KPJ Healthcare Bhd ('KPJ') is the largest private healthcare provider in Malaysia. It has 18 hospitals in Malaysia as well as 6 hospitals overseas.
Recent Financial Results
PJ has just announced its 2Q2009 results. Its net profit increased by 13.8% q-o-q or 23.2% y-o-y to RM24.9 million while turnover increased by 9.5% q-o-q or 19.5% y-o-y to RM371 million.
Table 1: KPJ's 8 quarterly results
From Chart 1, we can see that KPJ's top-line & bottom-line has been rising steadily over the past 10 quarters.
Chart 1: KPJ's 10 quarterly results
Valuation
KPJ (closed at RM3.43 yesterday) is trading at trailing PE of 8.6 times (based on last 4 quarters EPS of 40 sen) or at a Price to Book of 1.1 times (based on NTA per share of RM2.99). At these multiples, KPJ is still attractive.
Technical Outlook
KPJ appears to have just broken above its medium-term downtrend line at RM3.40. With this upside breakout, KPJ may test the resistance at RM3.75 & then RM4.00.
Chart 2: KPJ's weekly chart as at Aug 26, 2009 (Source: Quickcharts)
Conclusion
Based on attractive valuation, steady financial performance and bullish technical outlook, KPJ is a both a trading BUY or long-term BUY.
7 comments:
Dear Mr Alex,
Thanks and appreciate for your sharing here..
It's a pleasure that if you could sharing with us some of the potential companies previously come from 2nd board..(before merging)
I believe most of them still underperformed since most of the main board stocks already rally strongly since Mar 09.
Thanks.
Chin Hoe
Dear Mr.Alex,
Apperciate if you clarify further on Price to Book Value of 1.1 for KPJ. How was this calculated based on NTA of 2.99?
Thanks You.
Jonathan.
Hi Lin,
I like to write about small-cap or mid-cap companies. They are easier to write about & if you get it right, it can be very rewarding. I've picked some outstanding or promising small-cap or mid-cap companies & posted about them. Soon or later, a promising company will capture my attention & if time permits, I will write about it. My problem is I am constrained by time. Last week has been really tiring as it was the dateline for quarterly results announcement for companies with financial period ending at Mar 31, Jun 30, Sep 30 or Dec 31. Looking through the accounts of 600-700 companies can take a lot out a person. I was so jaded that I did not update my blog last Friday.
Hi JR,
Price to Book [or Price to NTA] gives an idea of replacement cost of the company or the cost of setting up a similar company. It is calculated by dividing the share price with the net tangible value per share.
So, when you look at KPJ giving a return of 11.7% (or trading at PE of 8.6 times), you may want to get into the same business. Why put up with all the risks & headaches? Just go out & buy KPJ share which is trading at a premium of only 10% above the cost of setting a similar business.
Dear Mr. Alex,
Thank you for the explanation.
Best Regards
Jonathan.
Dear Mr Alex,
Really appreciate your hard work to share info here. In this booming info era, important to extract the important news.. you done it well..
I have a problem here and hope you may suggest me..
Usually I will use Tradesignum to download the lastest chart..
But currently seem Tradesignum already stopped updating its data, as retail investor, it costs us if we purchase the online updating chart service..any other suggestion on free online chart website?
Thanks,
Chin Hoe
Hi Lin,
The free charts websites tend to suffer from occasional problem of not being up-to-date. I think it may be their tactics to encourage users to subscribe for the paid service, which is understandable. I guess we have no choice but to live with this inconvenience.
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