Bupa Arabia likely to capture the market, expand topline, says Falcom

Bupa Arabia for Cooperative Insurance Co. is expected to capture the market and expand its top line, with its strong presence in the Kingdom, Falcom Financial Services said in a note.

Bupa reported a 12.8 percent increase year-on-year (YoY) in net profit before zakat to SAR 245 million in Q3 2018.  The profit rise was driven by an increase in net earned premium and a drop in operating expenses, including provision for doubtful receivables.

Also, investment income rose 39.5 percent YoY to SAR 48 million in Q3 2018.

Bupa Arabia’s strong performance was underpinned by an increase in the market share and expansion of its customer base, Falcom added.

However, Saudi Ministry of Health recently cancelled contracts with Bupa Arabia owing to complicated procedures for customers and delayed settlement of financial liabilities.

Bupa also suspended its insurance coverage services for the bodies affiliated or owned by the Health ministry.

"We expect the cancellation of the contract from the Saudi Ministry of Health and continuous departure of expatriates from the country to affect the company’s top line in the coming quarters." Falcom noted.

Falcom maintained a ‘Neutral’ rating on the stock, and revised the stock's target price upward, with a fair value of SAR 74.2.