Time to let go
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