Private hospital operator Ramsay Health Care Limited (ASX: RHC) held its annual general meeting (AGM) on Thursday and once again the company reminded investors just why it has been such an outstanding success.
With a total shareholder return (TSR) of 25.8% per annum since listing on the ASX in September 1997, there is little doubt as to the investment merits of this company.
Here are some of Ramsay's key attributes:
- 212 hospitals across five countries
- Employs 60,000 people
- Admits around 3 million patients per year
- Still expanding profits – the group managed to increase its earnings before interest, tax, depreciation, amortisation and rent (EBITDAR) margin from 18.2% to 19.2%
Here's why you could probably hold the stock forever
The global industry dynamics are incredibly favourable for the health care sector with the global population aged over 60 set to more than triple between now and 2050.
Ramsay holds an appealing mix of brownfield developments complemented by numerous greenfield developments and acquisition opportunities as well. There are 8 main brownfield projects due to complete in 2016 that will add around 450 beds across the group. Meanwhile, a significant merger in France has propelled the group to the position of leading private hospital operator in the country. Perhaps most exciting of all, however, is the greenfield opportunity in the form of China where Ramsay recently announced its entry into the region via a joint venture.
Core earnings per share in financial year 2015 grew 20% to 196.6 cents per share. For the current financial year, investors have been guided by the company to expect core EPS growth of between 12% and 14%.
With the stock trading at $64.38, representing a trailing P/E ratio of 32.7x, investors buying in today are certainly paying a hefty premium however, if you take a very long-term view, that premium could be justified.
