SHFA held its FY20 analyst briefing to discuss the hospital’s performance and expansion projects in the pipeline. To recall, SHFA reported unconsolidated FY20 NPAT of PKR505mn (EPS: PKR8.18), down 35%yoy (consolidated FY20 EPS: PKR0.01, vs. PKR13.73 SPLY), led by a sharp decline in revenues due to ban on OPD services in Islamabad during the Covid-19 pandemic. This significantly affected revenues from Shifa Medical Centre Islamabad.
Recent developments and expansion projects:
SHFA recently received JCI reaccreditation, where AKUH and Shaukat khanum are the only other two hospitals which have received the same. On upcoming expansions, SHFA has joined hands with Interloop Holdings to set up an ambulatory healthcare facility in Islamabad and a 250 bed tertiary care facility in Faisalabad under the name of Shifa National Hospital Faisalabad. SHFA has also recently acquired a facility where they expect to set up the Neuroscience Institute of Excellence and have opened a second neonatal floor in Faisalabad. SHFA recently received equity financing from IFC (5% of total issued share capital) to fund its project in Tanzania in 2019 – SBP approval is awaited on this front. SHFA has recently set up a wholly owned subsidiary in Dubai called Shifa International DWC LLC in order to re-route patients towards Pakistan which may enable them access much more affordable healthcare.
Key takeaways from the analyst briefing:
SHFA witnessed a PKKR1.37bn decrease in revenues in 4QFY20 due to the ban imposed on OPD patients in hospitals in Islamabad during peak Covid-19 pandemic. This resultantly reduced the number of diagnostics and other procedures leading to a sharp decline in cash flows and revenues. Transplant facilities remained most affected (liver transplant costs c. PKR4.8mn per patient) with associated businesses (MRI, CT) witnessing a sharp decline. Laboratory testing remained largely flat led by large influx during Covid-19. Renal failure cases, radiology and oncology patients remained steady. Inpatient services were mostly taken up by Covid-19 patients.
With the second Covid-19 wave underway, SHFA’s Covid-19 ward remains full. That said, the lift on the ban on OPD services in Islamabad has increased outpatient/inpatient numbers in addition to diagnostics & surgeries where SHFA posted unconsolidated revenue of PKR3.1bn in 1QFY21 vs. PKR3.2bn SPLY. Management does not anticipate such harsh measures to be imposed in the second wave and is actively monitoring the Covid-19 infection rate.
SHFA management anticipates assets to rise to PKR25bn from PKR15bn (as at June’20) as new projects come online
SHFA has altered its strategy for F11, having realized that a singular OPD facility will not survive during Covid-19 shutdowns and has included inpatient beds to this facility in order to sustain operations in the event of a second lockdown. SHFA expects the Neuroscience facility – construction of which is 50% complete and should come online by 2021.
(Intermarket Securities Limited)