KUALA LUMPUR (Feb 20): CIMB Research said today it raised its KPJ Healthcare Bhd share target price to RM1.28 from RM1.27 after the hospital operator reported full-year core net profit which was in line with expectation.

In a note today, CIMB said KPJ's core net profit of RM182 million in financial year ended Dec 31, 2018 (FY18) made up 99.3% of CIMB's and 100% of Bloomberg consensus forecasts. At Bursa Malaysia today, KPJ shares fell one sen to RM1.07 with some two million units traded.

CIMB said: "We expect circa 7% earnings growth in FY19F, driven by the turnaround of its loss-making hospitals and ramp-up of new hospitals. Maintain add with a higher target price of RM1.28, still pegged to 2020F P/E of 28x, its 5-year historical mean."

"We remain positive on KPJ's plans to explore capex (capital expenditure)-light opportunities as this will reduce the need to fund heavy development expenditures, in line with its efforts to manage its finances. KPJ declared a DPS (dividend per share) of 0.5 sen/share, bringing total 2018 DPS to 2 sen/share (50% payout ratio), in line with our expectation. Potential re-rating catalysts include stronger private healthcare demand, and improved earnings," the research house said.