KEY THEMES
Alameda Healthcare announced its plan to invest an additional EGP5bn in the next five years, nearly doubling its investments in Egypt’s health care market, which amounts to c.EGP5bn. Additionally, Alameda announced the imminent addition of 100 beds at As-Salam International Hospital in Maadi as well as the inauguration of the group’s fourth facility, As-Salam International Hospital in New Cairo with a total capacity of 150 beds in the coming few weeks.
This announcement, which comes post the failure of the acquisition talks between Alameda and Cleopatra Hospitals Group (CHG) [CLHO], should draw attention to the rewarding opportunities and weak penetration rate of Egypt’s private health care market.
We note that the year 2021 should witness stupendous recovery for the sector, following notably weak volumes recognized in 2020. We believe the base effect should serve as a tailwind for CLHO’s stock price with an improved earnings outlook leading to a 2021e P/E of only 18x, almost half CLHO’s historical 3-year average P/E of 35x.