MLP Care: Robust even in a recession (stays BUY)

Updating our MLP Care (MPARK) model to reflect our current macro outlook and the company’s FX-debt hedging, we maintain our BUY recommendation, with a new price target (PT) of TRY 15.6/share (from TRY 19.1), or upside of 21%. While healthcare is a defensive sector, private healthcare in Turkey is not recession proof, as we saw in 2009. So, assuming the country faces an economic slowdown for the next couple years, we have lowered our expectations for 2019-21E domestic hospital revenues by c.11% (a CAGR of c.12% vs. c.17% previously), but see this being almost wholly offset by growth in medical tourism and ancillary services (e.g., university hospital management fees), both of which should be largely unaffected by domestic spending power. In addition, MPARK’s exposure to SSI patients would be, in a downturn, a real competitive advantage vs. other self-pay only players, helping it to sustain higher bed utilisation rates. We also like that MPARK is addressing its FX debt exposure, which, while not cheap, should smooth out the financial expenses going forward and swing the business into a net profit from 4Q18-onwards, on our estimates.