Post on 09-May-2018
HEALTHCARE
KPJ HEALTHCARE BHD(KPJ MK, KPJH.KL) 9 April 2012
Back on an aggressive expansion mode
Company report BUY
Low Soo Fang
low-soo-fang@ambankgroup.com
+603 2036 2292
(Initiation)
Rationale for report: Initiation coverage
Price RM5.14
Fair Value RM6.15
52-week High/Low RM5.17/RM3.84
Key Changes
Fair value Initiation
EPS Initiation
YE to Dec FY11 FY12F FY13F FY14F
Revenue (RMmil) 1,891.3 2,134.3 2,432.2 2,773.6
Core net profit (RMmil) 142.3 158.7 189.6 228.2
EPS (Sen) 26.1 29.1 34.7 41.8
EPS growth (%) 15.4 11.5 19.5 20.4
Consensus EPS (Sen) 25.9 29.0 35.8
DPS (Sen) 7.4 14.5 17.0 21.0
PE (x) 19.7 17.7 14.8 12.3
EV/EBITDA (x) 11.1 9.2 7.8 6.5
Div yield (%) 1.4 2.8 3.3 4.1
ROE (%) 17.2 17.4 18.8 20.1
Net Gearing (%) 17.9 11.9 8.5 net cash
Stock and Financial Data
Shares Outstanding (million) 546.1
Market Cap (RMmil) 2,807.1
Book value (RM/share) 1.62
P/BV (x) 3.2
ROE (%) 17.2
Net Gearing (%) 17.9
Major Shareholders Johor Corp (40.7%)
EPF (11.0%)
Free Float (%) 24.3
Avg Daily Value (RMmil) n/a
Price performance 3mth 6mth 12mth
Absolute (%) 19.4 9.2 31.0
Relative (%) 10.3 3.8 28.5
1,150
1,284
1,417
1,551
0.00
1.50
3.00
4.50
6.00
Apr-07
Oct-07
Apr-08
Oct-08
Apr-09
Oct-09
Apr-10
Oct-10
Apr-11
Oct-11
Index Points
(RM)
KPJ FBM KLCI
PP 12247/06/2012 (030106)
Investment Highlights
• We initiate coverage on KPJ Healthcare (KPJ) with a BUY
recommendation and a DCF-fair value of RM6.15/share, offering
potential returns of ~ 20%. We see further upside to the share price
in a likely sector-wide re-rating from the impending listing of regional
healthcare provider Integrated Healthcare Holdings (IHH) which have
acquired assets at 16x-26x PERs.
• As it is, KPJ’s current valuations are attractive. Fully-diluted PERs of
17x and 20x are at a 10%-13% discount to closest peer, Thailand-
based Bumrungrad Hospital, and a wider 23%-33% discount to
regional peers’ average.
• We like KPJ’s defensive earnings profile. Also, a step-up increase in
bed capacity via a pipeline of 7 new hospitals would accelerate
earnings momentum to achieve our conservative 3-year CAGR of
17%. Faster-than-expected patient admission growth, coupled with a
one-year hiatus from hospital expansion, has led to shrinking ready
capacity. Current occupancy rate of 70%-75% is a tad below
overcrowded thresholds of 85%-90%.
• With a sizeable 22% market share, KPJ is Malaysia’s largest private
healthcare provider with a national footprint and growing scale. It is
well placed to capitalise on the booming and lucrative health
tourism, with the doubling of the strategic existing hospital chain in
Johor – a focal area slated to become the primary destination for
medical tourists.
• Increased demand as spurred by recent regulatory changes on cross
border medical reimbursement between Malaysia and Singapore is
expected to power the segment’s contribution from 10% currently to
25% of group revenue by 2020F.
• KPJ also operates KPJ International University College of Nursing
and Health Sciences (KPJUIC) with annual revenues of RM40-
RM50mil. Despite minimal contribution to group earnings, the
education arm complements its hospital operations in that it serves
to mitigate staffing risks of qualified nurses and medical staff.
Management has earmarked a RM120mil capex for the Nilai branch
expansion and commissioning of a new campus at Bukit Mertajam. It
aims to quadruple student in-takes to 10,000 in 5 years’ time.
• The non-core operation in the retirement/aged care industry will
remain insignificant in the medium term. Nevertheless, we reckon
the ‘know-how’ attained via KPJ’s 51% stake in Australia-based Jeta
Gardens Waterford Trust would be beneficial for future potential
opportunities within the niche market.
