KPJ Healthcare Berhad Another hospital on deck

Transcription

1 13 September 2012 Corporate Update KPJ Healthcare Berhad Another hospital on deck Maintain BUY Unchanged Target Price (TP): RM6.98 INVESTMENT HIGHLIGHTS Hospital acquired. KPJ s subsidiary, Ipoh Specialist Hospital Sdn Bhd (ISH), has entered into a conditional share sale agreement with Dr Lee Min Chuang and Yeat Soo Sing to acquire a 100% equity interest in Sri Manjung Specialist Centre Sdn Bhd (SMSC) for a total cash consideration of RM14.25m. The acquisition is expected to be completed by the end of 4QCY12. Operator of Sri Manjung Specialist Centre. SMSC is a company principally engaged in specialist medical practices and operation of specialist hospital. It owns and operates the Sri Manjung Specialist Centre, which is located in Sitiawan, Perak. No material effect on financial position. The acquisition will be financed through internally generated funds of KPJ. As at end of June 2012, KPJ had a cash holding of RM212.2m. Therefore, assuming no major movement in KPJ s cash position, the acquisition will cause a less than 7% setback in KPJ s coffers, which we do not think is a major concern. Earnings contribution to be negligible. From the information that we gathered, Sri Manjung Specialist Centre currently has less than 30 beds in operation. Considering the total number of licensed beds that KPJ currently operates, which stands at around 2,700 beds, the acquisition will add a mere 1% to the number of beds in KPJ s stable. Thus, we do not expect the addition of the new hospital to have a material impact on KPJ s future earnings. Move in tandem with peers. KPJ s move is tandem with its peers to tap into the growing private healthcare demand in the district in Manjung, Perak. Currently, IHH Healthcare Bhd is developing the new Pantai Hospital Seri Manjung, while Columbia Asia Hospital is constructing the Columbia Asia Hospital, Sitiawan, which is expected to be opened by end Positive on the acquisition. Seri Manjung town is developing as a well-planned administrative town, housing various government buildings. Meanwhile, with a population of about 200,000 residents, Manjung District has the second highest average annual growth rate in Perak, with a 2.0% growth rate. It is also the second most rapid growing district in Perak for the commercial sector. Adding the popular tourist destination of Pangkor Island, we believe there is a huge demand potential for private healthcare services ready to be tapped in the region. Therefore, we are positive on KPJ s move to expand its network into this area, as we expect the demand can only increase in the upcoming years. Maintain BUY with an unchanged TP of RM6.98. We maintain our BUY call with a TP of RM6.98, derived from 25x PE multiple of FY13F EPS, based on peers average PE multiple. Due to the company s continuous growth story, we believe there is an ample upside potential for the stock in the long run. RETURN STATS Price (12 Sep 12) Target Price Expected Share Price Return RM6.17 RM % Expected Dividend Yield 1.8% Expected Total Return 14.9% STOCK INFO KLCI 1, Bursa / Bloomberg Board / Sector Syariah Compliant 5878 / KPJ MK Main / Healthcare Yes Issued shares (mil) Par Value (RM) 0.50 Market cap. (RM m) 3,930.2 Price over NA 3.92x 52-wk price Range RM3.84 RM6.40 Beta (against KLCI) mth Avg Daily Vol 1.33m 3-mth Avg Daily Value Major Shareholders RM8.13m Johor Corp 38.29% EPF 15.99% Nomura Asset Mgmt 7.95% ASB 7.93% Waqaf An-Nur 7.30% KINDLY REFER TO THE LAST PAGE OF THIS PUBLICATION FOR IMPORTANT DISCLOSURES

