HOSPITAL GROUPS
No sign of recovery
Results from the local hospital groups were all bleak as elective surgeries, the main source of income, are still under pressure due to the pandemic. I have long not liked the hospital sector, owing to the risk of regulation due to price increases well ahead of inflation over the last decade, and I see no reason to change this view. All three listed hospital groups, namely Mediclinic, Life Healthcare and Netcare, are trading at multi-year lows with share prices back where they were ten years ago. But over that period all three have also had disastrous ventures offshore with Mediclinic the last to pull the plug. Mediclinic received an offer for its 29.9% stake in Spire Health at £2.40 per share. Mediclinic has agreed to take the offer and will receive a net £287.7m after they paid £432m for the stake in 2015. The market liked the deal, even as it is a large loss. But I continue to stay away from this part of the healthcare sector.
CASHBUILD
Acquisition vetoed
The deal whereby Cashbuild would buy The Building Company from Pepkor has seen the Competition Commission recommend the deal be prohibited on 28 May. This is a major setback for both parties, but likely more so for Pepkor. Cashbuild has a strong footprint even as The Building Company would have added several new provinces. This was a large deal, and my view is that they seldom deliver on the promised synergies, so shareholders are probably better off.
Earnings jump
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