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New hospitals to post net profits within 3 to 5 years

SUBANG JAYA: Sime Darby Healthcare expects both its soon-to-open hospitals will post profit after tax within three to five years.

The group will open the 220-bed Sime Darby Medical Centre Ara Damansara in the next quarter while the 300-bed Sime Darby Medical Centre ParkCity will start seeing patients in early 2013.

In an interview with Business Times, managing director of the healthcare group Raja Azlan Shah Raja Azwa said that for a start, the hospital in Ara Damansara will operate 73 beds while the ParkCity hospital will start with 70 beds. Both hospitals will reach full capacity within five years from the openings.

In the same time span, these two hospitals are expected to help the healthcare division double revenue to RM600 million.

Revenue from the medical segment has been increasing steadily. It contributed RM282 million in 2010, compared to RM187 million five years ago in 2006. The bulk of its revenue comes from its Subang Jaya hospital.

Raja Azlan expects the healthcare division to contribute 2-3 per cent to its parent company Sime Darby Bhd in five years.

Return on investment for the RM140 million Ara Damansara hospital is expected to take the usual eight to 10 years. The Ara Damansara hospital was bought while the ParkCity hospital will be leased.

The two new hospitals were identified as part of the entry point projects (EPP) under the economic transformation programme.

The EPP targets to attract two million medical travellers to Malaysia by 2020. Sime Darby Healthcare hopes to be able to leverage on the publicity and the tax incentives.

Meanwhile, its education arm, which is under the healthcare division, expects to see revenue rise by 15-20 per cent. This division, which teaches nursing and allied healthcare, contributed about 12 per cent to Sime Darby Healthcare.