Cleopatra Hospital Co. [CLHO] announced yesterday its Q3 2020 KPIs. Management expects to generate solid revenues in Q3 2020 with projected growth of c.15% y/y and around 50% q/q on recovered patient volumes, mainly in August and September. Margins are expected to return to historical average levels and net profit to grow on both quarterly and yearly basis.
Based on management guidance, we calculate that Q3 2020 revenues will likely hover around EGP531mn with GPM settling at 34.1% (vs. 36.1% in Q3 2019 and 28.3% in Q2 2020) in view of revenue growth and wide-ranging cost control and reduction efforts. We also estimate Q3 2020 net profit to come in around EGP89mn (+28% y/y, +381% q/q), implying a net margin of 16.8% (vs. 15.0% a year earlier and 5.4% in Q2 2020). This implies that 9M 2020 revenues will likely be in the vicinity of EGP1.4bn (+7% y/y) with GPM returning to its 5-year average historical levels of 32.6% (vs.35.1% a year earlier).
As for 2020 full-year, revenues could reach EGP1.9bn (+6%y/y), with GPM of 33% (vs.34.8% in 2019), filtering through to a net profit of c.EGP279mn (+8% y/y). This implies a 2020 P/E ratio of 29x, which is an exceptional year in view of COVID-19 impact. Historically, CLHO succeeded to record a 4-year CAGR (2015-2019) of 45% in its top line, reaching EGP1.8bn in 2019, while earnings grew by 40% over the same period to EGP257mn.