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Analysis Report by Affin Investment Bank
We are upbeat on KPJ's ongoing expansion, as it allows the group to capture the growing middle-income population and also the rising demand for private healthcare. KPJ is also well positioned to capture the growing market of medical travellers. The Malaysia Health Tourism Council and Association of Private Hospitals Malaysia estimate the number of medical travellers to grow by a compound annual growth rate of 14% to 1.1 million travellers in five years (2011 to 2016).

Despite an annual capital expenditure of RM200mil for its expansion programme, we expect KPJ to continue generating positive free cash flow of about RM50mil to RM100mil a year. The group has a healthy cash balance of about RM200mil and a very low gearing of 0.2 times. As such, we believe KPJ is able to maintain its dividend payout ratio of about 35% which translates into a net yield of 2%.

Pending its second quarter results this month, we maintain our forecasts at this juncture, but with an upward bias. For exposure to the domestic defensive and growing healthcare sector, we continue to like KPJ Healthcare for its sound fundamentals, ongoing expansion plans and undemanding valuation in comparison to its peer IHH. Our target price is unchanged at RM6.44 based on 20 times CY 2013 PER.
10 Sep 2012, 01:29 AM

Maturity Date:29/11/2013
Exercise/Strike/Conversion Price:MYR 6.0000
Exercise/ Conversion Ratio=5 : 1
Premium(Discount) : 7.08%
Gearing: 14.12

Mid cap counter to watch pre/post election
04 Apr 2013, 08:26 AM

CIMB Research starts coverage of KPJ, target price RM5.70

KUALA LUMPUR: CIMB Equities Research says KPJ Healthcare, being the largest private hospital group in Malaysia, is a good proxy for the country's rising healthcare spending.

It said on Thursday the group's aggressive expansion of its hospital network will improve its competitive position.

“However, its near-term earnings will be dented by start-up losses from its new hospitals. This, coupled with its rich valuations against the regional peers, is why we begin coverage with an Underperform call.

“Our target price of RM5.70 is based on sum-of-parts valuation. We prefer BGH and Raffles Medical Group for exposure to Asean hospitals,” it said.

To recap, CIMB Research says KPJ operates 23 hospitals with about 2,716 beds in Malaysia. It is a prime beneficiary of the rising healthcare spending in the country, driven by an ageing population and rising incomes.

KPJ has laid out an aggressive expansion plan that aims to add two hospitals to its portfolio every year. In the pipeline are eight hospital projects which are expected to start

operations in 2014-2016. Once they are fully operational, these hospitals will raise its bed capacity by 60% from the end-2012 level.

KPJ's expansion will also create entry barriers for its competitors due to the government’s zoning policy which sets a limit of one private hospital for every 40km radius.

CIMB Research said the high valuations increase downside risk. KPJ’s 33.3 times CY15 P/E is the highest in the group’s Asean hospital coverage.

“We rate it an Underperform given its earnings weakness and potentially longer-than-expected gestation for its new hospitals. Its share price is also vulnerable to a rise in interest rate and market risk premium. A 0.5 percentage point rise in cost of equity would lower our SOP by 16%,” it said.
05 Dec 2013, 01:12 PM

KPJ (5878) - Technical and Fundamental analysis

August 25, 2019 | HONG WEI GIET

Technical Analysis


- From long term view, there is an upward trend since 2011 and KPJ challenged the upward line twice in past (RM0.815 @ April 16,2018 ; RM0.870 @ Aug 20.2019).

- Meanwhile, KPJ shares price traded in downward parallel line.

- As long as KPJ able to trade above the long term uptrend, we hold a upward opinion for KPJ shares performance.

- Based on daily/weekly/monthly charting, RSI shows a turning point for KPJ from bearish to bullish so we believe it is a save entry point for long term investor.

- Additionally, KPJ management start to share buy back program in July 2019 with average pricing above RM0.90. 

- Resistance 2: RM1.010


25 Aug 2019, 03:35 AM

Olivia_Ooi and 3 others like this company.
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