KUALA LUMPUR: KPJ Healthcare Bhd saw RM404.6mil erased from its market capitalisation at midday on Monday after it was ordered to pay RM70.48mil as damages in a legal suit.
At midday, the shares fell 62 sen to RM6.63 with 4.09 million shares done. This saw its market capitalisation reduced from RM4.74bil (based on Friday's closing price of RM7.25 and its paid-up of 653.9 million shares) to RM4.335bil.
Its warrants, KPJ-WA fell 41 sen to RM5 and its call warrants, KPJ-CJ lost 10 sen to 11.5 sen.
Last Friday, KPJ announced that the High Court had allowed the plaintiff Dr Mohd Adnan Sulaiman's claim against the healthcare provider and awarded RM70.48mil as damages and costs of RM150,000.
Dr Adnan had sued the company for breaching the joint venture agreement incorporating shareholders' agreement dated May 30, 1995.
Alliance Research said the sum awarded represented 43.8% of its FY13 core net profit estimates.
"We lower our FY13 net profit estimates by 41.4% and but leave our FY13 core net profit estimates unchanged. Furthermore, we see downside risk to KPJ's dividends despite an appeal to the Court of Appeal and ample cash of RM232.9m as of 1QFY13," it said.
Alliance Research said with the recent share-price run, FY13 and FY14 P/E valuations had been stretched to 28.7 times and 27.6 times respectively which were unjustified despite a 15.1% three-year earnings CAGR.
"Given this setback and risk of longer than expected gestation period for upcoming new hospitals, we downgrade from neutral to SELL with a higher target price of RM6.32 as we rollover valuation to FY14," it said.