Related Articles
Top Stories
May 25 2012 13:58
The costs of the first phase of the Gauteng Freeway Improvement Project have increased significantly to almost R90bn, according to a report.
May 25 2012 19:13
Uncertainty over the future of the euro zone returned to push the rand down against the dollar.
May 24 2012 17:31
The Reserve Bank will maintain current interest rates, and a considerable reduction in the local petrol price is anticipated, says governor Gill Marcus.
Cape Town - Because of their defensive nature, health-related companies have performed reasonably well during the economic downturn.
Abdul Davids, head of research at Kagiso Asset Management, says health companies are dependent on government decisions about the industry - which in turn can affect their valuations.
There is currently no certainty as to when the national health insurance (NHI) system will realise and how it could affect companies.
In general, Medi-Clinic's market risk is lower, while Netcare, according to Davids, has better growth potential. Medi-Clinic is well diversified with its Swiss interests, in particular, that are doing well.
Netcare is also strong offshore because of its interests in the United Kingdom. This group's big balance-sheet debt is being discharged, which will improve revenue growth.
Davids reckons Netcare and Medi-Clinic are attractive at current levels.
Pharmaceutical groups with a strong focus on generic medicines like Cipla Medpro and Adcock will probably benefit from the NHI.
Among local companies Cipla has the best capacity to increase its production of generics, expanding its growth potential.
According to Davids, Cipla and Aspen's earnings-growth prospects indicate a possible doubling over the next two to three years.
He reckons that Cipla in particular has good potential from the perspective of dividends and capital growth.
- Fin24.com
For more business news in Afrikaans, got to Sake24.com.