Kpj Healthcare Berhad

Titan Trading Notes For Tuesday [8/4/2025]:

KLCI took a huge hit today ,retracing all the way towards the 1419 only to rebound slightly back towards closing red around the 1443 points region as tariff tensions continue between USA and China. Overall market sentiment was extremely bearish as we saw almost 1300 counters closing red for the day. Daily trading volume despite hitting high around 5.3 billion, was mainly dominated by selling activities.

$GAMUDA / 5398 (GAMUDA BERHAD) following the widespread sell off, wasn't spared today and took a hit all the way back towards the RM 3.60+ major support levels on the daily chart with huge volume today.

So far facing strong selling pressure above the RM 4+ regions but still able to hold above its RM 3.60 levels here. I believe GAMUDA isn't really affected by the tariffs directly and is purely suffering due to poor market sentiment.

If able to sustain above its RM 3.60 support, could bonce back towards the RM 4.20+ regions soon in the coming week. Will be monitoring GAMUDA closely.

$KPJ / 5878 (KPJ HEALTHCARE BERHAD) on the other hand also took quite a hit and retraced back towards the RM 2.49+ major support levels due to weak market sentiment. I believe KPJ shouldn't be directly affected by tariff tensions between countries.

For now taking a hit due to foreign outflows. If able to hold above its RM 2.50+ support levels, could bounce back towards the RM 2.80+ major resistance levels soon. Otherwise, could retrace further down towards its RM 2.40 support.

Will be monitoring KPJ closely for potential bargain hunting opportunities.

$YTLPOWR / 6742 (YTL POWER INTERNATIONAL BHD) also fell victim to the widespread sell offs today, likely from foreign funds here but its core business likely still not really affected by the tariffs imposed by USA as its core operations are mainly domestic and regional.

For now if able to sustain above its RM 2.90+ support levels, could see a rebound back towards the RM 3.40 - RM 3.50+ regions soon in the coming weeks here from being oversold.

Will be monitoring YTLPOWR closely.

Remisier note post q4 result

$ECOWLD / 8206 (ECO WORLD DEVELOPMENT GROUP BERHAD)
$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
$GAMUDA / 5398 (GAMUDA BERHAD)
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Good morning 🌻

4Q24 Results: An Abysmal Quarter

- 4Q24 represented one of the most peculiarly (and frustratingly) depressing results seasons ever witnessed in recent memory, ie enduring a perfect storm of non-systemic but broad-based company specific disappointments
- These include Dialog’s unguided asset impairment, Hartalega’s guidance for a poorer 1Q25, Nestle’s revenue/earnings plunge, Genting’s dividend cut, etc
- Equally peculiar is the divergence of 2025-26 earnings revisions for coverage universe (-1.3%/-2.0%) and FBMKLCI (-0.1%, +0.4%) due to distortions ie upgrades for utility and plantation
- However, most sectors endured earnings cuts (refer to table of revisions by sector)

- Nevertheless, maintaining our playbook that sentiment will recover by 2Q25, guided by easing external headwinds
- But cutting FBMKLCI target to tentatively 1,690 from 1,800 after lowering valuations (-1SD or 14.9x 2025 earnings, from -0.75SD or 15.3x)
- Recalibrating TOP PICKS: EcoWorld (ECW), Gamuda Berhad, Hartalega, Hong Leong Bank, KPJ Healthcare (KPJ), RGB International, Press Metal and VS Industry.
- New additions ECW, Gamuda, Hartalega and KPJ replace Inari, IOI Property, My E.G. Services and Pekat

Thanks.

Titan Trading Notes For Tuesday [4/3/2025]

KLCI closed back towards the 1571 points region with an overall bearish market sentiment as we still saw over 700 counters closing red for the day. Daily trading volume settled around the 3.1 billion mark, mainly dominated by sellers here. Still not looking good at all.

Main stocks that showed strong buying momentum would be the likes of MYEG, CIMB, KPJ, MRDIY, ARMADA, LHI, ELRIDGE, NOVAMSC, and SRIDGE. All of which were able to sustain their rallies throughout the day on the top volumes list despite the weak market sentiment.

$KPJ / 5878 (KPJ HEALTHCARE BERHAD) since announcing stellar earnings during last Friday, was able to rebound strong from its RM 2.40+ support levels and broke out all the way towards the RM 2.64 regions with huge volume and buying momentum.

So far looking very strong here and as long as able to hold above its RM 2.55+ immediate support levels, could continue on towards and beyond its RM 2.64+ regions for an uptrend continuation pattern.

