Two Investors Have Sold Shares Of NMC Health Plc Worth $493 Million, The Stock Has Slumped More Than 16%.

Two investors have sold shares of NMC Health Plc worth $493 million, the stock has slumped more than 16%.

As per an exchange filing made by the NMC Health Plc as on January 08, 2020, the group announced that two investors have sold 31.2 million existing ordinary shares in the company at a price of GBX 1,200/share worth $493 million on January 07, 2020.

The transaction was exercised by shareholders Saeed Al Qebaisi and Khaleefa Al Muhairi with the intention to reduce the indebtedness of their own and other corporate entities owned by them.

However, the price at which transaction was executed was approximately a 28% discount to the closing price of January 06, 2019, of GBX 1,671.50, which sent its stocks into a nosedive and were oscillating near its 52-week low price level of GXB 1,192 which the stock tested on December 20, 2019.

Stocks of NMC Health Plc were in trouble since a US-based short-selling company Muddy Waters raised red flag over the group’s asset values, cash balance, reported profit and debt levels as on December 17, 2019, and since then to date, the stock has tumbled more than 50% to GXB 1,283.16 at the time of writing as on January 08, 2020, at 12:13 PM GMT.

The day Muddy Waters targeted its shares for short selling, the stock plunged more than 32% in just a single day trade and losses extended for two straight days till December 20, 2019.

However, the group straightaway rebuffed all the allegations portrayed by the US-based short-selling firm and claimed it totally "false and misleading" and also stated that its stock price then did not reflect the true and fair value of the company.

But still, the stock is struggling near its 52-week low price level. However, the recent transaction exercised by the two shareholders of the group at GBX 1,200/share also diminish the company’s market value.

NMC Health Plc is a UAE-based large healthcare company in the private sector. Its stocks are listed and traded on the main market of the London Stock Exchange with the outstanding market capitalisation of £3.12 billion which ranks it among the large-cap companies listed and traded on the London Stock Exchange. Also, its shares are constituent stocks of the broader index of the UK, the FTSE 100 Index or Footsie. In the past 46 years, the group has earned the trust of millions of customers over individualized care, steadfast address of concerns and a genuine commitment to the speedy recovery of patients.

The group’s areas of operation divided into two segments; healthcare and distribution. The healthcare segment extends professional medical services and distribution and service segment is engaged in wholesale trading of pharmaceuticals goods, medical equipment, cosmetics and food.

During the first half of the financial year 2019 the group witnessed a revenue growth of 32.6% to $1,236.0 from $932.0m reported in the year-over period, with earnings before interest, tax, depreciation and amortization (EBITDA) surging 22.5% to $276.3m on pre-IFRS16 basis and EBITDA margin declined by 180bps to 22.4% on pre-IFRS16 basis. Also, during the H1FY19, the group reported record EBIDTA-to-Free Cash Flow conversion in its history.

Net Income attributed to the shareholders surged 29.6% to $151.0m from $116.5m reported in the same period of the corresponding financial year on the pre-IFRS16 basis and basic earnings per share (EPS) increased 29.1% to 0.72 US cents from 0.56 US cents reported in the H1FY18, respectively.

Also, in the same period under review, the group's net-debt-to-EBITDA improved from 3.4x at the end of H1FY18 to 2.7x at the end of H1FY19 on the pre-IFRS16 basis.

The group was benefited by strong performance in the core market of UAE and broader GCC expansion in the same period. Also, working capital cycles reduced substantially, which strengthened the group’s EBITDA-to-Free Cash Flow in H1FY19.


Stock Performance

Shares of NMC have delivered a negative price return of approximately 47% on a YoY basis, down about 16% on a YTD basis, plunged more than 40% in the past three months and declined about 40.93% in a month-over period and slumped more than 17% in the past five trading sessions, reflecting a severe downtrend in the stock.

Also, since the US-based Muddy Water launched a short-selling attack on its shares as on December 17, 2019, the stock ended 14 times lower, and 5-times higher against their respective previous closing levels in the past 19 trading session. Ups/Downs ratio for the past 19 trading days stood at 5/12 or 0.35x, which reflects that the prevailing trend in the stock is quite bearish.

In the preceding 52-week- period, its shares have registered a high of GBX 3,059 (as on September 11, 2019) and a low of GBX 1,192 (as on December 20, 2019). At the current trading level (as on January 08, 2020, at 02:15 PM GMT), its shares traded approximately 236 points or 16% lower against the previous closing level at GBX 1,258.50 and during the day's trading session, the stock has registered a day's high of GXB 1,294.50 and a day's low of GBX 1,200, respectively. Also, at the current trading level, its shares traded approximately 59% below its 52-week high level and 5% above its 52-week low price level.

From the technical standpoint, its shares traded steeply below its 5-day, 10-day, 20-day, 30-day, 50-day and 200-day simple moving average prices (SMAs), which is typically perceived to be a bearish trend in an underlying asset.

However, the group is confident about its future performance and the group categorically mentioned that the exercised price has nothing to do with the operations of the company.