• Net gearing is at a manageable level of 12%, aided by the group’s
asset-light model. Asset injections of hospitals into 49%-owned Al-
Aqar Healthcare REIT (AQAR Mk Equity, BUY) has enabled for better
deployment of free cash flows to fund future expansion, whilst
lending support to its dividend policy. We have assumed a dividend
payout of 50% p.a., in line with management guidance (yields: 3%-
4%).
KPJ Healthcare Bhd 9 April 2012
AmResearch Sdn Bhd 2
BACK ON AN AGGRESSIVE EXPANSION MODE
We initiate coverage on KPJ Healthcare (KPJ) with a
BUY recommendation and a fair value of RM6.15/share,
offering potential returns of ~20%.
We see further upside to the share price in a likely sector-
wide re-rating from the impending listing of regional
healthcare provider Integrated Healthcare Holdings (IHH)
which have acquired assets at 16x-26x PERs.
As it is, KPJ’s current valuations are attractive. Fully
diluted PERs of 17x and 20x are at a 10%-13% discount
to closest peer Thailand-based Bumrungrad Hospital,
and a wider 23%-33% discount to regional peers’
average.
STEP-UP INCREASE IN BED CAPACITY
� 7 new hospitals in the pipeline by end-FY15F
KPJ is an excellent play into Malaysia’s fast-growing
healthcare industry (YoY: 10%-13%), which is worth an
estimated RM25bil.
We like KPJ’s defensive earnings profile. Also, a step-up
increase in bed capacity from a pipeline of 7 new
hospitals would accelerate earnings momentum, to
achieve our conservative 3-year CAGR of 17%.
� Current occupancy rate a tad below overcrowded thresholds
Faster-than-expected patient admission growth, coupled
with a one-year hiatus from hospital expansion, has led to
shrinking ready capacity.
The current occupancy rate of 70%-75% is a tad below
overcrowded thresholds of 85%-90%. A small balance is
typically allocated for emergency cases.
The group recorded net profit of RM142mil for FY11,
representing a 20% YoY growth. Earnings track record
has been consistent, with an average of 15% growth per
annum (p.a.) over FY08-11 (See Chart 1).
� FY13F-14F to see strong earnings growth on step-up increase in capacity
We forecast an annual capex of RM200mil for the group’s
hospital expansion, with the construction of all 7 hospitals
to be completed by end-FY15F (See Table 1). Most
hospital expansion would be implemented in phases,
each typically comprising 90-100 beds.
Bandar Baru Klang Specialist, which was initially targeted
for opening late last year, is on schedule for operations
by 1HFY12F, with Phase I consisting of 94 beds. We
understand hospital inspection by the Ministry of Health
(MoH) would be finalised soon.
The group is also planning to open Sabah Medical Centre
to replace the old building in FY12F, with a total capacity
of 250 beds.
Part of the capex would be allocated for the
commissioning of KPJ Perlis Specialist Hospital. The
60:40 joint venture with Yayasan Islam Perlis will be
KPJ’s maiden hospital in Perlis. Expected completion
date is by early-FY14F.
That same year, KPJ will be adding a hospital in Tanjung
Lumpur, Pahang based on a 70:30 joint venture with
Pasdec Corporation. It has a target of 122 beds under
Phase I.
CHART 1 : QUARTERLY EARNINGS PERFORMANCE
Source: Company, AmResearch
KPJ Healthcare Bhd 9 April 2012
AmResearch Sdn Bhd 3
TABLE 1 : LIST OF KPJ HOSPITALS (MALAYSIA)
Hospitals State Number of licensed beds Remarks
1 KPJ Johor Specialist Johor 215
2 Kluang Utama Specialist Hospital Johor 40
3 Puteri Specialist Hospital Johor 150
4 Kedah Medical Centre Kedah 106
5 KPJ Perdana Specialist Kelantan 83
6 KPJ Seremben Specialist Negeri Sembilan 109
7 Kuantan Specialist Hospital Pahang 81
8 KPJ Penang Specialist Penang 136
9 Taiping Medical Centre Perak 48
10 KPJ Ipoh Perak 260
11 Damai Specialist Hospital Sabah 48
12 Sabah Medical Sabah 178
13 Kuching Specialist Sarawak 75
14 Sibu Specialist Sarawak 35
15 KPJ Ampang Puteri Selangor 230
16 KPJ Damansara Specialist Selangor 155
17 KPJ Selangor Specialist Selangor 180
18 KPJ Kajang Specialist Selangor 68
19 KPJ Tawakal Specialist Hospital W. Persekutuan 191
20 Sentosa Medical Centre W. Persekutuan 212
21 Bandar Baru Klang Specialist Selangor 200 Phase 1: 94 beds, MoH inspection expected to be completed in few weeks’ time.
