Al Hammadi’s Q1 profit in line with estimates, says Albilad Cap

Al Hammadi Company for Development and Investment’s (Al Hammadi) net profit of SAR 28 million in the first quarter of this year came in-line with Albilad Capital’s estimate of SAR 27 million and consensus estimate of SAR 28 million.

Net profit in Q1 jumped 32 percent year-on-year (YoY) driven by higher revenues. This was, in part, due to the 53-day shutdown of Al Olaya Hospital due to a fire in Q1 2016. On a quarterly basis, the profit rose 160 percent thanks to decrease in the doubtful debt provision as the company had provisioned around SAR 20 million for Q4-16.

Total revenues in Q1 rose 25 percent YoY to SAR 180 million compared to SAR 144 million a year earlier, while it declined by 1 percent QoQ.

Gross profit margin shrank to 34.4 percent from 37.9 percent last year, and the operating profit for Q1-2017 hit SAR 35 million compared to SAR 28 million in Q1 2016.

“We believe Al Hammadi will continue to achieve a good growth rate in the coming years, especially with the launch of Al Nuzha Hospital which will significantly boost the overall operating capacity of Al Hammadi Hospitals, in addition to higher demand for medical services,” the review noted.

However, the brokerage expected Al Hammadi to be negatively impacted by the removal of subsidies in electricity and water.

The brokerage revised its rating on the stock to “Neutral” and maintained a target price of SAR 41 per share.