Time to let go

Finweek English Edition - - MARKETPLACE - Editorial@fin­week.co.za

Net­care is South Africa’s sec­ond-big­gest pri­vate hospi­tal group, with op­er­a­tions in SA, the UK and a pub­lic-pri­vate part­ner­ship with the gov­ern­ment of Le­sotho, where it op­er­ates one hospi­tal in Maseru. Over­all, the group owns 113 hos­pi­tals, 13 218 hospi­tal beds, 93 pri­mary health­care fa­cil­i­ties/clin­ics and 87 re­tail phar­ma­cies.

Net­care’s growth in the South African seg­ment has been largely or­ganic, com­ple­mented by cost­con­trol mea­sures and greater ef­fi­cien­cies in the busi­ness. Its growth projects for SA in­clude four new day the­atres in Kim­ber­ley, Uping­ton, Cape Town and Richards Bay, as well as three new sub-acute fa­cil­i­ties in Cape Town, Hill­crest and Richards Bay.

In the UK, growth has been driven by an in­creased de­mand from pa­tients funded by the Na­tional Health Ser­vice (NHS), which off­set a de­cline in the num­ber of pri­vately in­sured and self-pay­ing pa­tients us­ing its fa­cil­i­ties. Even with the slug­gish economies in both coun­tries, de­mand for pri­vate health­care in SA has re­mained strong. The group re­ported a 15.4% in­crease in rev­enue to R18.8bn in the six months to end March, driven in part by the im­pact of the weaker rand against the pound. HEPS was up 10.9% to 90.3c, while the in­terim div­i­dend was main­tained at 38c a share. The share price was down more than 6% fol­low­ing the re­lease of the re­sults on 16 May. As a mat­ter of fact, Net­care’s share price has been slid­ing since March 2015. It re­bounded in De­cem­ber but lacked the thrust to es­cape bear­ish ter­ri­tory. Cur­rently ap­proach­ing sup­port at 3 290c/share, trad­ing through that level could trig­ger an­other sell-off to­wards 2 960c/share, and then pos­si­bly 2 620c/ share. Net­care would have to trade above 3 750c/share to end the long-term bear trend and com­mence a new bull trend, which could retest its all-time high at 4 440c/share. Fail­ing which, stay short.

Net­care Mil­park Hospi­tal in Jo­han­nes­burg

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