Al Hammadi Q2 profit strong despite hospital closure: Al Rajhi Cap

Al Hammadi Company for Development and Investment’s second-quarter net profit of SAR 20.9 million (down 43.3 percent YoY), beat Al Rajhi Capital’s forecasts of SAR 10 million, but came below consensus estimate of SAR 24 million, the brokerage firm said in an earnings review.

The profit drop is attributed mainly to the closure of its main hospital at Al Olaya, higher depreciation and interest expenses due to the opening of the Al Suweidi branch.

However, despite Olaya hospital remaining closed for the entire period of Q2 2016, the company reported a top-line growth of 1 percent YoY, Al Rajhi Capital said.

“This is positive as it implies that within 11 months of start of Al Suweidhi Hospital, its revenue has bettered that of Olaya hospital’s revenue. We believe this is partly because Olaya hospital’s staff is working in Al Suweidhi.”

Al Rajhi Capital has maintained its ‘overweight’ rating on Al Hammadi with a target price of SAR 50 per share, pending a review after the release of the financial details.