MLP Care: Premium healthcare at a discount valuation (BUY - initiation of coverage)
We initiate coverage of MLP Care, Turkey’s largest private hospital group, with a BUY recommendation and a 12M price target (PT) of TRY 19.1/share, or upside of 33%. Trading at a 2018E EV/EBITDA of 8.2x, the stock is a heavily discounted play – the cheapest healthcare stock in our EMEA universe – on the regional demand for premium healthcare, including medical tourism. We expect MLP to deliver a 2018-22E revenue CAGR of 16.9%, driven by organic new bed expansion, focused on the mid- and high-end, co-pay collecting segment of the healthcare market. Our 2018-22E EBITDA CAGR forecast of 18.6% reflects the improving operating leverage, the transition to profitability on the bottom line thanks to the deleveraging of the business post-IPO, and the strong FCF generation (2018-22E CAGR of 16.6%). Reducing the gearing to 2.1x (end-1Q18) from the peak of 5.1x in 2015 and the refinancing of the FX debt for TRY (which has begun and is ongoing) address two major concerns facing any Turkish growth story, in our view. As investors’ confidence in this grows, we believe that MLP, an established franchise in the region’s largest healthcare market, should be rewarded with a multiples rerating.MLP Saglik Hizmetleri AS, formerly Medical Park Saglik Hizmetleri AS, is a Turkey-based company engaged in the healthcare sector. The Company operates more than 20 hospitals in more than 10 provinces in Turkey. The Company's medical departments include: Mouth and Dental Health, Brain and Nerve Surgery, Biochemistry, Dermatology, Child Health and Diseases, Physical Therapy and Rehabilitation, Hematology, Check-up, Eye Health and Diseases, Gastroenterology, Cardiac Surgery, Ear-Nose-Throat, Cardiology, Gynecology and Obstetrics, as well as Laboratory Services, among others. The Company's subsidiaries are: Medical Park Gaziantep Hastanesi, Samsun Medikal Grup Ozel Saglik Hizmetleri AS and Sentez Saglik Hizmetleri AS, among others.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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