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Shares in NMC Health are almost 5% to the good, leading the UK 100 blue-chip index, after announcing the formation of a joint venture (in which it will have a majority stake and operational control) with Hassana Investment Co. to create new private healthcare platform. Nothing drastically different to the group’s strategy of incremental and acquisitive growth. Except that this helps further extend a 2016 move into Saudi Arabia (built upon in 2017), a rather significant geography for growth, especially as it modernises under MBS, for a health group focused on the Middle East but predominantly present in the Emirates.
Furthermore, it keeps the shares in the top 5 for 2018 UK 100 performance +24%. This is important because its steady incremental growth has helped the shares post impressive historical performance since its March 2012 IPO, with gains of circa 85% in 2015, 2016 and 2017 (we wrote about this in late May). With the shares up by 37-50% by this stage of the year in 2016 and 2017, they are a little behind schedule so far this year: +24%. That said, both 2016 and 2017 saw strong UK Index gains (+14% and +7.6%, respectively) and the UK Index is merely +0.4% YTD for 2018. Even more importantly the shares still grew almost 83% in 2015 (+70% by this stage of the year) even though the UK Index fell by 4.9%.
Even if the shares are off their best levels of the 2018 (+32.1% on 25 May), they remain close to the highs. And there is potential for further incremental growth opportunities, such as that announced today, to help the shares emulate the stellar capital growth of years gone by. No guarantees, but with the shares back firmly in a 2.5yr rising channel, after a brief early June wobble, the odds are looking healthy.
Mike van Dulken, Head of Research, 11 Jun 2018
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
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