22 Sabah Medical Centre Sabah 250 Phase 1: 80-100 beds, end-FY12F.
23 Pasir Gudang Johor 120 Phase 1: 60-90 beds, end-FY12F / early FY13F.
24 Muar Johor 120 FY13F
25 Tanjung Lumpur, Kuantan Pahang 200 Phase 1: 122 beds, FY14F.
26 KPJ Perlis Specialist Hospital Perlis 90 Phase 1: 60 beds, FY14F.
27 Bandar Dato' Onn, Iskandar Johor 400 End-FY14F / early FY15F.
Source: Company, AmResearch
KPJ Healthcare Bhd 9 April 2012
AmResearch Sdn Bhd 4
HEALTH TOURISM TO POWER KPJ’S NEXT LEG
OF GROWTH
� Largest private healthcare provider with 22% market share
With a sizeable 22% market share, KPJ is Malaysia’s
largest private healthcare provider with a national
footprint and growing scale (See Chart 2).
With its network of 20 hospitals in Malaysia, laboratory
services and a private nursing college under the KPJ
umbrella, the group is well ahead of competitors in scale,
service offerings and brand recognition – effectively
enhancing its pricing power. This is evident given the
gradual expansion in EBITDA margins over the last five
years.
CHART 2 : KPJ HAS DOMINANT MARKET SHARE(2009)
Source: APHM, AmResearch
� Investments in health tourism in line with government’s ETP policies
More importantly, KPJ is well placed to capitalise on the
booming and lucrative health tourism with the doubling of
the existing hospital chain in Johor.
� Rising demand from foreign patients to underpin health tourism’s robust growth
We see strong prospects for this fast-growing sub-
segment, which makes up 10% of the total healthcare
market. As an indication, health tourism recorded a
CAGR of 20% over the last five years.
We expect this segment to sustain its growth trajectory,
buoyed by increasing demand from foreign patients,
namely those from Indonesia and Singapore (See Table
2).
TABLE 2 : MEDICAL TOURISM REVENUE (2007)
Country 2007
Indonesia 72
Singapore 10
Japan 5
India 4
Europe 3
Others 6
100
Source: APHM, AmResearch
� Cross border medical reimbursement agreements bode well for operators in Johor
In particular, recently-sealed agreements between
Malaysia and Singapore on cross-border medical
reimbursement bode well for healthcare providers with
exposure to Johor.
Patients from Singapore represent the second largest
health tourist group after Indonesia. In addition, the
mainly non-elective nature of surgeries by most medical
tourists typically translate to higher average revenues per
patient, helping to mitigate some of the earnings risks.
� Cementing Johor presence by adding 3 more hospitals in the state
Part of KPJ’s hospital expansion plan will see three
additional hospitals strategically located within the state
neighbouring Singapore.
First on the list is a hospital in Pasir Gudang by end of
this year, followed by another one in Muar next year and
a larger-scale 400-bed hospital in Bandar Dato’ Onn,
Iskandar the following year.
All in, they are expected to more than doubled KPJ’s total
capacities to a total of 935 beds upon completion. This
would help boost group revenue contribution from health
tourism from circa 10% currently to 25% by 2020.
KPJ Healthcare Bhd 9 April 2012
AmResearch Sdn Bhd 5
INDUSTRY PROSPECTS
The operating environment is supportive of growth, with
private hospital services in Malaysia expected to hit
RM14bil by 2015. We underline two key factors
underpinning the industry’s robust growth outlook:-
1) Rising healthcare spending in tandem with
growing middle class and aging populace;
2) Healthcare being targeted for accelerated
development as part of the government’s long-term
economic transformation programme (ETP).
� Malaysia a dual healthcare system
Malaysia practises a dual healthcare system where public
healthcare is heavily subsidised, while the private
healthcare system is thriving but predominantly urban
focussed.
