not vested
Trading Buy: KPJ - 5878
(Last price: RM0.940, Potential upside +21.3%)
Company Profile
KPJ is Malaysia’s leading provider of private healthcare services. Its integrated network consists of over 26 specialist hospitals located throughout the nation.
With its expansion abroad, the Group currently has two hospitals in Indonesia, a sizable share in a hospital in Bangkok and a hospital in Bangladesh.
Trading Catalyst
• HLIB has a BUY rating with SOP TP of RM1.18, or 25.5% upside.
• KPJ offer investors exposure to Malaysia’s hospital play. Its niche lies in its network that feeds patient into its urban specialist. Going forward, we opine that growth will continue to be driven by higher contribution from newly opened hospitals and improvements in contribution coming from its more matured hospitals coupled with the booming medical tourism.
• We also view that the improving ringgit against USD bodes well for KPJ as it will reduce the volatility and the cost of medical consumables, which in turn will result in higher profitability
• Poised for a downtrend line breakout with the formations of Tweezers bottom and higher lows pattern, coupled with bottoming up technical oscillators.
Technical View
• Resistance: RM0.995 / RM1.07 / RM1.14
• Support: RM0.910 / RM0.870
• Cut loss: RM0.865
Key Financial Stats
• Trading at 20x FY19 P/E, 16.6% and 59% lower against its 10Y historical average of 24x and IHH’s 49x, respectively, and supported by strong EPS CAGR of 12% from FY17-19.17%.
Source: Bloomberg, HLIB