Yesterday KPJ has announced on Bursa Malaysia that it had entered into a JV agreement with Yayasan Islam Perlis (YIPs) to set up a 60:40 JV company, which will subsequently take on the development of a new specialist hospital in Kangar, the capital of Perlis state.
Maintain BUY. We maintain our BUY recommendation on KPJ with an unchanged FV of RM5.37 based on 19.6x PER against FY12 EPS. Despite the significant upward PER rerating over the last few years, we remain positive on KPJ’s growth story in a defensive sector. Despite the recent changes in key management following the resignation of its CFO, we are confident that KPJ would still execute its expansion strategy as it is supported by a strong management team. We believe the potential listing of Pantai-Parkway presents a short term upward rerating for the sector as well as KPJ’s share price.
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