Japara Healthcare Ltd

JHC Details

Japara Healthcare Ltd (ASX: JHC) has bought four new land purchases in FY17 and built 445 new greenfield beds in the anticipation. During H1FY17, JHC had reported a revenue growth of 14.5% year on year (yoy) to $178.5 million while EBITDA grew by 3.6% yoy to $29.1 million. However, it has witnessed a decline of 9.9% yoy in net profit after tax to $14.6 million, impacted by Profke portfolio due to occupancy issues, while reported an overall average occupancy at 94.4% with focus on high quality resident care and innovation in service delivery.  Further, the company’ projects are progressing well and the group has delivered four brownfield facilities during H1FY17 and four additional land sites secured in optimal metropolitan locations. With this, land has been secured for 10 of 11 greenfield projects which are targeted to provide over 1,100 places by FY20 to cater to the growing demand from Australia’s ageing population. The company is expected to release its FY17 results to on Monday 28 August 2017. Given the sector’s high dependency on government funding and recent regulation changes on Aged Care Funding Instruments, we maintain an “Expensive” recommendation on the stock at the current price of $2.02


JHC Daily chart; (Source: Company reports)

Ramsay Health Care Limited

RHC Details

Responded to ACCC Coffs Harbour Allegations: Ramsay Health Care (ASX:RHS) has taken its obligations under the Competition and Consumer Law seriously and worked cooperatively with the ACCC during its investigation into a matter in Coffs Harbour. Earlier, its Australian chief executive was accused of threatening doctors after they moved to set up a competing clinic. Thereafter, the Australian Competition and Consumer Commission launched federal court action against Ramsay claiming that it had threatened local surgeons at Coffs Harbour, who were considering opening their own clinic. It also claims that the company's Australian chief executive, Daniel Sims, was personally involved in warning at least one doctor not to be involved in the clinic or risk a backlash. Ramsay operates the only private hospital and private day surgery facilities in the Coffs Harbour region, and local specialists use those operating theatres to perform surgical procedures on private patients.

Recently, Ramsay Health Care had appointed its Chief Operating Officer, Craig McNally as the Company’s new Managing Director and Chief Executive Officer, succeeding Chris Rex. Mr McNally’s appointment commenced from 3 July 2017, following seven years with Ramsay as Chief Operating Officer and 22 years prior to this in various roles across the Company, including Head of Global Strategy and European Operations. Mr McNally is one of Ramsay’s longest serving Executives having commenced with the Company in 1988. He was initially employed as a Hospital Executive in Ramsay’s Sydney-based mental health facility, before taking over divisional responsibility for acute medical and surgical hospitals in the early nineties.

Given the rising ageing population, the group is well positioned to invest in capacity expansion as it has over £19.8 million worth of developments underway. On the other hand, RHC has upgraded guidance of core NPAT and core EPS growth to 12% to 14% for full FY 2017 (previously 10% to 12%) in view of strong first half results and the continuation of robust growth across all operations.We maintain a “Hold” recommendation on the stock at the current market price of $71.97


RHC Daily chart; (Source: Company reports)

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