Will be monitoring KPJ closely here as trending up strongly.

$NATGATE / 0270 (NATIONGATE HOLDINGS BERHAD) broke through its RM 1.70+ major support levels, taking it all the way down to its limit down price of RM 1.30 in just a short span of 10 minutes towards closing. This came after Singapore proving into potential fraud in Nvidia AI chip shipments to China.

Although NATGATE clarified their position in the evening that this probe has nothing to do with them, and certain research houses coming out to suggest a buy on weakness opportunity, we'll still have to monitor it closely first.

For now due to this sharp drop, there is a chance that some investors might get margin called and forced selling in the coming few days if unable to recover swiftly. Will have to monitor closely. If unable to hold above its RM 1.30 support, could retrace further down towards its RM 1.10+ major support levels in the coming few days.

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
Research Report by Kenanga

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
Research Report by MAYBANK

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
Research Report by CGSI

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
Research Report by TA

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
Research Report by RHB

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
Research Report by PBIV

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
Research Report by HLIB

CIMB Research will keep its “buy” rating on KPJ Healthcare Bhd with a sum-of-parts-based target price of RM2.60 as the new management team’s strategic initiatives and swift execution are set to position the healthcare group’s next phase of growth.

KPJ Healthcare Bhd expects to see two of its five loss-making hospitals return to profitability by the end of this year, as the group continues its efforts to address operational challenges within its network.

KUALA LUMPUR: RHB Research has maintained its 'overweight' rating for the healthcare facilities and services sector, with IHH Healthcare Bhd and KPJ Healthcare Bhd as its top picks.

© New Straits Times Press (M) Bhd

Titan Weekend Chart Reviews

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)

Retraced back towards the RM 2.05+ support levels and was able to hold well above this support region.

So far still looking quite good here and if able to sustain, could continue on this uptrend towards and beyond the RM 2.20+ major resistance levels for an uptrend continuation pattern.

Support: RM 2.05, RM 2 areas
Resistance: RM 2.15, RM 2.20, RM 2.35 areas

Bed capacity expansion will be the key driver for KPJ Healthcare Bhd’s top-line growth in the next three years, says CIMB Securities Research.

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
Research by Kenanga

$KPJ / 5878 (KPJ HEALTHCARE BERHAD) -2Q24

Revenue and Profit Growth:

KPJ's core profit after tax and minority interests (PATMI) increased by 30.2% YoY to RM128.7m, driven by higher bed occupancy rates (BOR) and improved operating efficiency.
Revenue grew 14.9% YoY to RM1.84b, supported by a 16.4% YoY rise in 2QFY24 revenue to RM930.6m due to increased patient traffic.
Core PATMI for 2QFY24 jumped 65.2% YoY to RM77.6m due to higher gross profit margins (GPM) of 43.3% (vs. 40.1% in 2QFY23) and lower administrative expenses.
Outlook:

KPJ is focusing on optimizing existing hospital capacity, with plans to add 368 new beds in 2024 (+9.9%), aiming for a total of 5,000 beds by 2028.
The company is prioritizing brownfield expansions over greenfield projects for faster growth, while expecting flattish PATMI growth YoY due to a higher effective tax rate.
Key Drivers:

Higher BOR and increased bed capacity are expected to continue boosting revenue and profit.
The use of advanced technologies like the Da Vinci Robotic surgical system and the divestment of its aged care business in Australia also contributed to improved margins.

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
Research by RHB
Buy - TP RM2.13

"Still Hungry For Growth; Maintain BUY"

Keep BUY, with a lower MYR2.13 TP from MYR2.14, 15% upside. We walked away from KPJ Healthcare’s 2Q24 post results briefing feeling positive on its 2H24 prospects. We expect KPJ’s profitability to improve as its flagship hospital Damansara Specialist Hospital 2 (DSH2) remains well on track to see narrower LBT, thanks to better operating leverage. Our DCF- derived TP represents 15x 2024F EV/EBITDA, 2SD above its 5-year historical EV/EBITDA average of 12x. Our TP includes a 2% ESG premium.

Analyst:
Oong Chun Sung
chun.sung@rhbgroup.com

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
Research by Kenanga
Market Perform - TP RM1.95

"Losses Narrowed at New Hospitals"

KPJ expects its earnings momentum to accelerate, underpinned by revenue intensity and rising demand in 2HFY24. Beyond CY24, it will add >1,500 beds (>+30%) over the next five years. It is optimistic for losses from KPJ’s five new hospitals to narrow substantially in CY24, driven by incremental revenues from higher patient throughput, new beds and improving operational efficiency. We maintain our forecasts, TP of RM1.95 and MARKET PERFORM call.

