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Spotty results, but Mediclinic might just be getting better


Spotty results, but Mediclinic might just be getting better

All three major hospital groups on the JSE have been ailing of late, but could be showing signs of a rebound

Giulietta Talevi

After three years of relentless selling that forced it out of the JSE’s top 40 index, hospital group Mediclinic appears to have found something of a bottom. Wednesday’s trading update was met with a 5.53% rally in the stock.
That’s notable because a mere 3.5% gain in full-year revenue and a 1.5% drop in earnings before interest tax depreciation and amortisation would not ordinarily cause a share to jump to such an extent.
However, steady (read flat) sales and profit are better, clearly, than falling revenue and earnings. Mediclinic has now met its own guidance for the year to end-March, with profit margins holding steady at about 21%.Mediclinic, at one point, appeared to be battling on all fronts except its Southern African division. But its Swiss operation Hirslanden is emerging intact from a period of major regulatory change; and the Middle East has steadied with margins there expected to move up to 14% for 2020, from its current 13%. Only its investment in UK group Spire healthcare continues to look sickly.
To be fair, all three major hospital groups on the JSE, Mediclinic, Life Healthcare and Netcare, have been thoroughly roughed up over the past three years, and all show signs of a rebound.
Mediclinic, however, is trading on a more palatable price:earnings ratio of 11 than Life, on 25.5, and Netcare, at a fairly breathtaking 49 times.

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