KPJ  Healthcare  has  signed  a  memorandum  of  understanding  (MOU) with Pelaburan Hartanah Berhad (PHB) and Nadayu Properties Berhad for  a  proposed  development  and  leasing  of  a  purpose-built  hospital building  to  be  known  as  the  "KPJ  Damansara  Specialist  Hospital  II". NPB  will  develop  the  hospital  within  36  months  with  PHB  being  the owner  of  it.  Subsequently,  KPJ  will  lease  the  hospital  from  PHB  for  a period of 15 years and an option to renew for another 15 years. (Source: Bursa Malaysia)

Comments:  The MOU is positive news for KPJ as it is consistent with KPJ’s  strategy  to  expand  its  hospitals’  network.  This  is  part  of  KPJ’s plan  to  extend  the  Damansara  Specialist  Hospital  given  the  current space  restriction  at  the  existing  location.  As  details  such  as  cost  of transaction  are  still  not  finalised,  we do  not  make any  changes to  our earnings  forecast  and  maintain  our  REDUCE  rating  with  a  TP  of RM3.52.

Source: Affin Hwang Capital Research - 17 Oct 2014