Analyst:
Raymond Choo Ping Khoon
pkchoo@kenanga.com.my

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
Research by TA
Hold - TP RM2.00

"Optimistic on FY24"

No change to our target price of RM2.00/share based on SOTP valuation and a 3% ESG premium. Reiterate our Hold recommendation on the stock.

Analyst:
Tan Kong Jin
kjtan@ta.com.my

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
Research by Public
Outperform– TP RM2.21

"Higher BOR and Influx of Patients”

KPJ Healthcare’s (KPJ) 2QFY24 core net profit increased by 71.2% YoY toRM77.6m from RM45.3m in 2QFY23, mainly driven by higher BOR and influx of patients visits. The results were in line with our estimates at 50% but fell short of street’s estimates at 44% of full-year forecast respectively. KPJ’s revenue was up 18.5% YoY, mainly boosted by a higher BOR of 66% in 2QFY24. We maintain our FY24F-26F earnings forecasts and reiterate our Outperform rating with an unchanged SOTP-based TP of RM2.21 based on FY25 12x EV/EBITDA (near Malaysia hospital average). KPJ declared an interim dividend of 1.0 sen per share (bringing the total DPS to 3.0sen for FY24).

Analyst:
Thye May Ting
thye.mayting@publicinvestbank.com.my

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
Research by RHB
Buy – TP RM 2.14

"Achieved a Historic Milestone; Keep BUY”

Maintain BUY, with unchanged MYR2.14 TP and 15% upside. KPJ Healthcare’s 2Q24 core earnings grew 66% YoY to MYR79m, bringing its 1H24 numbers to MYR125m, accounting for 43% and 42% of ours and Street’s expectations. We deem the results to be in line as we expect stronger quarters ahead underpinned by improvements in operating leverage from hospitals under gestation. Our DCF-derived TP represents 15x 2024F EV/EBITDA, 2SD above its 5-year historical EV/EBITDA average of 12x. We incorporate a 0% ESG premium/discount given KPJ’s ESG score equals the country median.

Analyst:
Oong Chun Sung
chun.sung@rhbgroup.com

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
Research by HLIB
HOLD – TP RM1.87

"Boosted by better margin and lower costs”

KPJ registered 1H24 core PATMI of RM128.7m (+30.2% YoY), which came in above ours (55%) but below consensus’ (41%) full year forecasts. The positive deviation was mainly attributed to better-than-expected GPM and lower-thanexpected effective tax rate, while revenue was in line with ours. Hence, we raised our FY24f/25f/26f forecasts by 18%/13%/13%. Going forward, we are forecasting a flattish core PATMI YoY growth mainly due to higher effective tax rate assumption after KPJ enjoyed a low base in 2023. Given limited upside and volatile quarterly tax rate, we keep our HOLD rating on KPJ with a marginally higher SOP-derived TP of RM1.87.

Analyst:
Chee Kok Siang
cheeks@hlib.hongleong.com.my

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
Research by TA
HOLD– TP RM2.00

"A Decent 2Q24”

We maintain our Hold recommendation on the stock with a TP of RM2.00/share based on SOP valuation.

Analyst:
Tan Kong Jin
kjtan@ta.com.my

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
Research by MIDF
BUY – TP RM2.54

"Higher BOR Continue to Support Earnings”
• 1HFY24 normalised earnings up +61%yoy, but slightly below expectations
• Revenue up +15%yoy due to increase in patient visits and higher bed capacity
• Positive on KPJ’s prospects amid strong fundamentals, company focus on strategizing costs; offset by higher competition in sector
• Maintain BUY with TP: RM2.54

Analyst:
MIDF Research
research@midf.com.my

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)

Thursday Trivia: $KPJ / 5878 (KPJ HEALTHCARE BERHAD) - Malaysia's Leading Specialist Hospital

$KPJ / 5878 (KPJ HEALTHCARE BERHAD) is one of Malaysia's leading private healthcare providers, operating over 20 hospitals nationwide. However, did you know that most of KPJ's hospital buildings are owned and operated by $ALAQAR / 5116 (AL-`AQAR HEALTHCARE REIT)? The last acquisition by ALAQAR from KPJ was in 2022, when ALAQAR purchased three hospitals for RM192 million. This transaction was a related-party deal, as Johor Corp is the largest shareholder of both companies.

Any more interesting fact that you find about this? Let us know in the comment section below!

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - KUMPULAN WANG PERSARAAN (DIPERBADANKAN)

$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.

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)