KPJ: Earnings Growth Continued

Result Update 

For QE30/9/2019, KPJ's net profit rose 11% q-o-q or 12% y-o-y to RM46 million while revenue rose 7% q-o-q or 10% y-o-y to RM906 million. Group revenue rose 10% revenue due to the increase in number of patient visits, radiology cases and surgeries especially for KPJ Johor, KPJ Selangor and KPJ Rawang. The new addition to the Group’s group of hospitals, KPJ Batu Pahat, which commenced its operation on 18 September 2019, also contributed to the improved revenue of the period. Increased activities within the support companies also contributed to the revenue growth.

Profit before tax recorded 16% increase to RM69.3 million during this quarter from RM59.9 million in the same quarter in 2018 led by the increase in revenue by 10%. Despite the fact that the increase in profit before tax has been set-off by the MFRS 16 impact recognized during the quarter especially on depreciation and finance costs amounting to RM9.7 million and RM14.0 million respectively, the Group managed to set higher profit before tax margin with 7.9% as compared to last year’s 7.5%. This was due to cost optimization and initiatives from the hospitals as well as better performance by support companies.


Table: KPJ's last 8 quarterly results


Graph: KPJ's last 47 quarterly results

Financial Position

As at 30/9/2019, KPJ's financial position is deemed adequate with current ratio at 1.15 times while gearing ratio was elevated at 2.03 times.

Valuation

KPJ (closed at RM0.905 yesterday) is now trading at a PE of 21 times (based on last 4 quarters' EPS of 4.31 sen). At this PER, KPJ is fully valued.

Technical Outlook

KPJ has been moving sideways for the past 5-6 years. If it can break above the high achieved during the past 5-6 years at RM1.15-1.20, KPJ's uptrend can begin.


Chart: KPJ's monthly chart as at Nov 28, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on improving financial performance and exposure to a growing consumer service sector, KPJ could be a good stock for long-term investment. However, its high valuation and neutral technical outlook mean that the stock is likely to trade sideways around RM0.90-1.10 for a while longer.

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

KPJ: Profits Continued to Rise

Result Update 

For QE31/122018, KPJ's net profit rose 29% q-o-q but dropped 12% y-o-y to RM53 million while revenue rose 5% q-o-q or 4% y-o-y to RM863 million. Group revenue rose 4% y-o-y mainly contributed by the increase in number of patient visits, number of beds and surgeries particularly for KPJ Rawang, KPJ Pasir Gudang and KPJ Bandar Maharani. A total of 14 new consultants from various disciplines joined the Group which contributed to an increase of 7% for its inpatient and outpatient treated at our hospitals. Extended promotions to the neighbouring countries and online promotions and marketing strategies were also factors to the increase in revenue.

Profit before zakat and tax increased 5.4% y-o-y due to lower negative EBITDA reported by the Indonesian operation (RM1.5 million vs RM7.2 million previously) which offset the drop in profit before zakat and tax in the Malaysian operation from RM90.2 million to RM86.1 million as well as higher negative EBITDA reported by the discontinued Australian operation (RM4.7 million vs RM0.5 million previously).


Table: KPJ's last 8 quarterly results

KPJ's quarterly revenue has been on a steady uptrend for the past 10 years. Its earning has been flattish in the past 5-6 years due to expansion program which led to lower profit margin as higher administrative expenses were not fully absorbed by revenue from the newly hospitals opened. However profits & profit margins seem to be curving upward. If these trends persist, we may see a breakout in profits next few quarters.


Graph: KPJ's last 48 quarterly results

Financial Position

As at 31/12/2018, KPJ's financial position is deemed satisfactory with current ratio at 1.2 times while gearing ratio was elevated at 1.2 times. IHH has much stronger financial position as at 30/9/2018 with current ratio at 2.5 times while gearing ratio was only 0.5 times.

Valuation

KPJ (closed at RM1.08 yesterday) is now trading at a PE of 26 times (based on last 4 quarters' EPS of 4.16 sen). At this PER, KPJ is fully valued.

Technical Outlook

KPJ has been moving sideways for the past 5-6 years. If it can break above the high achieved during the past 5-6 years at RM1.15-1.20, KPJ's uptrend can begin.


