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Pharos leaves Cleopatra Hospital's FV unchanged

Pharos leaves Cleopatra Hospital's FV unchanged
The management is still showing interest to expand inside Egypt - Photo Credit: Mubasher
Cleopatra Hospital
CLHO
-0.83% 7.21 -0.06

Mubasher: Pharos Research placed a 'Hold' recommendation on Cleopatra Hospital's stock, marinating the fair value (FV) at EGP 10.95 per share in spite of than estimates, according to a research note on Sunday.

The medical care provider earlier reported that net income after minority declined 13% year-on-year to EGP 26 million during the first half and 66% year-on-year to EGP 6.6 million in the second quarter of 2016.

This drop was due to due to EGP6 million in provisions for doubtful receivables and EGP6.4 million in staff redundancy cost savings, the research agency said, indicating,  "Excluding these one-offs, 2Q16 bottom line would have been broadly in line with 1Q16 figures of c.EGP20 million."

The first six-month consolidated revenues rose 163% year-over-year to EGP 411.5 million, after the integration of Al Shrouk Hospital, with inpatients and surgeries contributing a combined majority of 46% of total revenues.

Meanwhile, the second quarter's revenues were 3.9% lower due to reduced contributions from the outpatient clinics and laboratories segments, together registering a decline of 12.1% quarter-on-quarter in Q2.

"The largest contributor to group revenues was Cleopatra Hospital at (43%), followed by Cairo Specialized Hospital (21%), Nile Badrawi Hospital (18%) and Al Shorouk Hospital (17%)", the research firm pointed out.

The management is still showing interest to expand inside Egypt through the acquisition of existing players or establishing new ones.

The company stated in a press release "the appointment of a regional investment bank to advise on the potential acquisition by the Group of an additional 47% stake in Cairo Specialized Hospital (CSH) – an existing subsidiary of the Cleopatra."

In September 2015, Cleopatra acquired a 53% stake in CSH in September 2015.

Therefore, "We maintain our FV of EGP10.95 with a Hold recommendation", Pharos concluded.