CIMB Research said KPJ Healthcare’s long-term strategy aims to elevate the level of care.
PETALING JAYA: CIMB Research will keep its “buy” rating on KPJ Healthcare Bhd
with a sum-of-parts-based target price of RM2.60 as the new management team’s strategic initiatives and swift execution are set to position the healthcare group’s next phase of growth.
In a note, the research house said KPJ Healthcare’s long-term strategy aims to elevate the level of care, targeting patient flows from the Middle 40 and Top 20 income brackets, further supporting its positive outlook.
It noted the latest flagship hospital by the group that opened its doors in September 2022, Damansara Specialist Hospital 2 (DSH2), has a larger floor space compared to its other hospitals.
The hospital also has five centres of excellence including a heart and lung centre, bone, joint and spine centre, neuroscience and stroke centre, advanced surgical centre as well as the only pre-term birth prevention centre in Malaysia.
“DSH2’s heart and lung centre is at the forefront of Malaysia’s expertise in performing minimally invasive cardiac surgery (MICS) using endoscopic techniques. It is also the first private hospital that performs MICS for heart and lung cases in Malaysia,” CIMB Research said.
The research house also noted that DSH2 is equipped with a complete stroke team and has been committed to investing in advanced medical technology
In particular, it is the first hospital within the KPJ group to introduce the da Vinci Xi robotic surgical system and also the first hospital in KPJ’s central region to offer robotic total knee replacement to patients.
“It is also the first hospital in Malaysia to be included in the Mayo Clinic Care Network, granting it access to Mayo Clinic’s extensive cutting-edge medical knowledge and specialised care for rare or complex conditions,” it noted.
KPJ has said that 70% to 80% of DSH2’s rooms are single-bedded, ranging between RM250 and RM1,500.
“Monthly revenue rose significantly to RM10mil in the second quarter of this year, compared to the range of RM3mil to RM4mil in the second quarter of 2023, driven mainly by higher patient volume as demand picked up and a stronger bed occupancy rate (BOR) of more than 70% was recorded,” CIMB Research said.
The hospital had also achieved its first earnings before interest, tax, depreciation and amortisation breakeven in the first quarter of 2024.
“We believe it is on track to reduce its pre-tax loss margin in financial year 2024, driven by strong BOR and ongoing efforts to enhance clinical excellence, which should boost revenue intensity as well as higher operating leverage from its bed expansion plans,” it said.
Meanwhile, CIMB Research also said that medical tourists constituted about 15% to DSH2’s patient volume.
“Indonesians are drawn to gastroenterology, cardiology or ophthalmology; mainland Chinese patients typically seek neuro, stroke and internal medicine treatments, while Middle Easterners often seek blood disorder treatments,” it said.
