KUCHING: KPJ Healthcare Bhd (KPJ) recent-proposed acquisitions of two medical centres based in Sibu are part of the strategy to expand its services to new markets where private healthcare is in high demand.
On Wednesday, the company announced that it had entered into separate share sale agreements with relevant vendors to acquire Sibu Specialist Medical Centre and Sibu Geriatric Health & Nursing Centre Sdn Bhd (SGHNC) for RM26.9 million and RM1.24 million cash respectively.
KPJ would acquire the 100 per cent stake in Sibu Medical Centre Corporation Sdn Bhd (SMCC), comprising 6.62 million shares from 14 individuals for RM26.9 million cash. The company said the purchase would be financed from internally-generated funds and its subsidiaries and expected to complete the acquisition by the first half of this year.
For the record, SMCC owns and operates the private specialist hospital Sibu Specialist Medical Centre at Brooke Drive in Sibu. At the same location, SGHNC runs the Love Care Centre nursing and geriatric care centre.
TA Securities Holdings Bhd (TA Securities) in its research report pointed out that this move would enable KPJ to expand its network of hospitals and further divisify its earning base. It might post earnings dilution to the group on a short-
term basis due to its small earning base.
However, backed by years of experience and established systems, KPJ should be able to leverage on the units’ strengths and enjoy economies of scale from the acquisitions.
The research house pegged its target price at RM4.32 per share given the potential capital upside of 14.77 per cent and potential dividend yield of 3.3 per cent.