By Peet Serfontein & Pritu Makan
We initiate a long position. Our upside target is set at R16. We recommend a stop-loss at R13.40.
Netcare operates the largest private hospital network in South Africa. The group also offers primary healthcare, sub-acute care, day surgery, occupational health and employee wellness services through Medicross, emergency medical services through Netcare 911, renal dialysis through National Renal Care and mental health and psychiatric services through Akeso. Netcare is also a leading private trainer of emergency medical and nursing personnel in the country.
The group boasts a market-leading position in South Africa with a defensive portfolio that has been augmented by the addition of mental health facilities as well - a noteworthy competitive advantage. Thematically, we like the hospital space in South Africa with a rising middle class likely to support long-term growth in demand for quality healthcare.
Technically, a double-bottom pattern in the share price makes for an appealing long position (see insert on main chart). The pattern reflects a shift in market sentiment, where selling pressure weakens, and buyers begin to re-enter at a perceived value area.
The start of upside momentum, according to the Moving Average Convergence Divergence (MACD) histogram indicator, supports the trade idea. When the MACD histogram shifts from negative to positive territory or begins to print higher bars while still below the zero line, it suggests that the rate of decline is slowing and that a potential bullish crossover may be forming. This early signal of strengthening momentum often precedes an actual price breakout, giving investors a lead indication of a possible reversal or continuation to the upside.
The price is in the accumulation phase of the Wyckoff Price Cycle, further supporting a bullish tone.
We suggest a medium capital at-risk allocation to this trade. Increase exposure for a break above R14.50.
| Share Information | |
|---|---|
| Share Code | NTC |
| Industry | Health Care Equipment & Services |
| Market Capital (ZAR) | 19.57 billion |
| One Year Total Return | 29.19% |
| Return Year-to-Date | -1.25% |
| Current Price (ZAR) | 14.34 |
| 52 Week High (ZAR) | 15.77 |
| 52 Week Low (ZAR) | 11.02 |
| Financial Year End | September |
| While the share has sold off heavily since the start of the year, a recovery can continue with several technical indicators supporting further upside momentum. The share is also testing its 200-day simple moving average. | |
| Consensus Expectations (Bloomberg) | ||||
|---|---|---|---|---|
| FY24 | FY25E | FY26E | FY27E | |
| Headline Earnings per Share (ZAR) | 1.12 | 1.32 | 1.51 | 1.68 |
| Growth (%) | 17.95 | 14.16 | 11.41 | |
| Dividend Per Share (ZAR) | 0.70 | 0.84 | 0.95 | 1.08 |
| Growth (%) | 20.14 | 13.32 | 13.43 | |
| Forward PE (times) | 10.86 | 9.51 | 8.54 | |
| Forward Dividend Yield (%) | 5.86 | 6.65 | 7.54 | |
| Solid earnings growth is expected over the forecast horizon, complimented by a relatively attractive dividend yield. | ||||
Buy/Sell Rationale:
Technical Analysis:
Long-term fundamental view:
| Share Name and Position | MRP - BUY (Continue to hold) |
GRT - BUY (Continue to hold) |
ABG - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 219.84 | 13.22 | 171.50 |
| Current | 239.26 | 13.09 | 165.98 |
| Movement | +8.8% | -1% | -3.2% |
|
The start of wave 5 in the Elliott wave price theory remains of interest. Remains just below its 200-day simple moving average. Fading downside momentum supports the trade strategy.
Our profit target is at R267 with a trailing stop-loss at R221. Exit the trade on 9 June 2025. |
The price is at one of the highest price bins out of the price distribution analysis remains of interest. Continues to test its 200-day simple moving average. Upside momentum supports the trade strategy.
Our profit target is at R16 with a trailing stop-loss at R12. Exit the trade on 17 November 2025. |
A favourable peer comparison for the share remains of interest. Remains just below its 200-day simple moving average. Fading downside momentum supports the trade strategy.
Our profit target is at R200 with a trailing stop-loss at R160. Exit the trade on 14 July 2025. |
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