"With a lack of re-rating catalyst and as the new hospitals under gestation period could continue to be a drag on earnings, we reiterate our 'Market Perform' call," it said.
The research house said KPJ's core net profit of RM131mil came to 91% and 100% of its and consensus estimates respectively,
FY20 revenue fell 12% due to the Covid-19 movement control order in 2QFY20, which resulted in lower patient visits and lower inpatient, resulting in lower bed occupancy ratio as compared to the previous year.
Moving forward to 2021, the group will contonue to take advantage of governments' incentives to mitigate the adverse effects of the pandemic.
"Under the PERMAI assistance package announced by the Government in January 2021, the Group has offered to collaborate with the government hospitals to treat non-COVID-19 patients in an effort to alleviate the strain on the public healthcare system," said Kenanga.
The research house kept its FY21/22 earnings forecasts and target price of RM1 on the stock based on an unchanged 25x forecast FY21 earnings per share.