Individuals and households contribute 40% towards
healthcare expenditure, with the government contributing
the balance of 60%. All in, total healthcare expenditure
amounts to 5% of the nation’s GDP. In comparison,
healthcare expenditure by OECD countries average 9.6%
- indicating room for meaningful growth for Malaysia.
� Need to streamline industry to tackle nation’s rising healthcare demand
This has largely led to the inclusion of healthcare as part
of the government’s long term economic transformation
programme (ETP) as it seeks to streamline the industry
to tackle the nation’s rising healthcare needs.
� Aspires to achieve healthcare standards of a developed country by 2020
To match standards equivalent to other developed
countries, the doctor to population ratio of 1:859 (2010)
would need to rise to 1:600 by 2015, and to 1:400 by
2020, according to the Ministry of Health (MoH) (See
Table 3). This translates to total public and private health
expenditure of approximately 7% of GDP by 2020.
� Broader role of healthcare industry as engines of economic growth under ETP
More importantly, government policies under the ETP are
primarily aimed at transforming designated industries as
future engines of economic growth via public-private
partnerships. Already, it has identified 3 key areas for
growth within healthcare – pharmaceuticals, health travel
and medical technology products.
CHART 3 : PRINCIPAL CAUSES OF HOSPITALISATION IN
PUBLIC HOSPITALS (2010)
Source: MoH, AmResearch
TABLE 3 : MALAYSIA’S KEY STATISTICS (2010)
Total population 28.3 mil
<15 years old 27.6%
15 - 64 years old 67.3%
>= 65 years old 5.1%
Life expectancy 72 (Male), 77 (Female)
Infant mortality (per 1,000 births) 6.2
Number of doctors 32,979
Doctor to population ratio 1:859
Source: MoH, AmResearch
CHART 4 : BREAKDOWN OF HOSPITALS AND BED
CAPACITY
Source: MoH, AmResearch
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� Increased competition among healthcare providers will raise standards
Admittedly, we do anticipate increased competition among
healthcare providers, along with the rapid structural
developments taking place within the healthcare industry.
� Parkway-Pantai seen expanding aggressively
Coming close to industry leader KPJ is the Parkway-Pantai
group which operates the Pantai and Gleneagles hospitals.
Parkway-Pantai was privatised by Khazanah Nasional
(Khazanah) back in June 2010, and is now part of
Khazanah’s Integrated Healthcare Holdings (IHH).
Plans are underway for Parkway-Pantai to add five new
hospitals by end-2015, with the combined additional bed
capacities of 1,150 beds – some 15%-20% short of KPJ’s
(See Table 4).
Besides Parkway-Pantai, IHH controls Turkey-based
hospital chain Acibadem, Malaysian-based IMU Education
Group and an 11.2% equity stake in India-based Apollo
Hospitals Enterprises Ltd (APLH Bo Equity, Non-rated).
NON-CORE OPS: EDUCATION & RETIREMENT
VILLAGE
� In-house education arm mitigates staffing risks of nurses and qualified medical staff
KPJ also operates KPJ International University College of
Nursing and Health Sciences (KPJIUC) with annual
revenue of RM40-RM50mil.
Despite minimal contribution to group earnings, the
education arm complements its hospital operations in that
it serves to mitigate staffing risks of qualified nurses and
medical staff.
KPJUIC was awarded university college status in July
last year, and now offers its own degree programmes. It
hopes to attain a full university status, complete with its
own medical school, by 2016F.
Management has earmarked a RM120mil capex for the
Nilai main campus expansion and the commissioning of a
new campus at Bukit Mertajam, Penang.
The Penang campus is expected to commence
operations by end-FY12F. It aims to quadruple student
in-takes to 10,000 in five years’ time.
� Tapping into lucrative retirement/aged care industry in Australia
The non-core operation in the retirement/aged care
industry will remain insignificant in the medium term.
Nevertheless, we reckon the ‘know-how’ attained via
KPJ’s 51% stake in Australia-based Jeta Gardens
Waterford Trust (JGWT) would be beneficial for future
potential opportunities within the niche market.
JGWT has full ownership and operational control of a 64-
acre retirement village known as Jeta Gardens in
Waterford, Queensland – located approximately 45km
from Surfers Paradise, Gold Coast, Australia (See Chart
8).
