Al-Rajhi Capital affirmed its long-term positive view of the Saudi healthcare sector, expecting a 3-fold increase in insurance penetration and an improvement in the accounts receivable cycle, expecting that the capacity of the sector will record a compound annual growth rate of 10% during 2022-2025, while revenues are expected to grow and net income at a compound annual growth rate of 13.7% and 21.7%, respectively.
NCB Capital expects the sector’s earnings to grow by 30% year-on-year in 2023, supported by strong performance across covered stocks, likely to increase the number of beds by 15% in 2023, while EBITDA margins are expected to expand from 25.3% in 2022. to 27.0% in 2025, adding that Dr. Sulaiman Al Habib Group is expected to record net income growth of 32% year on year in 2023, with increased patient turnout and margin improvement, and Mouwasat is expected to achieve net income of 771 million riyals for the year 2023 , supported by a high patient influx.
On the other hand, it is estimated that Al-Hammadi will achieve profits of 307 million riyals in 2023 (+26.2% on an annual basis) due to improved utilization and lower consumption expenses, expecting Dallah Company to record a net income of 328 million riyals for the year 2023 on improving efficiency and increasing the number of beds.
On the other hand, “Al-Ahly Capital” recommended neutrality for the shares of the 5 companies included in the coverage, with a target price of 256.4 riyals for Dr. Sulaiman Al-Habib Group, 225 riyals for Al-Mouwasat, 55.2 riyals for Al-Hammadi, 34 riyals for the German and 156.8 riyals for Dallah Health Company.
She added that although the outlook for the sector is positive, it is fully priced at current levels, noting that in general it prefers companies that have strong expansion plans, an appropriate mix of customers and a healthy cash cycle.
