KPJ eyes 10 new hospitals in next five years

KUALA LUMPUR: KPJ Healthcare Bhd expects to add another 10 hospitals worth RM1 billion to its current network of hospitals over the next five years.

KPJ managing director Amiruddin Abdul Satar said its 23 hospitals nationwide have more than 3,000 beds and with the additional 10 hospitals, there will be a further 1,500 beds.

He said the expansion will further cement KPJ’s position as a market leader with a share of 25% in the domestic private healthcare sector.

“The total of 10 projects will be worth RM1 billion. But each hospital will have a different value depending on the size and location,” he said after KPJ’s 12th Healthcare Conference yesterday.

Amiruddin said the development of the 10 hospitals, costing RM1 billion, will be funded with the proceeds from the rights and sukuk issuances.

KPJ had in July proposed a renounceable rights issue of up to 43.97 million new KPJ shares to raise between RM121.91 million and RM123.11 million.

It had intended to utilise part of the proceeds to be raised from the proposed rights issue to partly fund Phase 1 of the business expansion plan to construct a private specialist hospital in Bandar Dato’ Onn, Johor Baru.

KPJ has a cash balance of about RM284.4 million and a low net gearing of about 0.5 times as at June 30.

Amiruddin noted that three out of the 10 hospitals are located in Johor, two in the Klang Valley, two in Sarawak, and one each in Sabah, Perlis and Pahang.

“Each hospital will have an average of 150 beds, depending on the size and location of the hospital,” he said.  

Amiruddin pointed out that these hospitals will also offer about 5,000 job opportunities in the next five years, depending on the speed of development of the hospitals.

Amiruddin: The total of 10 projects will be worth RM1 billion.

He noted that the group will start off with 30 beds in a hospital, and it will take about three to five years to reach its full capacity.

Amiruddin highlighted that two out of the 10 hospitals will be developed in Johor Baru within the next two years, adding that the group will be spending a total of RM300 million on both projects.

KPJ is currently running three hospitals in Johor Baru. In the hope that the Iskandar economic zone will develop rapidly, Amiruddin expects the hospitals in Johor Baru to perform well.

KPJ has already started expanding its network, with the latest being the acquisition of the Sarawak-based BDC Specialist Hospital Sdn Bhd (BDCSH) announced just yesterday.

In a filing with Bursa Malaysia, the group said its wholly owned subsidiary Kumpulan Perubatan (Johor) Sdn Bhd (KPJSB) had entered into a conditional share sale agreement with Usaha Cendera Sdn Bhd for the purchase.

The proposed acquisition worth RM16.5 million will see BDCSH becoming a wholly owned subsidiary of KPJSB.

On KPJ’s overseas expansion, Amiruddin said the group has received various offers within Asean. But, the main priority will be its domestic operations.

He noted that current offers are requesting KPJ to manage their hospital, to seek advice or consultancy services, and some are also for sale.

“We still have many projects in Malaysia which require big investments so our focus and priority for growth is still in Malaysia,” Amiruddin said.

However, he said the group is looking at and is in talks to consider managing some overseas operations.

“We are only focusing on this region and are looking more towards management and operating rather than owning or acquiring,” he said.

The group currently has two hospitals overseas — one in Indonesia and another in Thailand.

Meanwhile, the group’s 51% stake in Australia-based Jeta Gardens is set to serve as a learning ground for the group in the aged-care sector.

Jeta Gardens is an Asian-themed retirement resort comprising apartments, aged-care facility and retirement homes.

“We are in the process of planning the care for the aged, and plan to launch next year in the Klang Valley,” Amiruddin said, adding that this is a special niche market that the group is looking to develop.

This article first appeared in The Edge Financial Daily, on November 07, 2013.


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