Business Overview
NMC Health Plc (LON: NMC) was incorporated in the year 1975 and is the largest private healthcare company in the UAE. It provides healthcare services internationally with the U.A.E (United Arab Emirates) and Spain being the major markets.

Recent News
On 17th January 2020, NMC Health announced the retention of Louis Freeh. Louis Freeh is former FBI Director and Federal Judge. Mr Freeh’s firm FGIS (Freeh Group International Solutions LLC) will examine the allegations raised by Muddy Waters on 17th December 2019 and will compile a report for the same. In response to the allegations by Muddy Waters Research, the company stated all the accusations are misleading, containing many errors of fact, baseless and appear principally unfounded.

Capital Markets Day Update
On 21st October 2019, NMC Health announced decent performance in the second half of the financial year 2019, while the full-year guidance was restated. The company’s strategy is offering a substantial advantage in all the main markets in which it operates. The company expected double-digit growth in top-line and the bottom-line performance in FY2020. In the financial year 2019, the company’s top line is expected in the range of US$2,500-US$2,540 million at Post-IFRS 16 and Pre-IFRS 16 basis. The net income to equity holders for the financial year 2019 expected to be in the range of US$297-US$305 million at Post-IFRS 16 (US$320-US$330 million at Pre-IFRS 16 basis). The net debt to EBITDA would be below 3.4 times in the financial year 2019. The company is expecting robust double-digit organic revenue and EBITDA growth in FY2020. The aforementioned facilities are anticipated to contribute towards the revenue of US$45-US$55 million in 2020 and, as a result of being in the initial ramp-up phase, it estimated a US$18-20 million of loss at the EBITDA level from new projects (post-IFRS 16) in 2020. Growth capex is expected at US$90-US$100 million, while maintenance capex is expected to be around 3 per cent of revenues for the year.

Share Price Performance

Daily Chart as on 7^thFebruary 2020, before the market closed (Source: Thomson Reuters)



On February 7^th, 2020, NMC Health Plc shares were trading at GBX 898.4 at the time of writing before the market close (at 8:02 AM GMT), down by 0.2 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 3,059/GBX 850.40. The stock price has givennegative 65.41 per cent returns during the previous year. In the last one month the stock price has given negative 28.43 per cent returns. And, now some pull back relief rally is expected.

Valuation Methodology

*Peers: MD Medical Group Investments Plc, Caretech Holdings Plc and Aspen Pharmacare Holdings Ltd

Conclusion
The company expected a favourable performance in the second half of the financial year 2019. Consequently, the financial year 2020 is expected to deliver double-digit growth in the top line and bottom line. The company’s management is expected to open four new hospitals: two in Oman and two in the UAE. These facilities would improve the total capacity of up to 380 beds. At the end of 2019, the company has opened a ten-bed cosmetics hospital in Dubai. The company is expected to reduce the debt in H2 FY2019. In the last months, the company’s share price has declined about per cent due to some allegations by the third parties. However, the Group’s strong fundamentals are intact, and this could be a decentopportunity to invest in this share at current beaten down market price.

Based on the decent growth prospects and the valuation done using the above method, we have given a “Buy” recommendation at the current price of GBX 861 (as on 7th February 2020 before the market close at 8:18 AM GMT) with lower double-digit upside potential based on 8.77x NTM Price/Earnings (approx.) on FY19E earnings per share (approx.).
 
*All forecasted figures and information have been taken from Thomson Reuters.        
                                                     
*Currency exchange rate taken for 1 US Dollar = 0.77 GBP.

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