One expensive Healthcare stock – Japara Healthcare Ltd

Japara Healthcare Ltd (ASX: JHC) is aiming to attain a better position in the industry in order to leverage the growing demand at the back of increase in ageing population. The Cumulative Average Growth Rate of government funding during the fiscal 2008 to 2015 period was 8.6% and the government funding has been expected to rise going forward as ACFA estimates $33bn of capital funding is required to meet growth and replace obsolete stock. The group has bought four new land purchases in FY17 and built 445 new greenfield beds in the anticipation. During H1FY17, JHC had reported a revenue growth of 14.5% year on year (yoy) to $178.5 million while EBITDA grew by 3.6% yoy to $29.1 million. However, it has witnessed a decline of 9.9% yoy in net profit after tax to $14.6 million, impacted by Profke portfolio due to occupancy issues, while reported an overall average occupancy at 94.4% with focus on high quality resident care and innovation in service delivery.  Further, the company’ projects are progressing well and the group has delivered four brownfield facilities during H1FY17 and four additional land sites secured in optimal metropolitan locations. With this, land has been secured for 10 of 11 greenfield projects which are targeted to provide over 1,100 places by FY20 to cater to the growing demand from Australia’s ageing population. Apart from this, company is commencing a $15 million refurbishment program and upgrading 13 facilities over the next two years, which is expected to provide progressive EBITDA uplift more than $4 million. While EBITDA is expected to grow at 7%-10% for FY17.   

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