KPJ earnings outlook likely to remain resilient
It added that the further delay in the diagnosis-related group (DRG) system is positive as it leaves earnings potential uncapped for the near-term.
Last year, the Health Ministry said it was considering implementing a DRG system to help manage rising healthcare costs, particularly in private hospitals.
The research house viewed KPJ's asset monetisation and lease renewal exercise as a strategic effort to unlock capital and support its 6,000-bed target by 2030.
KPJ recently launched a 60-bed hospital in Kuala Selangor as part of its organic expansion, supporting progress towards its 6,000-bed financial year 2030 (FY30) target.
'Alongside five other hospitals under gestation (four are earnings before interest, taxes, depreciation, and amortisation or ebitda positive), this could pose near-term earnings upside,' it said.
On July 8, KPJ said it had fulfilled all conditions precedent of the sale and purchase agreements related to its proposed sale and leaseback, as well as lease renewal.
The sales and leaseback agreement for the new wings of KPJ Ampang Puteri and KPJ Penang for RM241mil cash.
Maybank IB Research said KPJ has historically injected assets into its 34%-owned associate Al-Aqar Healthcare REIT to unlock asset value while retaining operational control via leasebacks.
It said apart from the injection of these new hospital wings, the resolution also includes lease renewals on existing leaseback properties with Al-Aqar for KPJ Penang, KPJ Seremban, Taiping Medical Centre, KPJ Healthcare University and KPJ Healthcare College Penang,
The research house maintained its FY25 to FY27 ebitda margin forecast of 24% as it leaves earnings estimates unchanged on potential impact of 8% sales and service tax (SST) on leases, pending clarity on possible business-to-business exemption.
It has, however, trimmed FY25 to FY27 earnings by 2%, 4% and 4%, respectively.
The research house is 'neutral' on the SST expansion of 6% on foreign patients, and 8% on leased assets. 'For the latter, we believe there is a possibility for KPJ to be eligible for exemptions,' it said.
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