KPJS carpark block disposal will not impact KPJ’s earnings

KUCHING: KPJ Healthcare Bhd’s ( KPJ) financial year 2017 to 2018 ( FY17 to FY18) earnings will not be affected by the dispoal of a fivestorey carpark block in KPJ Selangor Specialist Hospital ( KPJS) and this has led analysts to maintain earnings estimates.

In a filing on Bursa Malaysia, KPJ’s board of directors announced that the company’s 60 per cent owned subsidiary SgSH had on December 8, 2017 entered into a sale and purchase agreement with the real estate investment trust ( REIT) Trustee, being the trustee of Al-’Aqar for the proposed disposal of a fivestorey carpark block together with a half basement level and an open roof level ( building only) in Shah Alam.

The research arm of MIDF Amanah Investment Bank Bhd’s ( MIDF Research) check with the management revealed that KPJ intends to use the proceeds from the disposal of the carpark and motorcycle bays to pare down debts owed by KPJS.

“In addition, the proceeds will also be used to repay any advance payment received by the hospital from the KPJ group,” MIDF Research said.

“We understand from the management that there will be gradual asset injection into AlAqar REIT from 2018 onwards starting with its brownfield expansions.

“We were also made to understand that KPJ Selangor’s consultant office suite will be injected once it has maximised its investment tax allowance ( ITA) which will allow KPJ to benefit from a lower tax from its investment in building new hospitals.

“KPJ estimates to inject the consultant office suite in 2022.”