Dallah’s Q3 2019 profit beats expectations: Aljazira Cap

Dallah Healthcare Co.’s Q3 2019 net profit of SAR 26.6 million exceeded Aljazira Capital and analysts’ estimates of SAR 23.7 million and SAR 21.9 million, respectively.

“We believe the operations at Namar Hospital, which commenced in Q2 2018, continue to have an adverse impact on the company’s profit,” Aljazira Capital said in a recent earnings note.

“We believe it would take a couple of years for margins to increase as further capacity expansion would take effect by FY- 21,” it further added.

Key revenue growth drivers are increased capacity utilization at Namar Hospital and the new hospital opening at Al-Nakheel.

“Dallah needs to make prudent capital allocation decisions while executing its expansion plans due to a high net debt/EBITDA ratio of 3.5x,” the brokerage firm noted.

Aljazira Capital remained “Neutral” on Dallah, keeping the stock’s price target unchanged at SAR 54.20.