KPJ may see further upside

KPJ may see further upside: "Background

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.

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