KUALA LUMPUR : PublicInvest is reducing KPJ Healthcare Bhd's net profit forecast for the 2013 to 2015 financial years by 11 per cent to 23 per cent to account for higher losses to be incurred by new hospitals coming on board. "We have also adjusted our target price to account for the recent bonus issue and rights issue with free warrants, resulting in a lower target price of RM3.38 (from RM4 ex-all previously) based on 30 times the price earnings ratio of 2014 financial year. "It is imperative for the group to rationalise operations and manage its ballooning administrative costs," said PublicInvest. KPJ Rawang Specialist Hospital is scheduled to be opened next month while Muar Specialist Hospital is expected to commence operations in the second quarter of this year. The management is cautiously optimistic of these two hospitals' ability to achieve break-even level faster than its blighted KPJ Bandar Baru Klang Hospital , due to a lack of competitors and ready catchment area. Meanwhile, its Sabah Medical Centre began operations at the end of last year after a one-year delay. This resulted in additional costs in the 2013 financial year. PublicInvest maintains "neutral" call on KPJ with a lower target price of RM3.38 .
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