KUALA LUMPUR (June 16): Private hospital operator KPJ Healthcare Bhd (KL:KPJ) has increased its inventory levels to mitigate potential supply disruptions arising from tensions in the Middle East, said president and managing director Chin Keat Chyuan.

Its inventory holding period has been extended to nearly 90 days, from 15 to 30 days previously, covering medical consumables, devices and pharmaceuticals sourced locally and globally.

However, rising costs have had minimal impact on the group’s operations and margins, Chin said. KPJ has a network of 30 hospitals nationwide, including Damansara Specialist Hospital.

“We continue to closely monitor the situation as an industry. Our network and centralised procurement system allow us to secure sufficient supplies at scale,” he told reporters after the group’s annual general meeting on Tuesday.

“In addition, our scale provides us with strong bargaining power, allowing us to stabilise pricing through centralised procurement. Much of our pricing had already been secured prior to the geopolitical tensions, which has helped us manage costs effectively and avoid significant inflation compared to others in the industry. Overall, this has placed KPJ in a stronger and more resilient position,” he added.

The US-Iran conflict, which began in late February, has driven up costs and disrupted global supply chains following the closure of the Strait of Hormuz. A peace agreement nears this week, which could pave the way for the reopening of the strategic waterway, although sentiment remains cautious.

No significant drop in Indonesian patients

For KPJ, margins could improve further in the coming quarter on higher patient volumes and aforementioned cost control through centralised procurement and operational efficiencies.

Separately, Chin said the group has not observed any significant decline in foreign patient volumes, despite a weakening Indonesian rupiah. Indonesia remains KPJ’s largest source of foreign patients, accounting for more than half of its international patient base.

Other markets include South Korea, Japan and China, he said.

“As of today, we have not seen anything significant. The numbers are still within normal fluctuations of about plus or minus 3%, largely due to seasonal factors,” said Chin.

He added that medical tourism “has gained strong momentum post-pandemic, as patients increasingly recognise that Malaysia offers treatment quality comparable to other countries at a more competitive cost, supported by its hospitality and overall patient experience”.

According to the Malaysia Healthcare Travel Council, the country’s healthcare travel revenue rose 23.2% to RM3.35 billion in 2025 from RM2.72 billion in 2024, while the number of medical tourists increased 15.6% to 1.85 million from 1.6 million previously.

Asked whether the 2027 roll-out of the diagnosis-related group (DRG) system — a fixed-fee, diagnosis-based hospital payment model — would affect the group’s largely domestic operations, Chin said it is still too early to determine the impact.

Malaysia’s medical inflation is expected to rise further this year, from about 15% in 2025.

KPJ’s net profit rose 22.1% to RM69.6 million from RM57.1 million a year earlier, driven by higher patient visits and surgeries, as well as stronger contributions from associates. Revenue increased 8.6% to RM1.05 billion from RM967 million, while its net profit margin expanded to 7.4% from 6.8%.

At the time of writing on Tuesday, shares of KPJ were two sen or 0.63% lower at RM3.16, giving the group a market capitalisation of RM14.3 billion.

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