KUALA LUMPUR: RHB Research maintains its “Buy” recommendation on KPJ Healthcare Bhd as it favours KPJ's solid long-term fundamentals. It also revised its fair value from RM7.14 to RM7.30.
It said on Thursday KPJ was still trading at a 10%-15% discount to its regional healthcare peers and expects this valuation gap to narrow as the group focuses on its local presence and healthcare tourism expansion.
RHB Research said KPJ's revenue rose 3.7% to RM545.1mil as contributions from Malaysia, Indonesia and Australia rose however its earnings of RM25.1mil fell short due higher operating and financing costs.
"We attribute these to the start-up costs incurred in relation to some of KPJ's new hospitals as it rolls out an aggressive expansion plan. Meanwhile, the company declared a first interim dividend per share of 2.0sen, which implies a payout ratio of over 50% for the quarter," it said. The research house added with the opening of KPJ's four new hospitals this year -- KPJ Sabah Specialist Hospital, Pasir Gudang Specialist Hospital, Maharani Specialist Hospital and Rawang Specialist Hospital it was trimming KPJ's forecasts by 17.7% for financial year 2013 and 9.2% for 2014. "We also take this opportunity to introduce our FY15F core earnings estimate of RM206.6mil," it said.