KPJ Healthcare poised to remain robust in FY24

KUCHING: KPJ Healthcare Bhd (KPJ) is expected to see a robust financial year 2024 (FY24) with recovery in demand for elective surgeries as well as its shift in strategy to ensure an efficient operation, while giving more room to expand its operations.

“We remain positive for KPJ’s prospects in FY24, on the basis that its focus on its Malaysian hospitals will ensure an efficient operation, while giving more room to expand its operations with more premium offerings for its patients.

“Other key drivers to KPJ’s FY24 performance also include Budget 2024 and state budgets favouring the Healthcare sector, increased beds, services, and medical consultants in line with the expansion of its hospitals, rising aging population in Malaysia by 4.5 per cent 10-year CAGR, and medical tourism expected to exceed RM2 billion of revenue in 2024,” said the research team at MIDF Amanah Investment Bank Bhd (MIDF Research) in a report.

Sharing its sentiments, the research team at Kenanga Investment Bank Bhd (Kenanga Research) said in FY24, it expected KPJ’s patient throughput to grow at nine per cent (compared with an estimated seven per cent in FY23) with BOR at 72 per cent (compared 67 per cent in 2023) driven by revenue intensity emanating from the recovery in demand for elective surgeries.

“Thanks to high patient throughput, two of its new hospitals have turned EBITDApositive while the other two only recorded small operating losses,” it added.

Meanwhile, on its performance in 2023, Kenanga Research pointed out that its FY23 core net profit rose 43 per cent to RM255 million, beating forecasts.

“The variance against our forecast came from a strongerthan-expected rebound in business as the pandemic came to a close and lower-than-expected effective tax rate arising from recognition of unutilised capital allowances and tax losses for new businesses under gestation,” it added.

On a yearly basis, its FY23 revenue rose 19 per cent, thanks to higher inpatient throughput (18 per cent) and higher BOR of 67 per cent (compared to 58 per cent in FY22) as demand for non-Covid related services rebounded including elective surgeries cases (11 per cent) following the transition to endemic phase.

However, it noted that its net profit rose 43 per cent thanks to better overhead absorption (on an improved turnover) as well as reduced losses from its new hospitals (which are EBITDA positive); KPJ Bandar Dato’ Onn, KPJ Perlis and KPJ Miri.

Its 4QFY23 q-o-q revenue fell two per cent due to lower throughput from inpatient (down four per cent) and outpatient (down three per cent).

“However, its 4QFY23 core net profit rose 24 per cent to RM84 million boosted by a positive tax writeback (recognition of unutilised capital allowances and tax losses for new businesses under gestation) compared to 27 per cent in 3QFY23,” it said.