Lanka Hospitals Corporation Plc (LHCL)
Posted on the July 22nd, 2011 under Analysts View by Taprobane Securities 
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Company Profile
Apollo Hospitals has been re launched as Lanka Hospitals. While they aim to expand service portfolio, assure all stakeholders of commitment to offering benchmark healthcare services to patients.
Specialties
Lanka Hospitals brings to the heart of Sri Lanka a world class healthcare experience. A comprehensive range of medical services are offered by highly qualified specialists using the latest medical technology, in exclusively designed interiors.
Financial Performance
Revenue had increased by 30.64% from Rs.681.73 Mn in Q1 FY 2010 to Rs.890.59 Mn at the end of Q1 FY 2011. Net profit has significantly increased by 81.21% from Rs.35.99 Mn in Q1 FY 2010 to Rs.65.21 Mn at the end of Q1 FY 2011. Based on interim financial results as at 31 March 2011, we expect the company to reach Rs.4.44 Bn Revenue and Rs.345.02 Mn Profit after tax by the end of 31st December 2012.
The PE has increased from 30.1 times in Q1 FY 2010 to 35.2 times at the end of Q1 FY 2011. The current PE of 35.2 times is above the industry average of 25.5 times. This suggests that the stock is trading above its industry price. The cash inflow is positive as at the end of 31st March 2011 at Rs.403.09 Mn. Quick or the acid test ratio has increased from 1.1 times on 31st March 2010 to 1.7 times at the end of 31st March 2011. A measure of 1.7:1 means that the company is able to meet existing liabilities if they all fall due at once. Net Asset per share has increased from Rs.7.04 on 31st March 2010 to Rs.12.49 at the end of 31st March 2011. PBV has increased from 2.7 times to 3.3 times for the same period above. The current PBV of 3.3 times is higher than the industry average of 2.2 times.
Prospective valuations and recommendation
LHCL’s share price has increased from Rs.19.25 on 31st March 2010 to Rs.40.80 at the end of 31st March 2011. Currently trades around Rs.37.30.
EPS was Rs.0.16 on 31st March 2010 and this has improved to Rs.0.29 at the end of 31st March 2011. Q1 FY 2010 to Q1 FY 2011 The EPS is an improvement on the prior year by 81.25%. If the company maintains this performance, we expect it to achieve an EPS to be Rs.1.54 by the end of 31st December 2012. Drop in revenue was caused due to the change of ownership and change of the balance sheet date in 2009. Valuations and assumptions are calculated based on the 31st March 2011 PE ratio, EPS,PBV,NAV while taking into account the performance based on last three years audited financial statements of the company as of 31st March.
