Riyadh – Mubasher: Al Rajhi Capital said that Mouwasat Medical Services Company’s expansion plans will ensure high growth rates by mid-2020; however, during the next few years, the company’s growth is expected to slow down from the current 20%.

The research firm highlighted that the company’s improvement in margins was limited by the higher costs related to expansion at the Jubail hospital, which started operations in May 2016.

Moreover, Al Rajhi believes that the 100-bed expansion of the Jubail hospital had contributed to the growth of revenues.

Mouwasat has two hospitals under construction (Khobar and Dammam), which are expected to be completed in 2019 and 2020, and another one planned in Madinah, Al Rajhi said.

Al Rajhi Capital maintained its “Neutral” recommendation on the company, with a price target (PT) of SAR 149.

The stock currently trades at an earnings per share (EPS) of 24x for 2017, Al Rajhi Capital added.

Mouwasat had reported a 12.6% increase in its profits for the first quarter of 2017 to reach SAR 85.1 million compared to SAR 75.6 million in the year-ago period.