MediClin AG – Value Analysis (XETRA:MED) : December 26, 2017

Capitalcube gives MediClin AG a score of 69.

Our analysis is based on comparing MediClin AG with the following peers – Kindred Healthcare, Inc., RHON-KLINIKUM AG and Primary Health Properties PLC (LDJ-DE, RHK-DE and PHP-GB).

Investment Outlook

MediClin AG has a fundamental score of 69 and has a relative valuation of UNDERVALUED.

Fundamental Score

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Company Overview

  • Compared to peers, relative underperformance last month is down from a median performance last year.
  • It’s current Price/Book of 1.49 is about median in its peer group.
  • MED-DE‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • MED-DE has a successful operating model with relatively high net profit margins and asset turns.
  • Compared with its chosen peers, changes in the company’s annual earnings are better than the changes in its revenue, implying better than median cost control and/or some economies of scale.
  • Over the last five years, MED-DE‘s return on assets has improved from median to better than the median among its peers, suggesting the company has found relative operating advantages.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • While MED-DE‘s revenues growth has been below the peer median in the last few years, the market still gives the stock a P/E ratio that is around peer median and seems to see the company as a long-term strategic bet.
  • The company’s capital investment program suggests it is under-investing in a business that is producing peer median returns.
  • MED-DE has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

MED-DE has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 18.71% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 34.62%), and a well-cushioned interest coverage level of 8.23x, MED-DE can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • All 3 peers for the company have an outstanding debt balance.

MED-DE has maintained its Quick & Able profile from the recent year-end.

  • MED-DE‘s interest coverage is greater than (but within one standard deviation of) its five-year average interest coverage of 4.67x.
  • Though its interest coverage increased to 8.23x from 7.58x (in 2016), its peer median remained relatively stable during this period at 1.20x.
  • Interest coverage rose 0.83 points relative to peers. It is also above the 2.50x coverage benchmark unlike the peer median.
  • MED-DE‘s debt-EV is its lowest relative to the last five years and compares to a high of 30.35% in 2012.
  • Compared to 2016, debt-EV has remained relatively stable for both the company (18.71%) and the peer median (34.62%).

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Kindred Healthcare, Inc. 83.27 1.55 1.24 8.87
RHON-KLINIKUM AG 0.25 1.72 -2.56 1131.18
Primary Health Properties PLC 50.52 N/A 1.15 5.47
MEDICLIN AG 18.71 2.15 8.23 57.1
Peer Median 34.62 1.72 1.2 32.99
Best In Class 0.25 2.15 8.23 1131.18

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Company Profile

MediClin AG engages in the operation of hospitals, rehabilitation clinics, care homes, and medical centers. It operates through the following segments: Post-Acute, Acute, and Other Activities. The Post-Acute segment offers subsequent nursing and curative treatment services. The Acute segment focuses on neurology and neurological early rehabilitation, psychosomatic medicine, psychiatry, orthopedic, and internal medicine. The Other Activities segment refers to nursing care and service business area including software support, controlling activities, quality assurance, and other central services. The company was founded on September 12, 1996 and is headquartered in Offenburg, Germany.


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