KPJ Healthcare Bhd is poised for earnings momentum in the second half of 2025, driven by continued improvements in operational efficiency and cost-optimisation measures, according to analysts.
Kenanga Research reported that the group’s management remains confident of narrowing losses at its newer hospitals, though the scale of improvement may be modest.
In the first quarter of 2025 (1Q25), KPJ’s performance reflected mixed indicators compared to the same period last year. While core net profit and minority interests stood at RM630 million—meeting analysts’ expectations—other operational metrics revealed both strengths and weaknesses.
Notably, average revenue per inpatient rose 10% year-on-year, accompanied by increases in outpatient throughput, surgeries, and operational beds. However, bed occupancy rates and inpatient numbers declined in the same period.
Kenanga noted that first-quarter losses at KPJ’s new hospitals have narrowed by RM5 million to RM6 million compared to 1Q24. For the full year 2024 (FY24), estimated pre-tax losses at these facilities reduced to between RM90 million and RM99 million—an improvement of RM40 million to RM50 million.
Looking ahead, KPJ aims to achieve 4,200 operational beds by the end of 2025. Beyond this, the group is targeting a total of over 6,000 beds within the next five years, primarily through brownfield expansion already incorporated into current forecasts.
Further cost efficiency gains are expected as KPJ nears the completion of its central procurement implementation. With more than 85% of its hospitals now integrated into the central system, the group anticipates continued enhancement in cost control.
Kenanga Research also provided a comparative view on KPJ’s valuation. The stock is currently trading at 36 times and 31 times forecast FY25 and FY26 earnings, respectively. In contrast, regional peers such as Thailand’s Bumrungrad Hospital and Bangkok Dusit Medical Services are trading at more modest FY26 PE ratios of 17 and 20 times, respectively.
Both Thai operators also boast superior EBITDA margins, with Bumrungrad and Bangkok Dusit projected at 38% and 24% respectively for FY25—significantly higher than KPJ’s.
Kenanga maintained its earnings forecast, a target price of RM2.50 per share, and an “underperform” rating on the stock.
However, CGS International Research (CGSI Research) retained a more bullish view, reaffirming its “add” call with an unchanged target price of RM3.35 per share. The firm expects a recovery in patient volumes through the remainder of FY25.
Management has also revealed ongoing internal initiatives aimed at enhancing operational insight. Since 2023, KPJ has been classifying its hospitals by case-mix, allowing for better standardisation of resource allocation and clearer understanding of cost structures across its network.
Additionally, KPJ confirmed that none of its 30 hospitals had been removed from any insurance panels, despite ongoing discussions with insurers around controlling healthcare costs in Malaysia. Patient volume is reportedly picking up at its recently launched Kuala Selangor facility.
-The Star
