Why did Ramsay Health Care (RHC) shares rally?
RHC +7.27%: Opened down this morning before they did a good job putting some more ‘meat on the bones’ of today’s 1H24 update, while they talked about the potential to realise value across their various business units, rolling out the private equity playbook which certainly worked on the share price, trading up to 6-month highs – a nice way to wrap up the official interim results period.
The result itself showed a lot of improvement, particularly in the UK/Euro business which has been a real struggle while the Australian business remained solid. Total revenue of $8.16bn was up +11% (5% constant currency) which was ~3% ahead of consensus, driving Net Profit After Tax (NPAT) of $135.5m – when we strip out the benefit ($618.1m) on the sale of Sime Darby, profit was broadly inline with consensus. The dividend of 40cps fully franked was a touch ahead.
- While conditions remain a challenge with pressure on margins still obvious, and they said recovery would be slower, there were clear signs that RHC is now on a stronger footing.
- Market positioning was negative going into this update, very concerned about the potential for another downgrade, and that didn’t materialise.
If the UK/Europe continues to improve, analysts will get more comfortable and price the earnings accordingly, we could then see the start of an upgrade cycle – here’s hoping for more positive trends to play out!