Modelled as a full-fledged retirement village, Jeta
Gardens comprises a 108-bedded aged care facility, 23
retirement villas and 32 apartment units.
TABLE 4 : UPCOMING PRIVATE HOSPITALS
Location Capacity (beds) Opening target
Parkway-Pantai Gleneagles Kota Kinabalu Sabah 200 2014
Gleneagles Iskandar Johor 300 2015
Gleneagles KL (extension) KL 100 2014
Pantai Manjung Perak 100 2012
Pantai Bangsar (extension) Selangor 450 2014
Sime Darby Healthcare Sime Darby Medical Centre Parkcity Selangor 300 2013
Others Hang Tuah Jaya Resort Specialist Centre Melaka 390 2013
Melaka Straits Medical Centre Melaka 350 2014
Mahkota Medical Centre, Melaka (extension) Melaka 220 2014
Columbia Asia Hospital Petaling Jaya Selangor <90 2014
Thomson Medical Centre Pte Ltd n.a. 200 2015
Source: Various, AmResearch
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AmResearch Sdn Bhd 7
We understand plans are underway for development of
additional facilities on the remaining balance of vacant
land measuring 30-32 acres.
� Jeta Gardens a strategic target for KPJ’s medical tourism business
More importantly, we view the group’s venture in Jeta
Gardens positively given cross-selling potential of
medical tourism services.
We see scope for Jeta Gardens acting as first point of
contact in attracting local Australians to medical
treatments offered by KPJ-owned hospitals in Malaysia.
EARNINGS FORECASTS & FINANCIALS
� Decent patient volume growth of 10% p.a.
Our earnings model indicates a 3-year CAGR of 17%,
underpinned by new bed capacities from new hospital
openings.
We have assumed patient volume growth of 10% per
annum (p.a.). This is slightly higher than the group’s
historical average of 9%, but within the 7%-13% range
over the past years.
In addition, we have factored in a conservative 2%
increase in average revenues per patient.
We forecast a small 5% annual rise in average consultant
fees, largely in line with its historical increase of 6% p.a.
Management has been able to maintain its optimum
consultants to staff ratio of 1:10, ensuring an efficient cost
structure (See Chart 5).
Consultant fees and staff labour costs make up
approximately 49% of group operating expenses (See
Chart 6).
The other half is made up of material costs and hospital
administrative expenses. Overall, our earnings model
suggests a marginal improvement to EBITDA margin of
14%.
� Net gearing at manageable level of 12%, dividend payout of 50% p.a.
Net gearing is at a manageable level of 12%, aided by the
group’s asset-light model. Asset injections of hospitals into
49%-owned Al-Aqar Healthcare REIT (AQAR Mk Equity,
Buy) has enabled a better deployment of free cash flows
to fund future expansion, whilst lending support to its
dividend policy.
The group is in the midst of concluding REIT injection of
Bandar Baru Klang hospital worth RM85mil, to be satisfied
partly in cash and shares. Timeline for completion is at
end 1H2012.
The group may opt to distribute a special dividend in-
specie of Al-Aqar Healthcare REIT shares in order to
maintain its equity stake below the 50% level.
We have assumed a dividend payout of 50% p.a., in line
with management guidance. This translates to dividend
yields of 3%-4% p.a. based on the current share price.
Any special dividends would be an added bonus to
shareholders.
CHART 5 : EFFECTIVE MANAGEMENT OF LABOUR
COSTS
Source: Company, AmResearch
CHART 6 : BREAKDOWN OF GROUP OPERATING
EXPENSES
Source: Company, AmResearch
KPJ Healthcare Bhd 9 April 2012
AmResearch Sdn Bhd 8
VALUATION & RECOMMENDATION
� Initiate with BUY, fair value of RM6.15/share
Despite the stock’s relative outperformance year-to-date,
we believe the current share price has not fully reflected
the stock’s potential value.
We initiate coverage on KPJ with a BUY recommendation
and a DCF-fair value of RM6.15/share, offering potential
returns of ~20%. We see further upside to the share price
in a likely sector wide re-rating from impending listing of
Khazanah’s IHH by year-end.
� IHH acquired healthcare assets at PERs of 16x-26x
Though no details are available at this juncture, various
news reports cited the fund-raising to be in excess of
USD3bil. Notwithstanding IHH’s larger scale and
earnings base, healthcare assets under IHH were
acquired at PERs of 16x-26x.
