Mouwasat’s Q3 results exceed expectations: Aljazira Capital

Mouwasat Medical Services Co.’s third quarter (Q3) results of SAR 93.0 million (SAR 0.93 EPS), came above its and consensus estimate of SAR 84.8 million and SAR 90.7 million respectively, Aljazira Capital said in a research note.

The brokerage firm added that the increase was driven by expansion of operation of the sub-specialties clinics and addition of new specialized department.

“Mouwasat’s overall results exceeded our expectations. GP Margin and Operating profit were higher than our estimates, which resulted in higher net income,” the note said.

“We expect the company to continue the positive momentum witnessed in Q3 2019 into Q4 2019, and tweak our FY-2019 EPS estimate to SAR 3.82 from SAR 3.74 earlier. We believe a gradual increase in capacity would enable Mouwasat to capitalize on demand for additional beds,” the brokerage firm said.

The brokerage further said that the majority of the company’s patients are Saudi nationals. “Hence, the company faces minimal impact of the reduction of expats.”

“The key challenge for the company would be to increase its utilization rate and maintain its GP margin, as other private companies also have expansion plans,” the brokerage firm added.

The brokerage firm maintained its “Overweight” recommendation with a target price of SAR 100.33 per share.