KPJ to record further revenue improvements coming from new hospital

KUCHING: KPJ Healthcare Bhd ( KPJ) is expected to record further improvements in terms of revenue contributions coming from the group’s new and more matured hospitals.

“Going forward, we are expecting further improvements in terms of revenue contributions coming from KPJ’s new hospitals as well as its more matured hospitals,” the research arm of MIDF Amanah Investment Bank Bhd ( MIDF Research) said in its results review on the group.

“The aggressive opening of greenfield and brownfield developments would further accelerate the revenue growth rate for the year.”

However, MIDF Research expected the Indonesian operations to remain loss-making in the foreseeable term.

Meanwhile, AmInvestment Bank Bhd (AmInvestment Bank) believed that moving forward, with the opening of KPJ Bandar Dato’ Onn in Johor Baru in February 2019 and the expected opening of KPJ Kuching in the second quarter of financial year 2019 (2QFY19), KPJ will intensify the group’s activities to promote these hospitals in neighbouring countries.

AmInvestment Bank also anticipated KPJ’s earnings before earnings before interest, tax, depreciation and amortisation ( EBITDA) margin in FY19F to be circa 13 per cent.

“We expect gestation costs stemming from its new hospital openings to offset any margin boost from the group’s ongoing cost optimisation or an increase in inpatient admissions,” the research firm said.

Overall, AmInvestment Bank liked KPJ for the group’s vast network of hospitals in Malaysia, capacity expansions and it being a potential beneficiary of the hea lth insurance scheme.