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CGS-CIMB: KPJ HEALTHCARE TO GET RM50 MLN PROCEEDS FROM SALE OF INDONESIAN UNIT
KUALA LUMPUR, Jan 19 (Bernama) -- CGS-CIMB Securities Sdn Bhd expects better earnings for KPJ Healthcare Bhd in the first quarter of financial year 2023 (1Q FY2023) on the likely divestment of its Indonesian operations, which could lift its valuation.
KPJ could raise RM50 million proceeds from this divestment in Q1 this year, the stockbroking house said.
“We expect the unit’s net profit to improve from Q1 FY2023 as Indonesia’s Ministry of Health had raised the blended tariffs for Indonesia Case Based Group by five to 10 per cent, that is, the reimbursement rate paid by the Health Social Security Administering Body (BPJS),” it said in a note today.
It also said BPJS health cases made up 35 per cent of KPJ Indonesia’s FY2021 revenue.
“We think the division’s brighter earnings prospects going forward could help KPJ fetch a better valuation for it,” it said.
Besides that, CGS-CIMB anticipated KPJ to benefit from the potential influx of Chinese health tourists after China’s relaxation of COVID-19 rules from Jan 8, 2023, albeit only marginally as Chinese visitors made up five per cent of KPJ’s FY2019 health tourism revenue or 0.3 per cent of total revenue.
"Nonetheless, we conservatively project its FY2023 earnings before interest, taxes, depreciation, and amortisation margin to narrow to 20.6 per cent, owing to staff cost pressures."
As such, it reiterates an ‘Add’ call for KPJ with a target price of RM1.18.
At noon, KPJ’s share price shed one sen to RM1 with 383,200 shares changing hands.
-- BERNAMA
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