Review

• KPJ Healthcare Berhad’s (KPJ) 9M24 net profit of RM239.4mn was within our expectation at 76.6% of our full-year forecast but above consensus estimates at 80.2%.

• The company declared a fourth interim dividend of 1.15sen/share for FY24, bringing the YTD dividend to 4.15sen/share (vs. 3.35sen last year).

• QoQ, PBT increased 17.7% to RM139.6mn, in tandem with higher revenue of 11.0% to RM1bn. We attribute the solid performance to decent bed occupancy rates (BOR) and higher patient visits.

• 9M24 PBT and revenue grew 18.7% and 14.5% YoY to RM349.7mn and RM2.9bn, respectively. This was boosted by higher bed capacity and BOR. Overall, the GP margin improved by 1.9 pts to 43.9% due to operational efficiency.

Impact

• No change to FY24-26 earnings projections, pending more updates from an analyst briefing to be held later today.

Outlook

• Moving into 4Q24, we expect earnings to remain resilient, driven by health tourism and stable occupancy rates. We remain optimistic that KPJ’s health tourism would grow by c. 35% in FY25 on the back of higher patients from Indonesia.

• Bed capacity expansion remains on track, the group targets to increase the number of beds to c. 4,100 by end-2024 (vs. 3,745 beds in 2Q24).

Valuation

• We place our target price (RM2.22) and Hold recommendation under review pending analyst briefing later.

Source: TA Research - 26 Nov 2024