Chart: KPJ's monthly chart as at Feb 19, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on improving financial performance and exposure to a growing consumer service sector, KPJ could be a good stock for long-term investment. However, its high valuation and neutral technical outlook mean that the stock is likely to trade sideways around RM1.00-1.10 for a while longer.

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

TMCLIFE: Earning Continued to Impress

Result Update

For QE31/8/2018, TMCLife's PBT rose 34% q-o-q or 59% y-o-y to RM10.7 million while revenue was mixed- down 3% q-o-q but rose 10% y-o-y to RM43 million. Revenue rose 10% y-o-y due to higher patient load and higher intensity cases handled. PBT rose 59% y-o-y due to higher profit before tax margin of 25% as compared to 17% recorded in QE31/8/2017 which was mainly due to lower total operating expenditure during the current quarter.


Table: TMCLife's last 8 quarterly results


Graph: TMCLife's last 30 quarterly results

Financial Position

TMCLife's financial position is deemed healthy with current ratio at 5.4 times and gearing ratio is lower at only 0.1 time.

Valuation

TMCLife (closed at RM0.73 yesterday) is now trading at a PE of 46 times (based on annualized EPS of 1.6 sen). Based on PER, TMCLife is deemed overvalued.

Technical Outlook

TMCLife has been rising in a long-term uptrend line, SS up to June 2016. Since them, its uptrend has accelerated slightly to a new uptrend line, S1-S1. The support from the accelerated uptrend line is at RM0.73.


Chart: TMCLIfe's weekly chart as at Oct 29, 2018 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance, strong financial position and positive technical outlook, TMCLife could still a good stock for long-term investment. However, its valuation is deemed unattractive, which will cap its upside.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

KPJ: Tentative Signs of Earning Expansion

Result Update 

For QE30/6/2018, KPJ's net profit dropped 0.3% q-o-q but rose 32% y-o-y to RM42 million while revenue dropped 2.6% q-o-q but rose 1.1% y-o-y to RM801 million. Revenue rose y-o-y mainly contributed by the increase in number of patient episodes and complex cases per inpatient particularly for KPJ Rawang, KPJ Bandar Maharani and KPJ Pasir Gudang. Besides, increased activities at the support companies also contributed to the revenue growth. In current quarter, KPJ Perlis has commenced its operation on 17 May 2018.

Profit before zakat and tax has increased to RM62.0 million during this quarter, an increase of 26% from RM49.1 million in the same quarter in 2017, contributed by the cost optimisation initiatives by the hospitals mainly the new hospitals which were under gestation period.


Table: KPJ's last 8 quarterly results

KPJ's quarterly revenue has been on a steady uptrend for the past 10 years. Its earning has been flattish in the past 5-6 years due to expansion program which led to lower profit margin as higher administrative expenses were not fully absorbed by revenue from the newly hospitals opened. However profits & profit margins seem to be curving upward. If these trends persist, we may see a breakout in profits next few quarters.


Graph: KPJ's last 46 quarterly results

Valuation

KPJ (closed at RM1.14 yesterday) is now trading at a PE of 23.4 times (based on last 4 quarters' EPS of 4.87 sen). At this PER, KPJ is fully valued.

Technical Outlook

KPJ has been moving sideways for the past 5-6 years. If it can break above the red band between RM1.15-1.20, KPJ's uptrend will continue.


Chart 1: KPJ's monthly chart as at Aug 16, 2018 (Source: ShareInvestor.com)


Chart 2: KPJ's weekly chart as at Aug 16, 2018 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance and exposure to a growing consumer service sector, KPJ could be a good stock for long-term investment.

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

TMCLife: Earnings Continued to Rise

Background

TMCLife Sciences Bhd ("TMCLife') is essentially involved in the operation of the Tropicana Medical Centre, Kota Damansara, a 180-bedded medical centre that provides complete services for fertility, women & children health.


Source: hospitals-malaysia.org

Result Update

For QE30/11/2017, TMCLife's PBT rose 23% q-o-q or 36% y-o-y to RM8.3 million while revenue rose 6% q-o-q or 15% y-oy- to RM42 million. PBT rose q-o-q mainly due to higher revenue achieved and higher EBITDA margin 23% as compared to 20% in QE31/8/2017.


