KPJ Healthcare Bhd (KPJ) has received positive updates from analysts, with both RHB Investment Bank Bhd (RHB Research) and MIDF Amanah Investment Bank Bhd (MIDF Research) maintaining BUY calls on the company. RHB Research has raised its target price to RM3, offering a 29% upside, while MIDF Research maintained a target price of RM2.54, reflecting a 9% expected return.

KPJ recently reported a strong performance in 3Q24, with a 29% year-on-year (YoY) increase in core earnings to RM86 million, which contributed to a total of RM211 million for the first nine months of 2024, accounting for 74% and 73% of RHB Research and street's full-year estimates, respectively.

The company's highest-ever revenue of RM1.003 billion in 3Q24, up 14% from the previous year, was driven by robust patient traffic and an improved patient case mix. As a result, the core profit surged by 29%, and an interim dividend of 1.15 sen per share was declared, up from 0.8 sen in 3Q23.

As per the analysts' analysis on the operational front, KPJ saw increased patient visits, with outpatient visits rising by 2% and inpatient visits increasing by 7% year-on-year, bringing the total patient visits to 887,665 in 3Q24. The company's bed occupancy rate also improved by 6 percentage points quarter-on-quarter to 72%, as the number of operational beds rose by 42% to 3,787.

MIDF Research's analysis highlighted that KPJ's 9MFY24 revenue increased by 14.5% YoY to RM2.9 billion, with normalised earnings growing by 34.8% to RM247.3 million. The increase in patient visits and higher bed capacity were key contributors to this positive performance. Despite a decline in revenue from other business segments, including the divestment of its Australian operations in early 2024, KPJ's fundamentals remain strong. The Malaysian government's allocation of RM45.3 billion to the Ministry of Health in Budget 2025 is also expected to support the growth of the healthcare sector.

Analysts from both RHB Research and MIDF Research are optimistic about KPJ's outlook, noting the company's strategic expansion of its bed capacity and talent acquisition initiatives. While competition in the healthcare sector and cost pressures remain key risks, analysts believed KPJ is well-positioned to maintain its positive trajectory.