KPJ Healthcare Berhad’s (KPJ) 9M23 net profit of RM189.2mn came in at 83.9% and 85.0% of ours and consensus’ full-year estimates. We deem the results as within expectations as we expect a drop in patient volumes in 4Q23.
The group declared a fourth interim dividend of 1.05sen and a special dividend of 0.25sen per share for FY23, bringing YTD total dividend to 3.35sen per share (vs. 2.0sen last year).
3Q23 net profit surged 92.4% QoQ to RM90.3mn mainly due to the disposal gain of Bumi Serpong and KPJ Medica amounting to RM41.5mn. Meanwhile, revenue rose 15.7% QoQ to RM925.4mn on the back of higher outpatient and inpatient visits of 11% and 17% respectively.
9M23 PBT increased 61.4% to RM279.3mn mainly driven by Malaysia segment. Malaysia operations reported higher revenue of 18.7% to RM2.5bn driven by: i) higher bed occupancy rates of 67% (vs. 56% in 9M22), ii) improvement in patients visits of 3.5% and iii) 12% increase in surgeries.
However, Australian operations remained a drag on earnings with a LBT of RM22.1mn (vs. RM16.4mn in 9M22) due to the lower occupancy rate.
Impact
We maintain our forecasts, pending granularity from management at today’s analyst briefing.
Outlook
We remain confident on KPJ’s growth trajectory. We continue to like the group’s strategy to further grow its medical tourism. Note that medical tourist charges/fees are more expensive (at least 20% mark-up) than local patients.
Moreover, the ongoing efforts to recruit more consultants and add new beds would bode well for the group.
Valuation
We place our target price (TP: RM1.32) and Buy recommendation under review pending the outcome of today’s analyst briefing.
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