Further, KPJ’s valuation is undemanding in lieu of the
scarcity premium factor attached to quality healthcare
stocks. The stock’s fully diluted PERs of 17x and 20x are
at a 10%-13% discount to closest peer Thailand-based
Bumrungrad Hospital, and a wider 23%-33% discount to
regional peers’ average (See Table 6).
.
CHART 7 : GROUP EARNINGS PERFORMANCE
Source: Company, AmResearch
TABLE 5 : TOP 6 SHAREHOLDERS OF KPJ
Shareholder %
Johor Corp 38.6
EPF 11.9
Nomura Asset Management 8.2
Skim Amanah Saham Bumiputera 8.2
Kumpulan Waqaf An-nur Bhd 7.5
Lembaga Tabung Haji 4.6
Total 79.1
Source: Bloomberg, AmResearch
KPJ Healthcare Bhd 9 April 2012
AmResearch Sdn Bhd 9
TABLE 6 : PEER COMPARISON
Company Country PE (x) PB (x) EV/EBITDA ROE (%) EPS Growth (%) Mkt Cap
Div Yield (%)
CY12F CY13F CY12F CY13F CY12F CY13F CY12F CY13F CY12F CY13F
(USD mil)
CY12F CY13F
RAFFLES MEDICAL GROUP LTD
Singapore 22.0 18.9 3.4 3.0 15.8 13.8 16.3 16.7 10.5 16.2 983.8 1.8 1.6
APOLLO HOSPITALS ENTERPRISE
India 35.2 28.1 3.5 3.1 17.8 14.5 10.9 11.6 23.5 25.4 1,641.1 0.7 0.8
FORTIS HEALTHCARE LTD
India 53.2 26.3 1.2 1.1 19.1 13.9 2.7 4.3 (36.4) 102.0 821.1 0.1 n/a
BUMRUNGRAD HOSPITAL PUB CO
Thailand 22.5 19.3 5.3 4.7 14.2 12.9 25.7 26.3 20.0 16.3 1,300.1 2.2 2.6
BANGKOK CHAIN HOSPITAL PCL
Thailand 19.2 16.6 3.9 3.6 10.9 9.8 21.9 22.5 25.9 15.6 499.5 2.9 3.3
BANGKOK DUSIT MED SERVICE
Thailand 27.0 22.6 4.1 3.7 15.4 13.8 16.1 17.4 24.7 19.7 4,530.8 1.6 1.9
Simple Average
29.8 22.0 3.6 3.2 15.5 13.1 15.6 16.5 11.4 32.5 n.a. 1.6 2.0
PRIMARY HEALTH CARE LTD
Australia 11.7 10.1 0.6 0.5 7.3 6.8 4.9 5.3 13.0 15.2 1,466.5 4.7 5.8
RAMSAY HEALTH CARE LTD
Australia 16.8 15.1 3.0 2.7 8.8 8.1 17.7 18.3 14.5 11.6 4,108.2 3.0 3.3
KPJ HEALTHCARE BHD
Malaysia 20.1* 16.8* 3.4 3.0 10.1 8.8 17.4 18.8 10.6 19.5 1,035.4 2.8 3.3
*Fully diluted basis Based on share prices as at 6 April 2012
Source: Bloomberg, AmResearch
KPJ Healthcare Bhd 9 April 2012
AmResearch Sdn Bhd 10
CHART 8 : JETA GARDENS – 45KM FROM SURFERS PARADISE, GOLD COAST, AUSTRALIA
Source: Google map, AmResearch
KPJ Healthcare Bhd 9 April 2012
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CHART 9 : PB BAND CHART
0.0
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1.6
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3.2
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Feb-12
(x)
CHART 10 : PE BAND CHART
4.0
7.6
11.2
14.8
18.4
22.0
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(x)
KPJ Healthcare Bhd 9 April 2012
AmResearch Sdn Bhd 12
TABLE 7 : FINANCIAL DATA
Income Statement (RMmil, YE 31 Dec) 2010 2011 2012F 2013F 2014F
Revenue 1,654.6 1,891.3 2,134.3 2,432.2 2,773.6
EBITDA 203.4 255.1 300.1 348.7 410.6
Depreciation (59.4) (71.2) (92.0) (103.9) (114.5)
Operating income (EBIT) 144.0 183.9 208.1 245 296.2
Other income & associates 30.4 25.1 25.6 28.4 31.8
