KPJ: Healthcare Provider Delivers Strong Earnings Amidst Operational Optimisation

A prominent healthcare provider reported a resilient performance for the first half of 2025 (1H25), with net profit reaching RM139.2 million. This figure aligns closely with analyst and consensus full-year estimates, driven by a strong second-quarter recovery and ongoing operational efficiencies, leading to expectations of a stronger performance in the second half of the year.

Performance Review

On a quarter-on-quarter (QoQ) basis, the second quarter of 2025 (2Q25) saw a significant surge in net profit, climbing 43.4% to RM82.0 million. This boost was primarily attributed to a 5.9% increase in sales, reaching RM1.0 billion, propelled by higher patient volumes following the Chinese New Year and Ramadan periods in 1Q25. The group’s PBT margin expanded by 2.7 percentage points to 12.8% during the quarter, supported by various cost optimisation initiatives, strategic procurement, and reduced losses from hospitals still in their gestation phase. Year-on-year (YoY), 1H25 revenue and net profit improved by 8.9% and 8.0% respectively, to RM2.0 billion and RM139.2 million. This robust performance was largely due to increased patient visits, higher bed occupancy rates (BOR), and enhanced cost efficiency. The group also declared a third interim dividend of 1.05 sen per share for FY25, bringing the year-to-date dividend to 3.0 sen per share.

Challenges and Efficiencies

While the report indicates a strong recovery in patient volumes in 2Q25, implying a relatively softer utilisation or lower volumes in the preceding periods due to holiday impacts, the group has effectively mitigated these challenges through diligent cost control. Strategic procurement and concerted efforts to minimise losses from newer hospitals, particularly those still in their gestation phase, have been instrumental in bolstering overall profitability and expanding margins.

Future Outlook

Looking ahead into the second half of 2025 (2H25), patient volumes are expected to continue their upward trend, supported by sustained demand and growth in medical tourism. The group is committed to advancing its Centres of Excellence, strengthening integration across its clinical, research, and educational pillars, and further optimising hospital operations under its integrated Health System. These strategic initiatives are poised to drive continued revenue growth and improve profit margins.

Analyst View

TA Securities has reiterated its Hold recommendation on the company, setting a target price of RM2.82 per share. This valuation is based on a Sum-of-the-Parts (SOP) methodology.