JOHANNESBURG – One way of getting good returns on the JSE is to buy shares of solid but battered companies with the potential to recover their profitability. In February the share price of Mediclinic dropped below R55 to levels of seven years ago, and ever since hovers around just above this level. Almost impossible to believe it traded above R200 in 2016.
Mediclinic has had its fair share of bad luck, with regulatory changes in foreign jurisdictions. Not to speak of local developments, with National Health Insurance threatening the future of private hospitals in South Africa.
Whether this will materialise is another question, since the three JSE-listed hospitals – Netcare, Mediclinic and Life Healthcare – contribute an estimated R55 billion per annum to the gross domestic product.
Last month The Hospital Association of South Africa, which represents the private hospital sector, presented its views on the risks to the economy to Business Unity South Africa, with the potential loss of at least 100 000 jobs if implemented.
Mediclinic has diversified its business very well over the last few years, and Southern Africa now only contributes 30 percent of total revenue, with Switzerland and the Middle East contributing 47 percent and 22 percent respectively. Mediclinic Southern Africa operates 48 hospitals and four day clinics throughout South Africa and three hospitals in Namibia with more than 8 100 inpatient beds in total.