KUALA LUMPUR, Aug 28 ― Research firms are optimistic on KPJ Healthcare Bhd, maintaining their “buy” rating on the company backed by long-term prospects due to steady domestic healthcare demand growth, even with the uncertainties from the Covid-19 outbreak.
In a research note, CGS-CIMB said it reiterated its “add” call on the stock, with a lower target price (TP) of 95 sen from 98 sen previously, as it adjust its depreciation and effective tax rate assumption.
At the company's second quarter (2Q) financial year (FY) 2020 results briefing, KPJ said that since the start of the recovery movement control order (RMCO) period on June 10, patient visitations and bed occupancy have steadily recovered.
As of July 2020, the bed occupancy rate has improved to 49 per cent and patient visitations rebounded to March 2020 levels.
More positively, the number of surgeries performed in July 2020 has also rebounded to January-February 2020 levels, possibly aided by pent-up demand for surgeries that were postponed from the MCO period.
CGS-CIMB said re-rating for catalysts include stronger-than-expected patient visitations and recovery in revenue intensity in second half (2H) FY2020 and beyond, while downside risks are the longer-than-expected gestation periods for new hospitals, and the weaker-than-expected patient visitations.
Meanwhile, other ratings by investment firms include Maybank IB Research with a maintained 'buy’ call and TP of 98 sen, Public Investment Bank with an “outperform” call (TP RM1.05), and Kenanga Research also with an “outperform” call (unchanged TP at RM1.00).
As at 10.45am, the company's share price was flat at 82.5 sen, with 151,00 shares changing hands. ― Bernama