Table: TMCLife's last 9 quarterly results


Graph: TMCLife's last 9 quarterly results

Valuation

TMCLife (closed at RM0.84 yesterday) is now trading at a PE of 53 times (based on annualized EPS of 1.6 sen). Based on an earning CAGR of 58% last year, TMCLife's PEG ratio is marginally below 1x. That makes TMCLife a fairly attractive growth stock.

Technical Outlook

TMCLife is in a long-term uptrend line, SS with support at RM0.77. It peaked at RM0.99 in late 2016 and early 2017 and dropped back to test its uptrend line, SS in at RM0.73 in September 2017. With the share price below the 10-month SMA line and MACD below the MACD signal line, TMCLife share price may continue to drift lower.


Chart: TMCLIfe's monthly chart as at Jan 29, 2018 (Source: Malaysiastock.biz)

Conclusion

Based on improving financial performance, fairly attractive valuation for a growth stock and mildly positive technical outlook, TMCLife could still a good stock for long-term investment. Good entry will be below RM0.80.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

KPJ: 1-to-4 Share Split Goes Begging

Background

KPJ is the largest private hospital group in Malaysia, owing a total of 3000 beds which accounts for 23% of the 13,000 private hospital beds in the country. It’s the fifth-largest hospital operator based on market capitalisation in Asia Pacific behind IHH Healthcare Bhd, Apollo Hospitals Enterprise Ltd, Phoenix Healthcare Group Co Ltd and Fortis Healthcare Ltd.

KPJ currently operates 26 hospitals in Malaysia, two in Indonesia and one in Bangladesh and have more than 1,000 medical specialists on board. KPJ has allocated RM1 billion to add seven new hospitals in the country in the next 5 years. Two of the new hospitals will be built in Sarawak, three in Johor and one each in Perlis and the Klang Valley.

Recent Financial Performance 

For QE30/6/2017, KPJ's net profit dropped 16% q-o-q but rose 6% y-o-y to RM32 million while revenue dropped less than 1% q-o-q but rose 4% y-o-y to RM793 million. The drop in profits was caused by a slight drop in gross profit margin (from 30.2% to 29.9%) and increased administrative expenses (by RM10 million) which had more than offset the drop in net finance cost (by RM3 million) and increased share of results of associates (by RM0.6 million). (Note: KPJ's latest result was announced on August 24.)


Table: KPJ's last 8 quarterly results

KPJ's quarterly revenue has been on a steady uptrend for the past 10 years. Its earning has been flattish in the past 5-6 years due to expansion program which led to lower profit margin as higher administrative expenses were not fully absorbed by revenue from the newly hospitals opened.


Graph: KPJ's last 42 quarterly results

Latest Financial Position

As at 30/6/2017, KPJ's financial position is deemed average, with current ratio at 1.0x and total liabilities to total equity at 1.4x.

Proposed Corporate Exercise

In April, KPJ proposed to carry out a share split of 1-to-4 (here). Such a generous share split has caused many a stock to run amok. While we can see similar euphoria in KPJ-WB (see Chart 3 below), the response from KPJ was muted. The main reason is that steady selling by EPF. Strangely, EPF appears to have ceased its selling since early May (here). It's likely that EPF expects better prices ahead once the share split has been implemented. At that point, KPJ will be priced around the RM1.00 and that would make it an affordable stock for the general public; thus inviting speculative activity and higher prices.

Valuation

KPJ (closed at RM4.16 yesterday) is now trading at a PE of 29.5 times (based on last 4 quarters' EPS of 14.08 sen). At this PER, AEON KPJ is over-valued. (Note: IHH is now trading at a PER of about 31 times- based on annualized EPS of 19 sen).

Technical Outlook

KPJ has been moving sideways with a downward bias for the past 3 years. There is no sign that the sideways movement is about to change.


Chart 1: KPJ's monthly chart as at September 5, 2017 (Source: ShareInvestor.com)


Chart 2: KPJ's weekly chart as at September 5, 2017 (Source: ShareInvestor.com)

Chart 3: KPJ-WB's weekly chart as at September 5, 2017 (Source: ShareInvestor.com)

Conclusion

KPJ could be a good speculative stock for a short-term play. While the stock is a good stock for long-term investment, the continuous expansion program is a drag on its earning. This plus the fact that the stock is fully valued make KPJ an unexciting stock, except for one possible short-term play for the 1-to-4 share split.

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.