16 Jul 2013 07:54

KUALA LUMPUR, July 16 (Bernama) -- KPJ Healthcare Bhd's plan to enter the aged care business in the future, could translate into a long-term revenue generator for the company, says AmResearch.

The research house said although earnings contribution from its aged care business is still relatively small, the venture into retirement villages in Malaysia, could turn into a long-term revenue generator in this segment.

It was reported that KPJ Healthcare could potentially collaborate with property developers to launch the retirement villages, given that building such greenfield facilities is beyond its expertise.

The group is also looking at building facilities which consists of various types of properties, such as apartment units and villas, it said in a research note.

While studies are ongoing for the development of KPJ Healthcare's Malaysia retirement village, the facility would cater to both those who are highly dependant on medical personnel, and retirees who are independent and relatively healthy.

Towards that, the group has been proactively preparing itself for the aged care business, following the success of its acquisition of Australian-based Jeta Gardens 51 per cent stake acquisition in 2010.

Jeta Gardens is an Asian-themed retirement resort that houses an aged care facility, retirement homes and apartments in Queensland.

Underpinned by KPJ Healtcare's first mover advantage in this segment and supported by its "know-how" attained at Jeta Gardens, a planned Step Down Services Centre at the old Tawakkal Building here, is expected to be completed in financial year 2014.

This is subject to approval from the Health Ministry, while, a replica of Jeta Gardens in Bandar Dato Onn, is earmarked to open in financial year 2016.

"Our bullish conviction on KPJ Healthcare remains, thanks to its strong domestic foothold riding on the lucrative and booming local private healthcare sector, and its defensive earnings profile," AmResearch said.

Meanwhile, it highlighted that growth prospects for KPJ Healthcare remained favorable, with bed capacities expected to grow by 65 per cent over the next three years, driven by eight greenfield, four expansions and two acquisitions.

AmResearch also reaffirmed its "buy" recommendation on KPJ Healthcare with an unchanged fair value of RM8.00 per share.