Top UK Stocks: Mediclinic shares up as revenue surpasses pre-pandemic levels

Mediclinic sees patient activity recover from the pandemic, Pearson’s new educational app secures 2 million users, Rio Tinto cuts guidance amid a tight labour market, AstraZeneca hopeful of Imfinzi’s prospects treating liver cancer, and LandSec sees rent collection rates improve.

Mediclinic patient activity back at pre-pandemic levels

Mediclinic International said revenue grew in the first half of its financial year, with all three of its divisions now trading above pre-pandemic levels, while margins have improved.

The company, which runs private healthcare services in Switzerland, South Africa and in the Middle East, said revenue has grown 12% in the six months to the end of September from the £1.41 billion delivered last year, implying a figure of around £1.58 billion.

All three geographical segments are now trading above 2019 levels. With healthcare systems placed under strain during the pandemic, elective surgeries and treatments for other illnesses had to be delayed or put on the back burner – hitting companies like Mediclinic. However, with vaccination programmes rolling-out and restrictions easing, Mediclinic has seen a recovery in patient activity across the board this year.

‘Compared with pre-pandemic 1H20, revenue was up in all three divisions and 4% at the group, with Hirslanden and Mediclinic Middle East delivering volumes in excess of pre-pandemic levels,’ said Mediclinic.

Mediclinic also reported a significant recovery in its adjusted Ebitda margin of around 15.5% in the first half from just 12.1% last year. That is still below the 16.6% margin delivered in the first half of 2019 before the pandemic hit. It said Covid-19 is still adding costs to the business but that initiatives have been made across all three divisions to improve margins further.

Cash conversion also improved and came in around 100% during the first half, up from just 42% last year and in-line with its 90% to 100% target range. That helped push its cash balance up to around £770 million and lower its net debt down to around £2.2 billion at the end of September. That compares to the £661 million in cash and £2.39 billion of net debt it had a year ago.


Where next for Mediclinic shares?

The Mediclinic share price has been trading in a holding pattern since late August, capped on the upside by 320p and on the lower side by 300p. 

Today’s jump higher has taken the price to test the upper band at 320p. The RSI is supportive of further upside. 

Buyers will be looking for a close over 320p in order to attack 328p the August high and expose 350p the post pandemic high. 

On the flip side, 305p could offer strong support, the confluence of the 50 sma and the 100 sma on the daily chart. However, it would take a move below 300p for the sellers to gain traction towards 290p the August 4 high. 

Where next for Mediclinic shares?


Pearson profits to partly recover as education bounces back

Educational outfit Pearson said it still expects profits to start bouncing back from the pandemic this year after most of its new divisions reported growth over the last nine months.

The company said it remains on course to meet market expectations and deliver an adjusted operating profit of around £377.0 million in 2021. That would be an improvement from the £331.0 million delivered in 2020 but still below the £581.0 million booked in 2019 before the pandemic hit.

Pearson completely overhauled its organisational structure during the pandemic as the education sector shifted online.

It said there was 14% underlying growth in revenue from Virtual Learning, a 15% rise in English Language Learning, and a 24% jump from Assessment & Qualifications – all of which were hit hard by the eruption of the pandemic last year. Meanwhile, Workforce Skills reported 5% growth as businesses start hiring and training staff again.

The one drag was from Higher Education, down 7%, thanks to a decline in US courseware that was only partly offset by growth overseas.

Pearson also flagged the strong performance from its new US learning app Pearson+, which has already secured over 2 million users since being launched in late July.

Pearson is also continuing to restructure the business and said the next phase will focus on selling the ‘majority’ of its international courseware local publishing businesses.


Rio Tinto admits it can improve after ‘difficult quarter’

Rio Tinto cut its guidance for iron ore shipments this year after a tight labour market in Western Australia delayed the completion of new mines.

‘It has been another difficult quarter operationally and despite improving versus the prior quarter, we recognise the opportunity to raise our performance,’ said chief executive Jakob Stausholm.

The new greenfield mine at Gudai-Darri and the brownfield mine project at Robe Valley have both been hit by ‘modest delays’ because of a shortage in labour, which has prompted Rio Tinto to lower its expectations for the year for an array of commodities it produces.

It will now ship 320 to 325 million tonnes of iron ore from its core Pilbara operations, down from its original goal of 325 to 340 million tonnes.

That will be seen as a blow considering shipments had started to improve on a sequential basis in the third quarter, rising 9% quarter-on-quarter and 2% year-on-year to 83.4 million tonnes. Still, production suffered due to the project delays and other issues.

Rio Tinto also said its iron ore pellet and concentrate operation in Canada has also trimmed its guidance to 9.5 to 10.5 million tonnes from 10.5 to 12.0 million tonnes previously. Production of pellets and concentrate was down 20% from the previous quarter at 2.2 million tonnes in the latest quarter.

Elsewhere in the portfolio, Rio Tinto lowered its production guidance for bauxite and copper. It now expects to produce 500,000 tonnes of mined copper and 190,000 to 210,000 tonnes of refined copper. Previously, it was aiming to make up to 550,000 tonnes of mined copper and 250,000 tonnes of refined copper.


AstraZeneca: Imfinzi improves survival rate in liver cancer patients

AstraZeneca said Imfinzi significantly improved the overall survival rate in patients suffering from liver cancer when it was primed with a dose of tremelimumab.

A Phase III trial showed a single, high priming dose of tremelimumab added to Imfinzi demonstrated a ‘statistically significant and clinically meaningful overall survival benefit’ compared to those that were given sorafenib as a first-line treatment for patients with unresectable hepatocellular carcinoma.

Unresectable hepatocellular carcinoma is the most common type of liver cancer, which in turn is the leading cause of death from cancer and the sixth most-commonly diagnosed cancer worldwide. Around 900,000 people are diagnosed with HCC each year and only 7% of them go on to survive five years.

The company said the aim of the trial is to deliver a treatment that can ‘boost the patient's own immune system against their liver cancer, aiming to maximise long-term survival with minimal side effects.’

‘This is the first time a dual immunotherapy regimen has improved overall survival as a 1st-line treatment for patients with unresectable liver cancer for whom treatment options are limited and long-term outcomes are poor,’ added Susan Galbraith, the executive vice president of AstraZeneca’s oncology R&D.

AstraZeneca said the combination showed a favourable safety profile and did not result in any increase in severe hepatic toxicity.


LandSec sees rent collection improve as retail recovers

Land Securities Group said rent collection has improved across the board during September as businesses continue to bounce back from the pandemic.

The company said it has collected 85% of all rent due for the quarter to September 29, up from 81% at the same point in the previous quarter.

Rent collection from offices and urban mixed-use developments came in at 95% and 50%, respectively, both of which were flat from the June quarter. Collection rates from its sites across the rest of central London excluding offices improved to 80% from 71%, regional retail sites improved to 83% from 73%, and rates from its small division covering subscale sectors increased to 58% from 43%.


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