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Mediclinic News : Mediclinic shares climb after strong mideast showing

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Mediclinic shares climb after strong mideast showing

Date

2018-04-19

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News Description

BUSINESS REPORT The share price of healthcare services group Mediclinic International climbed by 6.33 percent following a positive a trading update in which the company forecast better than expected results, with a significant second half improvement from the Middle East division. The group said it had managed to turn around its Abu Dhabi division and was laying a foundation for long-term sustainable performance. The regulatory problems, which have since been resolved in the Middle East, affected its bottom line in last year's results. Mediclinic shares gained 7.42 percent on the 1SE yesterday to close at R114.70. Chief executive Danie Meintjes said the Middle East division was now entering an expansionary phase that the company expected would drive a strong increase in revenue and improvement in margins over time. "In Abu Dhabi, the growth will be driven by an improved operating performance in the existing business and strategic expansion projects at the Mediclinic Airport Road, Mediclinic Al Noor and the new Mediclinic Western Region hospitals," Meintjes said. In Dubai, the group also expected the ongoing performance of the existing business would be supported by significant growth from the new 182bed Mediclinic Parkview Hospital. "This development project has progressed ahead of schedule and we now expect the hospital to open in October 2018, some six months earlier than previously communicated," he added. The overall group revenue for the year to end March is expected to be up about 2 percent and adjusted earnings before interest, tax, depreciation and amortisation Ebitda to be flat as compared to last year. However, after the translation effect of foreign currency movements, revenue is expected to be up about 4 percent at £2.9 billion R49.86bn, from last year's £2.7bn, while adjusted Ebitda is expected to be up about 3 percent. Adjusted earnings per share, impacted by the equity accounted share of reported profit after tax from Spire, is expected to be broadly flat on the prior year of 29.8 pence a share. Mediclinic is listed on the London Stock Exchange and the JSE. In Southern Africa, the group said its performance was also ahead of expectations, with revenue anticipated to increase by about 5 percent to R15.1bn, up from R14.4bn a year ago, with inpatient bed days decreasing by about 1.5 percent and revenue per bed day increasing by about 6.7 percent. In Swizerland, Hirslanden expected to deliver revenue growth of about 1.8 percent to 1.7bn Swiss francs R21.19bn. The group said its performance was impacted by the timing of the Easter period, a subdued summer market, the continued change in insurance mix and the evolving changes in the regulatory environment. In the Middle East, after reaching an inflection point, second half revenue was expected to grow by about 6 percent, while the year revenue was expected to increase by almost 1 percent to 3.1bn United Arab Emirates dinars (R10.13bn). The division was expected to deliver an improved Ebitda margin of about 12.5 percent for the year following a strong second half operational performance. Bright Khumalo, an analyst at Vestact, said this was a good update and it was great to see the Middle East assets stabilising and turning around. "This puts the group in a much better position for the next financial year and we see the momentum continuing from here. The market seems to agree, as shares are up sharply," Khumalo said. "Great cost control in the South African business as margins are expected to be stable at home, even though management had come to some regulatory hurdles in Switzerland, their tone was positive and they indicated they would be adaptive to the new regulation. So going forward the margins should stabilise as well," he said.
Created at 2018/04/26 10:06 AM by Mediclinic
Last modified at 2018/04/26 10:06 AM by Mediclinic