Net interest (6.4) (6.4) (11.6) (11.0) (10.7)
Exceptional items 0.0 0.0 0.0 0.0 0.0
Pretax profit 168.0 202.6 222.1 262.1 317.3
Taxation (41.7) (47.4) (50.5) (59.6) (76.1)
Minorities/pref dividends (7.3) (12.9) (12.9) (12.9) (12.9)
Net profit 118.9 142.3 158.7 189.6 228.2
Core net profit 118.9 142.3 158.7 189.6 228.2
Balance Sheet (RMmil, YE 31 Dec) 2010 2011 2012F 2013F 2014F
Fixed assets 536.8 616.6 744.5 840.6 926.1
Intangible assets 136.3 165.6 165.6 165.6 165.6
Other long-term assets 457.4 449.0 422.0 422.8 423.6
Total non-current assets 1,130.5 1,231.2 1,332.1 1,429.0 1,515.3
Cash & equivalent 197.1 177.3 237.1 259.2 322.8
Stock 41.6 45.2 42.2 47.9 54.4
Trade debtors 298.4 300.8 311.6 353.9 401.4
Other current assets 12.3 10.5 0.0 0.0 0.0
Total current assets 549.5 533.9 590.9 661.1 778.6
Trade creditors 308.1 248.9 333.3 379.8 433.1
Short-term borrowings 362.7 118.8 110.6 105.6 103.0
Other current liabilities 54.1 72.9 112.2 135.0 155.0
Total current liabilities 724.9 440.5 556.1 620.5 691.2
Long-term borrowings 36.7 274.1 268.3 262.1 261.1
Other long-term liabilities 55.0 59.9 44.5 33.4 25.0
Total long-term liabilities 91.7 334.0 312.8 295.5 286.2
Shareholders’ funds 768.6 882.9 946.2 1,066.2 1,208.4
Minority interests 94.7 107.6 107.8 107.9 108.1
BV/share (RM) 1.46 1.62 1.73 1.95 2.21
Cash Flow (RMmil, YE 31 Dec) 2010 2011 2012F 2013F 2014F
Pretax profit 168.0 202.6 222.1 262.1 317.3
Depreciation 59.4 71.2 92.0 103.9 114.5
Net change in working capital 31.0 (48.7) 76.7 (1.6) (0.6)
Others (70.1) (72.6) (50.5) (59.6) (76.1)
Cash flow from operations 188.3 152.5 340.3 304.8 355.0
Capital expenditure (227.5) (171.0) (200.0) (200.0) (200.0)
Net investments & sale of fixed assets 0.0 0.0 0.0 0.0 0.0
Others 28.1 (1.9) (1.9) (1.9) (1.9)
Cash flow from investing (199.5) (172.8) (201.9) (201.9) (201.9)
Debt raised/(repaid) 30.6 (4.1) (14.0) (11.2) (3.5)
Equity raised/(repaid) 54.9 42.6 0.0 0.0 0.0
Dividends paid (26.5) (48.3) (59.4) (69.6) (86.0)
Others 0.0 10.6 0.0 0.0 0.0
Cash flow from financing 59.0 0.8 (73.4) (80.8) (89.6)
Net cash flow 47.8 (19.6) 65.1 22.1 63.6
Net cash/(debt) b/f 17.2 (15.5) 79.1 33.3 67.1
Net cash/(debt) c/f (202.3) (215.6) (141.8) (108.5) (41.4)
Key Ratios (YE 31 Dec) 2010 2011 2012F 2013F 2014F
Revenue growth (%) 13.6 14.3 12.8 14.0 14.0
EBITDA growth (%) 8.8 25.4 17.7 16.2 17.8
Pretax margins (%) 10.2 10.7 10.4 10.8 11.4
Net profit margins (%) 7.2 7.5 7.4 7.8 8.2
Interest cover (x) 10.6 10.8 17.9 22.3 27.8
Effective tax rate (%) 24.8 23.4 22.7 22.7 24.0
Net dividend payout (%) 49.8 28.0 37.4 36.7 37.7
Debtors turnover (days) 60 58 52 50 50
Stock turnover (days) 8 8 7 7 7
Creditors turnover (days) 63 54 50 54 53
Source: Company, AmResearch estimates
KPJ Healthcare Bhd 9 April 2012
AmResearch Sdn Bhd 13
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