Estia Health Limited

EHE Details
· Volatile Environment: Estia Health Limited (ASX: EHE) stock fell over 3.3% on December 08, 2016 owing to the diverse market sentiments on aged-care sector. The sector is said to be a highly regulated one and the government intends to attach subsidies to the consumer instead of the aged care provider. Further, government funds three-quarters of revenue for the sector and any change would impact the group’s performance. On the other hand, Credit Suisse Holdings (Australia) Limited became an initial substantial holder on December 02, 2016, and gained a voting power of 5.04% in terms of interests. Recently, the group commented on the media speculation on certain elements of its outstanding net debt balances. Net debt balance was $265.6 million as at 30 November 2016 against $254.7 million as at 31 October 2016. EHE advised that the November balance is after payment of final dividend in respect of FY16. The group otherwise re-confirmed its FY17 underlying EBITDA guidance of $86m-$90m.

· Recommendation: EHE stock has fallen over 46.5% in the last six months (as of December 07, 2016) and rose 4.15% in last five days. Given the volatile environment, we give an “Expensive” recommendation at the current price of – $ 2.67

FY16 Performance (Source: Company Reports)

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