National Medical Care Company (Care’s) net income of SAR 16.6 million is in line with Aljazira Capital’s estimate of SAR 15.8 million and above the consensus estimate of SAR 13.4 million, the brokerage firm said in an earnings review.
“Revenue exceeded our estimates due to higher than expected average revenue per bed. The GP margin expansion can be attributed to cost rationalization measures undertaken by the company,” Aljazira Capital added.
“The net income increase of 45.4 percent year-on-year (YoY) was driven by reduced operating costs (manpower, consumables and pharmaceuticals) and lower provision for credit losses. The reduced operating costs can be ascribed to cost rationalization measures undertaken by the company,” the brokerage firm said in the earnings note.
The brokerage firm however added that a high percentage of receivables from government and semi-government entities (66 percent of receivables in FY18) remain a major concern for the company.
Aljazira Capital maintained its recommendation of “neutral” on the stock with a target price of SAR 58.60 per share.
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