A look at Saudi healthcare providers performance upon listing of Dr. Sulaiman Al Habib

Argaam conducted a study on the performance of Saudi healthcare services providers upon the listing of Dr. Sulaiman Al Habib Medical Services Group on the Saudi Stock Exchange (Tadawul) today, March 17, 2020.

The study showed that the sector’s total revenue amounted to SAR 11.32 billion in 2019. Dr. Sulaiman Al Habib Group contributed 44% to the sector’s total revenue. The group’s revenues hit SAR 5.03 billion by the end of 2019, up 10% year-on-year (YoY), on the back of increase in operating revenues.

Mouwasat Medical Services Co. came second, accounting for 16%, or SAR 1.86 billion of aggregate revenue. It was followed by the Saudi German Hospital (SGH) with 13%.

Moreover, Dallah Healthcare Co. accounted for 11% of the total sector’s revenues, ranking fourth, followed by Al Hammadi Company for Development and Investment and National Medical Care Co. (Care) with 9% and 6%, respectively.

The sector generated a gross profit of SAR 1.709 billion in 2019, to which Dr. Sulaiman Al Habib Group contributed 51%, with a net profit of SAR 870 million in 2019.

On the other hand, Mouwasat ranked second with 25%. It was followed by Dallah (9%), SGH (6%), Al Hammadi, and Care (5% each).

The six companies had a combined bed capacity of about 6,610 beds by the end of June 2019. Some of the listed companies are expected to add a new capacity of nearly 1,584 beds in the near future, including 1,180 beds for Dr. Sulaiman Al Habib.

*Expected to be added in the upcoming years

** Includes Abdul Jaleel Ibrahim Batterjee Sons Development Co. ltd, Beverly Clinics and Hail National HealthCare (32.33% stake)

In terms of dividend yields, Care and Dr. Sulaiman Al Habib Group topped peers as their cash dividend yields hit 5.3% and 4.6%, respectively in 2019. Dr. Sulaiman Al Habib paid a cash dividend of SAR 800 million, compared to a dividend of SAR 90 million by Care. Dallah came third with a 2.8% yield (SAR 90 million dividend) and Mouwasat with 2.6% yield (SAR 200 million dividend) in 2019.

The price-to-earnings ratio (P/E ratio) of the sector companies ranged between 18.5 and 24.5x, while average P/E stood at 20.4x, as per closing prices on Monday, March 16, 2020.

Dr. Sulaiman Al Habib Group traded at a P/E of 20.1x, according to the IPO price of SAR 50 per share, while Al Hammadi traded at the highest P/E ratio for the sector at 24.5x.

* IPO Price.

*Total loans and leasing obligations divided by shareholders equity.