2 INVESTMENT STATISTICS FYE Dec FY10 FY11 FY12E FY13F Revenue (RM'm) 1, , , ,524.6 EBIT (RM'm) Profit before zakat and tax (RM'm) Net Profit (RM'm) EPS (sen) EPS growth (%) 4.2% 16.6% -7.7% 15.5% PER(x) Net Dividend (sen) Net Dividend Yield (%) 1.7% 1.3% 1.7% 1.9% Table A: New developments No. Hospital Est. Completion Date No. of beds 1. Klang Specialist 1H Sabah Specialist Pasir Gudang Specialist 2012 / Muar Specialist Pahang Specialist Perlis Specialist Bandar Dato Onn Comments Phase 1 comprising 94 beds commenced operation in 1H12. Replacement building. Phase 1 comprising 80 beds to commence operation in Phase 1 comprising 60 beds to commence operation by 2012 or Named Maharani Specialist. Phase 1 comprising 60 beds to commence operation in To be located in Tanjung Lumpur, Kuantan. Phase 1 comprising 120 beds to start operation in Phase 1 comprising 60 beds to commence operation in A 60:40 JV with Yayasan Islam Perlis. Phase 1 comprising 150 beds to commence operation in Kota Bayuemas, Klang 2014 / Acquired land for RM23.76m. 8. Miri 2015 / Joint venture with Naim Land Sdn Bhd. 2

3 3 Table B: Peers comparison Company Home Country Market Capitalization (RM bln) P/E Ratio KPJ Healthcare Berhad Malaysia Apollo Hospitals Enterprise India Bangkok Dusit Medical Service Thailand Bumrungrad Hospital Public Company Thailand Raffles Medical Group Ltd Singapore Bangkok Chain Hospital PCL Thailand Fortis Healthcare Ltd India Median Table C: KPJ Hospital List Hospital Location No. of beds Johor Specialist JB 213 Ipoh Specialist Perak 260 Ampang Puteri Specialist KL 230 Damansara Specialist Selangor 155 Seremban Specialist NS 109 Selangor Specialist Selangor 180 Perdana Specialist Kelantan 83 Kajang Specialist Selangor 68 Penang Specialist Penang 136 Kedah Medical Centre Kedah 106 Tawakkal Specialist KL 191 Damai Specialist Kota Kinabalu 48 Kluang Utama Specialist Johor 40 Puteri Specialist JB 150 Kuantan Specialist Pahang 81 Taiping Medical Centre Perak 48 Sibu Specialist Sarawak 35 Sabah Medical Centre Kota Kinabalu 178 Kuching Specialist Sarawak 75 Sentosa Medical Centre KL 212 RS Bumi Serpong Damai Indonesia 60 RS Medika Permata Hijau Jakarta 83

4 4 DAILY PRICE CHART Zulkifli Hamzah Azman Hussin

5 MIDF RESEARCH is part of MIDF Amanah Investment Bank Berhad ( X). (Bank Pelaburan) (A Participating Organisation of Bursa Malaysia Securities Berhad) DISCLOSURES AND DISCLAIMER This report has been prepared by MIDF AMANAH INVESTMENT BANK BERHAD (23878-X). It is for distribution only under such circumstances as may be permitted by applicable law. Readers should be fully aware that this report is for information purposes only. The opinions contained in this report are based on information obtained or derived from sources that we believe are reliable. MIDF AMANAH INVESTMENT BANK BERHAD makes no representation or warranty, expressed or implied, as to the accuracy, completeness or reliability of the information contained therein and it should not be relied upon as such. This report is not, and should not be construed as, an offer to buy or sell any securities or other financial instruments. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results. All opinions and estimates are subject to change without notice. The research analysts will initiate, update and cease coverage solely at the discretion of MIDF AMANAH INVESTMENT BANK BERHAD. The directors, employees and representatives of MIDF AMANAH INVESTMENT BANK BERHAD may have interest in any of the securities mentioned and may benefit from the information herein. Members of the MIDF Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein This document may not be reproduced, distributed or published in any form or for any purpose. MIDF AMANAH INVESTMENT BANK : GUIDE TO RECOMMENDATIONS STOCK RECOMMENDATIONS BUY TRADING BUY NEUTRAL SELL TRADING SELL Total return is expected to be >15% over the next 12 months. Stock price is expected to rise by >15% within 3-months after a Trading Buy rating has been assigned due to positive newsflow. Total return is expected to be between -15% and +15% over the next 12 months. Total return is expected to be <15% over the next 12 months. Stock price is expected to fall by >15% within 3-months after a Trading Sell rating has been assigned due to negative newsflow. SECTOR RECOMMENDATIONS POSITIVE NEUTRAL NEGATIVE The sector is expected to outperform the overall market over the next 12 months. The sector is to perform in line with the overall market over the next 12 months. The sector is expected to underperform the overall market over the next 12 months. 5