KPJ: To Expand locally before going Abroad

KPJ Healthcare Bhd will cap future dividend payouts at maximum of RM 80mil of its net profit to allocate more cash for the repayment of its borrowings, executive director Aminudin Dawam said.

“Our dividend payouts have always been around 40%-50% of net profits, so our Board has advised us to put a cap in absolute terms of up to RM 80mil payout,” Aminudin said on the sidelines of the Invest Malaysia conference.

“Now we are paying about RM 70mil to RM 80mil a year and we will continue with this.“If our net profit is more than this, then it will still be capped at up to RM 80mil and the excess profit, which we are confident of growing, will be used to offset our debt,” he added.

The largest public-listed hospital group by bed-count in Malaysia said the employment of a high gearing strategy is to help it to grow further.

“This is how we expand and we have done this before. There have been some lean years too. For the last seven to eight years, dividends have been around 50% although there is no formal dividend policy by the company,” its general manager of investor relations Khairul Annuar Azizi said.

KPJ also plans to spend some RM 1.4bil in capital expenditure (CAPEX) within the next five years to increase its bed-count from 3,000 now.

“Our plan is to add another seven hospitals and these will add another 1,000 beds to the group. Meanwhile, some of our existing hospitals will expand their capacity and this will add another 500 beds,” Aminudin said.

The seven new hospitals will be located in Perlis, Johor, Sarawak, Negri Sembilan and Selangor.

“We are in the midst of an aggressive expansion in Malaysia and we don’t want to overstretch ourselves (abroad) at the moment,” he said.

Overseas expansion, if any, would be through brownfield acquisitions, with Indonesia being the main target market.

Total capex allocated for this year is RM350mil, he added.

On the weak ringgit, he said KPJ had to pass on the additional costs arising from higher prices of imported equipment to its patients.

“As a private profit-generating company, we have to do this but we also have economies of scale, so this amount is controlled. We are doing our best to be more efficient in other areas – in how we do business and in other processes,” he added.

/theSTAR 27-07-2017

Disclaimer: Views or opinions expressed are solely those of the Author and should be used with discretion. The Author shall not be held liable for any acts or omissions arising from the use of the information. The user will be personally liable for any damages or other liability arising hereof.

Post a Comment