Review

• As expected, KPJ Healthcare Berhad’s (KPJ) reported a 47.1% YoY increase in FY23 core net profit, representing 104.6% of our full-year estimates.

• The company declared a first interim dividend of 1.0sen/share for FY24 which will go ex-dividend on 6 March 2024. Note that FY23 dividend stood at 3.35sen/share (vs. 2.0sen in FY22).

• FY23 core profit rose 47.1% to RM245.7mn, ahead of revenue growth of 19.2% to RM3.4bn. We attribute the better performance to recognition of deferred tax asset, which reduced the effective tax rate by 6.8%-pts to 20.7%, and strong rebound in patient volumes.

• Malaysia’s operations recorded higher PBT of 27.1% to RM405.2mn in FY23 driven by: i) higher bed occupancy rates (BOR) of 67% (vs. 58% in FY22), ii) higher inpatient visits of 350,330 patients (vs. 297,071 in FY22) and iii) 11% increase in the number of surgeries.

• 4Q23 revenue surged 19.0% YoY to RM911.5mn on the back of 4% rise in patient visits. The BOR increased from 64% to 69% in the quarter under review with increased bed capacity of 3,643 (vs. 3,437 in 4Q22).

Impact

• We maintain our earnings estimates at this juncture, pending an analyst briefing tomorrow.

Outlook

• Into 2024, we remain sanguine on KPJ’s outlook as domestic patient volumes are expected to remain resilient. Also, we expect the growth to come from medical tourism, ongoing efforts to recruit more consultants and expansion plans.

Valuation

• We place our target price (TP: RM1.50) and Hold recommendation under review pending management guidance at analyst briefing tomorrow.

Source: TA Research - 19 Feb 2024