Netcare Limited (JSE: NTC) emerges from 2023 with a resilient financial stance, as highlighted in its annual report. After a dip of 14% earlier in the year, Netcare’s share price staged a fourth-quarter rebound, resulting in a modest 1.79% annual decline, buoyed by robust earnings.
The company’s 9.5% surge in Group revenue to ZAR 23,699 million, coupled with a substantial 17.7% growth in Group EBITDA, reflects a commendable operational performance. This positive trend extends to the bottom line, with adjusted headline earnings per share soaring to ZAR 1.06, marking a significant 27% increase from 2022. Noteworthy contributors to this success include a 6.7% rise in paid patient days, reaching 2,447,494, and a successful seven-year digitization program yielding R104 million in operating efficiencies.
Despite these achievements, challenges persisted, notably from pervasive power cuts, driving generator diesel costs to R124 million—three times higher than in 2022. As Netcare navigates these hurdles, the question looms: can the upbeat performance of 2023 pave the way for sustained success in 2024?
Netcare’s share price charts a compelling narrative as it rides the waves of an ascending channel pattern, currently trading above the 100-day moving average, signifying a discernible uptrend.
A recent test of the lower boundary within the channel saw resilient support establish itself at ZAR 13.53 per share after encountering initial downside pressures. However, the enthusiasm faced a cap as overbought RSI conditions prevailed, triggering a downturn. This left a notable resistance level at ZAR 14.77 per share. The breach below the 50% Fibonacci Retracement signals prevailing downside pressures, raising the stakes for potential further declines.
The pivotal juncture lies in the hands of the 61.80% Golden Ratio. A high-volume breakdown below this level could usher in intensified bearish forces, potentially prompting a retest of the ZAR 13.53 per share support. Conversely, if the Golden Ratio acts as a robust intermediate support, a reversal scenario comes into play, with the ZAR 14.77 per share level looming as a probable target.
Netcare’s robust earnings report underscores a resilient financial position, overcoming a share price dip and power-related challenges. The ascending channel pattern, though facing resistance, hints at an optimistic uptrend. The breach below the 50% Fibonacci Retracement signals caution, with the Golden Ratio pivotal for potential shifts.
Sources: Netcare Limited, Moneyweb, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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