Raise TP on improved operating metrics

Research evidence excerpt

Global Markets Research

KPJ Healthcare KPJH.KL KPJ MK

19 August 2026

EQUITY: HEALTH CARE & PHARMACEUTICALS

Raise TP on improved operating metrics

Rating

Remains

We expect weak bed expansion in 2H26F but margins

should improve h-h on cost control, high revenue intensity

Target price

Increased from

MYR 3.50

MYR 3.60

Action: 2Q26 ahead of expectations on strong operational performance

KPJ’s 2Q26 results were stronger than our and Bloomberg consensus expectations with

revenue rising 17% y-y and net profit rising 27% y-y on the back of improved operating metrics

(Fig. 1 ) (see our 18 August report – Strong beat in 2Q as operational metrics improve ).

Closing price

18 August 2026

MYR 3.02

Implied upside

+19.2%

Key highlights from 2Q26 results briefing

The Bed occupancy rate (BOR) rose 6pp y-y to 68% in 2Q26 on the back of KPJ’s

transformation initiatives and marketing activities. According to management, 1) QTD3Q26

BOR remains strong; 2) the target to spend MYR5bn in capex over the next five years

remains, for brownfield expansion, medical technology for its centers of excellence (COE)

and IT investments. Any M&A expenses would be above this; 3) bed count would increase

to 4,200 by end-FY26E. In our view, this target is stretched given current bed growth has

been flat y-y at 3,930, and we expect it to expand to 4,050 by end-FY26F; 4) all 5 new

hospitals are EBITDA positive with DSH2 (Damansara Specialist Hospital 2) and Kuala

Selangor expected to join Batu Pahat and be profitable by end-FY26E or early FY27E; 5)

FY28E EBITDA target of 28% (FY25: 24%) is unchanged. This is higher than our forecast of

~25% in FY28F as we factor in the impact of capacity expansion; 6) all its hospitals are

expected to take part in the government’s MediAsas insurance programme from 2027E. We

expect this to boost BOR but have a negative impact on hospital margins; and medical

tourism revenues grew 21% y-y in 2Q, accounting for 6.5% of the company’s total revenue.

Market Cap (USD mn)

Valuation: Maintain Buy; raise TP to MYR3.60 (implying 19% upside)

We raise FY26F/FY27F revenue by 2%/2% as we believe the higher bed occupancy rate

…