RHB Research maintains Buy on KPJ Healthcare, FV RM7.30

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.