$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
KPJ Healthcare (KPJ) is focusing on optimizing its current resources to improve its bed utilization rate, though it is not in a rush to inject more assets into its Al-Aqar Real Estate Investment Trust (REIT). The group remains open to acquiring new assets and is actively exploring merger and acquisition opportunities, both in greenfield and brownfield projects.

In 1QCY24, KPJ achieved a bed occupancy rate (BOR) of 60%, nearly matching its full-year rate for CY23. The company aims to increase its bed count by approximately 400 beds by the end of CY24, supported by the expansion of existing hospitals in Malaysia and the growing demand for healthcare services. KPJ also sees potential in expanding its healthcare tourism segment, which contributed 5%-6% to its total business in CY23. With the Malaysia Healthcare Travel Council (MHTC) reporting RM2.3 billion in revenue for CY23, KPJ's contribution of around RM190 million suggests room for growth in attracting foreign patients. The expansion projects are seen as timely, offering opportunities to improve operations and integrate advanced technology in KPJ hospitals.

However, KPJ faces potential challenges in this approach. While the company is likely to meet its expansion goals and increase BOR, relying too heavily on optimizing current assets may not be sustainable in the long run. Risks include diminished returns as resources approach maximum efficiency, aging infrastructure leading to higher maintenance costs, and limited scalability. Despite these challenges, KPJ is expected to strike a balance between benefits and risks, addressing them as part of its 5-Year Strategic Plan.