Saudi hospital sector appears stabilized, growth likely to return: BofAML

Saudi Arabia’s hospital sector stabilized in Q2 2019 with revenues up for a second quarter though EBITDA remained flat, Bank of America Merrill Lynch’s (BofAML) has noted in a report.

“Q2 2019A demonstrated the listed private hospital sector as a whole has stabilized, with sector revenues growing year-on-year (YoY) for the second quarter in a row and EBITDA flat, versus previous declines. The number of insured seems to have been broadly stable year to date,” the report maintained.

BofAML said absent any further structural changes, net income for most companies seems likely to return to net income growth within the next two quarters.

“Even if we do not expect a sharp rebound in market volumes, we believe it is still possible for the listed groups to grow even in a static market, albeit more slowly than previously,” it added.

BofAML said the number of expats, and total insured seems broadly stable year to date, suggesting the worst may have passed.

Taking market share by adding new services or targeting different demographics seems the only way growth can be achieved in the short-term, BofAML said, adding that sector multiple should be supported by return to growth.