Key Insights:

  1. NARH’s 57%/233% YoY EBITDA/PAT growth surprised the street by 17%/24%.
  2. NARH demonstrated strong operating improvement across both domestic and Cayman Hospital (EBITDA grew 59% and 112% YoY respectively).
  3. Domestic EBITDA margin improved by 4ppt as 16% YoY patient growth drove operating leverage, especially in mature hospitals in South and East.
  4. Revenue/patient also held up due to: i) improving case mix (transplants); ii) scaling up of oncology; and iii) steady international patients.

Valuation and View: NARH’s RoCE improved from 9% in 2QFY19 to 18% in 2QFY20.

At 37x one-year forward PE, the stock price is reasonable given expected EPS CAGR of 72% over FY19-22 without any growth capex as operating and financial leverage play out.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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