price to earnings ratio or minus 0.8 standard deviation from its historical average.
