Middle East Healthcare Co. (MEAHCO), which operates the Saudi German Hospitals brand, is expected to report a net profit of SAR 108.1 million for the first quarter of 2017, a year-on-year (YoY) improvement of 2.8 percent, Arbah Capital said in a preview.
“We believe reasonable bed utilization rate, estimated at a level of 67 percent, expansion plans and improved patient traffic to support earnings of the company,” the asset manager said.
Revenue is set to grow 6 percent YoY to SAR 446.8 million, supported by the newly-opened Hail hospital and general increase in patient traffic.
Net profit margin is seen to dip slightly to 24.2 percent for Q1-17, compared to 25 percent in the year ago-period.
Meanwhile, the piling up of receivables is the major concern for the company, Arbah Capital said.
MEAHCO’s receivables reached an all-time high of SAR 1.4 billion in Q3-16. However, it came down by the end of FY-16 to SAR 1.1 billion. “We expect this declining trend to continue during the foreseeable future.”
Arbah Capital has revised the fair value of MEAHCO to SAR 81.5 per share with a ‘neutral’ recommendation.
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