One of the stocks that we have regularly followed is healthcare group RH Bophelo which aims to be a meaningful player in the hospital and healthcare resource development sectors.
RH Bophelo originally came to the JSE as a Special Purpose Acquisition Company (SPAC) and has subsequently conducted a number of transactions to help develop its portfolio.
In June 2019, RH Bophelo released a set of full-year financial results suggesting that the company was beginning to bed down a number of its transactions. It’s challenge remains that the RH Bophelo share price remains hard to interpret as the shares are tightly held and trade in the counter is very illiquid.
The company share price is up 22% year to date but should be seen in the context of an illiquid share.
On its previous year earnings, the company trades on a price to earnings multiple of around 26 times earnings. The company has a market capitalization of around R560m.
Key highlights from the full year results for the end of February 2019 are:
– RHB recorded an increase of 161% in operating profit to R21,2 million as compared to the prior year of R8 119 325,
which comprised of a gain in the valuation of investments, the interests earned from funds held in the money market, less administrative and operational expenses;
– The total revenue increased by 99% in the current year to R41,3 million as compared to the prior year of R20,8 million;
– The operating expenses reported for this period increased by 9% to R13,2 million, when compared to the prior year of R12,1 million;
– Basic earnings per share and headline earnings per share increased by 63% to 41,5 cents when compared to the prior year of 24,7 cents;
– RHB recorded a 15% increase in the fair value of its investments;
– The net asset value of the Company increased by 7% to R530 million, when compared to the prior year of R495,9 million
Of interest to long-term investors will be the fact that the company had R373m in cash available to deploy into other assets at the end of the financial year. Part of this was deployed in March to acquire the assets of the Netcare Bell Street hospital with the transaction split as below:
- 6 million for the Bell’s assets; and
- 6 million for the Bell Property.
The share continues to be illiquid with no meaningful sized tranches on the market. The only share dealing which has conducted since the release of the financial results is CEO Quinton Zunga buying 100 shares at R11/share.
There has been no noticeable increase in search activity related to Google Trends in terms of the RH Bophelo company phrase.
Under the leadership of CEO Quinton Zunga, Vuyokazi Nomvalo (Transaction Executive) and CFO Dion Mhlaba, the company continues to execute on its strategy of identifying core assets and building its portfolio.