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Korian delivered the second-best quarterly internal growth in three years and good dynamics have been seen in all regions and segments. Its maintained FY23 guidance should mitigate the market concerns about the persisting pressure from the sector’s ESG mess. We remain comfortable with our current estimates and no major changes are expected.
Companies: Korian (KORI:EPA)Clariane SE (CLARI:PAR)
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The long-term elderly care sector has undergone a significant overhaul following an industrial ESG earthquake and we continue to expect further repercussions. Korian now looks well placed to cope with these challenges, but progress is unlikely to be achieved in the short term. We have cut our valuation by over 40% to reflect the changing rules of the game.
Korian announced consensus-missing FY22 results and a less bright outlook following an industrial ESG earthquake, but the group seems prepared to cope with the challenging reform in the industry. We expect downward adjustments in the consensus and our estimates.
Despite the in-line Q3 revenue and unchanged guidance, the group’s trading update could well assuage the market’s impairment-related concerns following the mayday calls at one of Korian’s major rivals. We have upgraded our EBITDA forecast as the group’s cost management seems tighter than we had previously expected.
The de facto downgraded outlook is likely to disappoint the market despite the company’s numerous efforts on ESG. We expect a downgrade to the consensus but a c.10% increase to our EBITDA forecast, considering the negatives to a lesser extent.
Korian’s Q1 trading update was fairly reassuring and the FY22 guidance was maintained. In spite of the sector ESG scandal at the end of January, the group seems to be managing to demonstrate an insignificant aftermath for its business. However, uncertainties are expected to keep weighing on the whole industry due to a probable profound reform.
Despite the investigations made in the French TV show Cash Investigation last night, Korian’s share price continues going up as the arguments/explanations provided by the group seemed logical, detailed and rather persuading. We will include further downward adjustments but to a small extent, as our point of view has been mainly reflected in the current valuation.
Korian’s share price could move tomorrow as the French TV show “Cash investigation”, which claims to reveal further impropriety/mistreatments at Korian, is to be released tonight. The group’s FY21 results met analysts’ and our expectations, while its FY22 earnings outlook is more optimistic than our forecast. We might include further adjustments according to the reliability of either the revelations provided by “Cash investigation” or Korian’s arguments/proofs.
Korian’s Q3 revenue reached analysts’ expectations again, composed of similar levels of internal and external growth. The group reconfirmed its ambitions for the following two FYs.
Korian considerably recovered from its pandemic-led activities loss in Q2, recording 6.4% organic growth and a 90bp improvement in the EBITDA margin in H1 21. The positive trend is expected to extend into H2, leading the group to upgrade its FY21 revenue target. It also reconfirmed its mid-term financial objectives for FY22.
Korian delivered its Q1 21 revenue, which was mainly driven by external growth. The group also reconfirmed its mid-term revenue guidance for 2022.
Korian again delivered in line FY results. However, we interpret the lower-than-expected dividend payout (€0.3 proposed vs. €0.6 expected) as the group’s weaker confidence for FY21, but the FY22 guidance was reconfirmed.
Korian has concluded a long-term partnership with BNP Paribas Cardif and EDF Invest to support the implementation of its Asset Smart strategy.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Korian. We currently have 17 research reports from 2 professional analysts.
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