AlJazira Cap says Care’s Q4 2020 profit beats estimates, maintains ‘Overweight’ rating

National Medical Care Co.’s (Care) Q4 2020 net profit of SAR 22 million exceeded AlJazira Capital and consensus estimates of SAR 19.9 million and SAR 20.3 million, respectively.

Better cost control, absorption of costs on the higher margin cash and Ministry of Health (MoH) segments aided in gross profit margin expansion, AlJazira Capital said in a new report.

Revenue growth could moderate from the current levels, while margins are likely to remain relatively stable for 2021.

In the medium term, improvement in margins through cost control measures and revenue growth through capacity addition at Care National Hospital (CNH) are likely growth drivers.

A high percentage of receivables from government and semi-government entities remain a major concern, the brokerage noted.

Care is expected to achieve a net profit of SAR 99.5 million in 2021.

AlJazira Capital maintained its “Overweight” recommendation, keeping the target price at SAR 56.80 a share.

An overweight rating implies that the stock is currently trading at a discount to its 12 months price target. Stocks rated “Overweight” will typically provide an upside potential of over 10% from the current price levels over the next 12 months.