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Shifa: A Healthy Investment for your Portfolio

Name: Shifa International Hospital Ltd (SHFA)

Market Capitalization: PKR 15.99 billion

Price: PKR 258/share (July 7, 2020)

52 Week Range: 172 - 350

P/E: 11.98

Div. Yield: 1%


Company Profile


Shifa International Hospital is a 550 bed tertiary care hospital in Islamabad offering comprehensive diagnostic facilities, outpatient clinics and inpatient services in 35+ medical & surgical specialties. It covers the national footprint and outreach with a network of lab collection points, pharmacies & medical centers including a 40+ bed hospital in Faisalabad


Strengths

  • International Finance Corporation (IFC) equity investment of USD $12 million at approximately PKR 230/share

  • 15% revenue growth and 6% earnings growth (Q3 2019 YTD vs. Q3 2018 YTD)

  • Expansion of operations leading to significant increase in future earnings (Shifa Islamabad expansion: Shifa Faisalabad: Shifa Neurosciences)

  • Monopolistic market share in Islamabad private health space (best in class)

  • Health Care is a non-discretionary expense that is largely resistant to an economic recession

  • As of Q3 2019, share price was declining yet revenue and profit were trending upwards. It should be noted this was a period of overall market collapse.

Risks

  • A relatively high debt load could be problematic in a high rate interest environment.

  • Introduction of a new entrant in Islamabad's health space



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