Mouwasat’s Q4 misses estimates as margins narrow: Al Rajhi Cap

Mouwasat Medical Services Co.’s net profit of SAR 85.2 million for Q4 2018 came below Al Rajhi Capital's estimates of SAR 115 million, the brokerage said in an earnings report.

Revenue declined 4 percent year-on-year to SAR 414 million, missing the brokerage's estimates of SAR 502 million. 

Additionally, gross and operating margin narrowed to 39 percent (49 percent in Q4 2017) and 23.8 percent (25 percent in Q4 2017), respectively in Q4, due to employee and other expenses related to Khobar Hospital.

Al Rajhi Capital maintained the "overweight" rating on the stock, revising the target price to SAR 83 a share.

"We expect top-line growth to pick up in the coming quarters due to improvement in utilization rate at Khobar hospital following its contract with Aramco," the report said.

The brokerage expects improvement in profitability, on the back of further utilisation ramp-up at Riyadh Hospital and Jubail as well as the opening of hospitals in Madinah and Yanbu.