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Thanks notout - I think we are closer than it might have first appeared.
My worry is that 14 weeks drifts into 14 months. We will make money on this, I have no doubt. but it looks further off than I could possibly have imagined.
Mediclinic are in an interesting position - on one hand any offer would need to be higher than the current SP might suggest because, I suspect, there are quite a few shares in sticky hands.
But, suppose they were to buy now and undertake restructuring and a transformation programme of some sort. Perhaps they could argue that the costs of that are part of the costs of the business .....and load some or all those onto the price the charge gvt. for the C-19 patients. A complex calculation. But not impossible that even if they paid relatively high by todays SP they could get what would amount to significant investment from gvt. the fact that the agreement with government could go on for a year or more would make that more likely. I would certainly like to think, as a minimum, the current Board were looking aggressively at what changes they could make now and have partially or fully paid for indirectly under the new agreement rather than having to dip into profits or loans.
Lets Try - Lets hope its only 14 weeks and not months for all our sakes...
I have a good holding here too and I am confident there is light at the end of the tunnel. One has to remember that if Mediclinic are still interested in taking full ownership of Spire there is probably not going to be a better opportunity as right now to have a go.
5.24% as of 18th March - they saw the writing on the wall and an opportunity?
Apologies - agreement is for 14 weeks, not 14 month! Doh!
Hi 100notout,
I sincerely hope i'm wrong and you're right because i am in quite deep here.
I agree it has been oversold and as such there will be some bounceback which we are seeing evidence of this morning. However, I will part company with you when you say ".... Worst case scenario here is that in the next few months they will break even....".
I respectfully disagree. that is, imo, the best possible scenario. The agreement is for a minimum of 14 months, and can be terminated only by gvt it would seem. Imperial College who are doing much of the modelling gvt is depending on has made it clear that C-19 will not be beaten until a vaccine is available and expert opinion puts that at a year or more away. Until then more casdes will be appearing and they will need to go somewhere......including SPI. These patients will be treated on a zero profit basis.
I do hope my comments weren't misinterpreted. I certainly do not think there is a risk to the business. However, I do feel that it is on a ventilator insofar as it's eventual emergence into profit is very likely, but not in any significant way for 12 to 18 months. During that time it will serve the public and NHS well, but as an investor it is, can we agree, an uninspiring option?
for £119k over ask just gone through
Lets try: The ones needing a ventilator here will be the shorts.
This has been oversold. Investors are very short sighted as the potential backlog of procedures will keep SPI at full capacity in the coming years. Worst case scenario here is that in the next few months they will break even. I bet most companies wish they were in a similar predicament.
.
could be even longer term, it is nice to see SPI are willing to help in times like time,and it is reflected in the SP.
Spire Healthcare Group PLC
SPI
62.67 GBX
+10.07 (19.15%)
Letstry,
Looking at Wuhan, they had temporary hospitals for between 30 and 50 days ...although they did create 16 of them ...so although Spire looks like they may make all 35 hospitals available, they "might" not all come on stream at once, and some "might" be handed back before others as the situation improves , post peak. The 14 weeks whilst agreed , "might" turn out to be the projected "worse-case" scenario...that of course, remains to be seen ....
"Reduction in NHS capacity could only increase demand for profitable elective procedures in the private sector. "
letstry,
I think given the circumstances that is a fantasy in the short term....because ethically I dont think you are "really" in a position to supply your resources for that non-urgent demand .
You have to hope/believe that under such circumstances there is a bit of assurance that, at a later moment, private hospitals who do in fact help out now, get more referrals from the NHS when the time is right...as yes, there will be a backlog of patients who have had their non-urgent operation cancelled for now....so..a benefit could well come a bit further down the timeline...a case of give and receive
I think the number of virus cases could peak relatively soon..the problem of course being that, that peak number will overwhelm the NHS ...but once peaked, then week by week afterwards the number of cases will slowly decline as the effects of "lockdowns" take effect...and you have been able to extract the infected cases out of the population, at large
As with most businesses right now, you should forget the next quarter and take a view over a minimum of a half year ..minimum...most people seem to think profits should be immediate with this shareholding lark....even if you gain 10% in a year, that is pretty good on a historical basis...even the old pension guides only planned for a max of 7% in the days of inflation and interest rates !!
Hi Pokerchips :
- CEOs would say yes to having their costs covered only if they thought their free earnings potential is less. Reduction in NHS capacity could only increase demand for profitable elective procedures in the private sector.
- I agree that costs can be hard to define, but it is certainly going to be free of any identifiable margin.
- it isn't the next three months or so. It's for a minimum of 14 weeks or until government chooses to release the hold. Measures to limit spread of the disease could be alternately tightened and relaxed over the next year or more. SPI could be profit free for that or longer depending on whether the NHS chooses to allocate future coronations patients to NHS facilities ahead of taking advantage of private suppliers to soak them up at cost ( notwithstanding your point about that being a slightly fuzzy concept) and and using emerging headroom in NHS for other things.
As I said, good for the NHS and patients. But from a shareholder perspective SPI is now like the patients it will soon be treating - on a ventilator.
" - capacity made available at cost only "
I think if you went round a room of business CEO's and asked if they would accept at least having their costs covered over the next 3 months...there would be a large show of hands saying "yes,please"
Reduced profitability and earnings is baked into the cake across entire business sectors , so , the next best thing is cost covering....not many are expecting even that ...indeed , many are already planning for debt owed to them , as write offs
There is no way of knowing just yet, what "cost" actually means and covers.... but...this situation can only do the reputation of private hospitals some good and the way patients are helped and treated in these hospitals over the next 3 months or so, can only be good for their future business reputation.
The "fear" of shareholders across the board shouldnt be based on what happens over the next 3 months..... everyone knows it is a challenge to get over.... whatever business it is...
I need to check more carefully but my first impression is good for the NHS and patients, but bad I fear for SPI shareholders :
- profitable elective cases reduced
- capacity made available at cost only
- open book accounting to ensure compliance
- for a minimum of 14 weeks and thereafter on a rolling basis with no apparent time limit
- and in an agreement that can be terminated by the NHS but not, it would seem to me, by the provider.
Hopefully they’ve been able to secure a decent deal from the NHS!! Great to see them helping out in these unique circumstances.
Private healthcare is already planning for such a situation ...as are some hotels, and cruise ships....
..although it has to be organised and comminicated properly to ensure an orderly operation...
Even with all these facilities...there remains a shortage of ventilators, hospital gowns, etc which are needed the most
two panel members on question time just suggested that private healthcare should be put to use in connection with covid
should be done asap . imo
That's the one...... lets see what happens next.
Was that the potential big buy you was alluding to, Invesco holdings RNS......
Could this drop have been manufactured to let that big buy in ,
looks very suspect to me ……… now you say you cant get over 400 hmmmm.
Most I get offered is 400.....hardly worth it
Tried 20 times to get a quote....no chance ....
Spire raised to buy today by Peel Hunt. I've bought 8,000 more this morning. Gambling really, but let's see!
100notout - a fun idea!