KUALA LUMPUR (Sept 9): KPJ Healthcare Bhd’s (KL:KPJ) expansion plan remains on track despite the abrupt departure of its managing director, analysts said.
While the selection process for a new MD is ongoing, the leadership vacancy is not expected to have a material impact on its earnings or prospects, Kenanga Investment Bank said in a note on Wednesday.
“We like KPJ for the bright prospects of the private healthcare sector in Malaysia, underpinned by rising affluence and ageing population, the low ‘price elasticity of demand’ for healthcare service, making players less vulnerable to high inflation as they could pass on the higher cost, and its strong market position locally with the largest network of 30 private hospitals,” said Kenanga.
Former president and MD Chin Keat Chyuan stepped down on Sept 1 to pursue other interests, with chief medical director Professor Datuk Dr Hanafiah Harunarashid assuming the role of officer in charge pending the appointment of a successor.
The announcement of Chin’s resignation on Aug 21 triggered a sharp sell-off in KPJ shares, which have since fallen more than 15%.
Chin had previously outlined KPJ’s RM5 billion growth strategy, which includes brownfield expansion targeting an additional 2,200 beds by 2030, establishing 15 Centres of Excellence (COEs) by the same year to drive patient volumes.
Other initiatives are improving operational efficiency through better inventory management and leveraging economies of scale as the CoE network expands.
The group also plans to expand its healthcare tourism business by strengthening clinical capabilities across its hospitals and tapping emerging markets such as Cambodia.
Analysts who attended KPJ’s recent briefing said the group has not set a timeline for appointing a new MD.
Despite Chin’s resignation, RHB kept its “buy” rating as KPJ is trading at attractive levels underpinned by its MediAsas differentiation.
“However, we advocate for investors to accumulate patiently, and view any further clarity on the group’s new chief appointment as a near-term re-rating catalyst”.
Hong Leong Investment Bank likewise viewed KPJ’s recent share price weakness as an opportunity to accumulate, noting that the stock is trading at 12.8 times FY2027 EV/Ebitda — a significant discount to the roughly 20 times valuation multiples seen in past private hospital transactions.
It added KPJ’s fundamentals remain intact and are supported by structural tailwinds such as an ageing population, rising prevalence of non-communicable diseases (NCDs) and growing preference for private healthcare.
Shares of KPJ rose eight sen or 3.07% at RM2.69 at the time of writing on Wednesday, giving it a market capitalisation of RM12.18 billion.