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Monday, 30 August 2021

The Great 2021 Egyptian Earnings Recovery continues

Cleopatra sees another quarter of rapid growth: Cleopatra Hospitals Group (CHG) saw net earnings surge more than 6x to EGP 94.1 mn in 2Q2021, up from EGP 14 mn last year, according to the company’s latest earnings release (pdf). Bottom line growth was underpinned by a solid increase in revenues, which almost doubled to EGP 643.6 mn from EGP 340.2 mn in 2Q2020.

Top-line growth came on the back of a 72% y-o-y hike in case numbers, as well as “improving utilization rates, an increasingly optimised service mix, and the effective ramp up of the group’s newer revenue verticals,” the company said. Patients served and consolidated revenue both managed to edge up 2% on an already strong first quarter, despite the usual slowdown due to the Ramadan and Eid holidays. As in 1Q2021, CHG saw revenue from its established hospitals bolstered by its newer covid-19 services, outpatient pharmacy and diagnostics centers, and polyclinics, where revenues more than tripled y-o-y in the second quarter.

A covid rebound, and then some: Though the extent of the rebound is magnified by the large fall in income suffered during lockdown in 2Q2020, the second-quarter profits this year are well above the EGP 42.6 mn reported in the pre-covid era in 2Q2019, while revenues are almost 60% higher than in 2019.

Looking ahead: CHG is hoping to consolidate its first-half success into longer-term growth. The group wants to cement itself as the market leader in online and digitally-enhanced healthcare services under its digital transformation strategy, “a key area of focus for the Group and one which we are confident will be a main driver of sustainable growth,” CEO Ahmed Ezzeldin said. The firm is also planning for a post-covid future at its two designated coronavirus hospitals, Queens and El Katib. Otherwise, the focus will be on revenue diversification, quality enhancement, integration and expansion.

Whatever happened to the Alex Medical acquisition? A few months back, CHG was excited about its potential acquisition of Alexandria Medical Services, writing in its 1Q earnings release that the acquisition would see CHG “expand its geographic footprint into Egypt’s second-largest city while meeting the rising demand for high-quality healthcare in Alexandria.” After a protracted bidding war, Ezeldin says only that “we continue to assess potential opportunities to expand our geographic presence across our traditional Greater Cairo market and beyond.”


Orascom Construction net income almost tripled y-o-y in 2Q2021 as the company bounced back from a tough second quarter last year, according to its latest earnings release (pdf). The company reported a USD 26.5 mn profit for the April-June period this year, up from USD 9.5 mn last year, while revenues were up 9.8% to reach USD 868.4 mn

The covid recovery isn’t complete yet: Profits haven’t yet rebounded to their 2Q2019 levels, when the company earned USD 31.3 mn. Net income fell almost 70% during the second quarter last year as the covid lockdown and global disruption hit the company’s operations.

New awards increased 57% y-o-y in 2Q2021 to hit USD 1.1 bn, of which USD 350 mn stemmed from projects in Egypt and USD 790 mn were through US subsidiaries. New projects were led by a pickup in US business, particularly in the building of data centers, while new Egyptian business was concentrated in the water and industrial sectors. Consolidated backlog excluding the group’s 50% share in BESIX increased 8.8% y-o-y to USD 5.9 bn. Including BESIX, pro forma backlog increased 6% y-o-y to USD 8.4 bn as of end-June.

Income from subsidiaries, building materials, facilities management and infrastructure assets performed well for a second quarter, accounting for 22% of all first-half net income. “We are focused on growing this part of our business, which should continue to benefit from sustained demand for building materials coupled with our efforts to pursue new investments that provide us with recurring income,” said OC CEO Osama Bishai.

OC also generated positive operating cashflow in the second quarter, though not enough to compensate for the first quarter. “That said, we are on the right trajectory and are working diligently to conclude the year on a positive note,” Bishai said.

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