How Mediclinic turned its declines around
Mediclinic’s share price recovered slightly after months of declines on poor performance in foreign territories.
The share price has been under pressure for the past 14 months but rose 0.65% to close at R110.78 on Wednesday, following the medium-term budget policy statement by Finance Minister Malusi Gigaba. By early evening, the rand had dipped to a 10-month low, losing 35c to almost R14.11 to the dollar.
An equity analyst at Gryphon Asset Management, Casparus Treurnicht, said while there was a series of events that had contributed to Mediclinic’s underperformance, he was expecting the share price to keep track of the rand’s weakness.
"It is starting to look like a better buy by the day," he said, although he cautioned that an assessment of the speech and where the rand was going would still be necessary.
The private healthcare provider had been in dire straits after the resignation of CEO Danie Meintjes and a disappointing performance from Spire Healthcare, which sent the share price down 18.6%.
An analyst at Mvunonala investments, Matthew Zunckel, said the big negatives were Switzerland and the Middle East. The Swiss business’s margin was under pressure due to mix changes and this was likely to be worsened by additional regulatory changes on pricing early next year. The Swiss operations contribute nearly half of Mediclinic revenue, the South African 28% and the Mideastern 24%.
The Middle East continued to disappoint, even against management’s conservative guidance. "I think any recovery in that business is going to take time to play out," Zunckel said.
Mediclinic rival Netcare firmed 0.79%, to R24.30.