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As our colleagues on Lex helpfully pointed out earlier this year, there are many companies which, either because of their businesses or their lack of boardroom dramatics, do not receive as many column inches as their less well-performing peers.
In 2017, many of the top 10 performing companies in the FTSE 100 (as measured by share price change) are actually fairly familiar — housebuilders Persimmon and Berkeley, airlines easyJet and British Airways-owner IAG.
Still, there is a solid list of companies we rarely write about, but whose performance is perhaps objectively worth noting. This post is an attempt to rectify that — at least in part — by giving a few of the lower-profile companies their due in our Charts of the Year.
Apologies to other worthy contenders, including chemicals company Croda, product testing group Intertek, warehouse company Segro and business information provider Relx.
It joined the FTSE 100 only in September. But of the current index constituents, NMC Health is far and away the best performer of the year — up around 90 per cent from the start of the year, well ahead of runner-up Worldpay’s 60 per cent, according to data from Reuters.
The Abu Dhabi-based healthcare services provider floated on the London market in early 2012, when it was given a market value of around £390m. It’s now worth around £6bn — although the free float is only around 40 per cent, with the remainder held by three controlling shareholders, including NMC’s founder.
Originally focused on operating private hospitals in the United Arab Emirates, NMC Health has since expanded into Saudi Arabia and Oman — which are prioritising healthcare reform, including more private healthcare initiatives like mandatory health insurance — and gone on a buying spree, snapping up fertility centres in Denmark and Brazil.
Analysts say the Saudi Arabian market for private healthcare holds particular promise. Back in October Cora McCallum of Investec summed it up as follows:
Saudi is an attractive market with government support for healthcare: At $35bn in 2014, healthcare expenditure in Saudi is more than twice that in the UAE ($15bn). Like the UAE, Saudi currently spends a low proportion of GDP on healthcare and is actively engaging with the private sector to expand capacity. The government has introduced mandatory health insurance, and has committed $1.2bn to reform primary healthcare; we therefore expect that the current 10% per annum market growth rate can be maintained.
Once upon a time (but two short years ago) there was another London-listed major player in the UAE’s lucrative healthcare market. Al-Noor was the subject of a takeover battle, with bidders including NMC, but was ultimately taken over by the South African group Mediclinic. Since then Mediclinic’s performance has been less rosy — we have written about it rather more frequently than NMC, but that may be because it’s the fifth-worst performing stock of the year.
As many a Londoner will attest, there’s money to be made in pest control — even if much of that money has been in North America and emerging markets such as India of late.
Another recent addition to the index and the eighth-best performing stock in the FTSE 100 so far this year according to FactSet, is Rentokil which has also been on an extended run of acquisitions.
Having previously shed some of its less profitable businesses, in the third quarter of this year alone it bought six businesses: five of them in pest control, and the last in hygiene. Even that was relatively prudent compared to the first half of the year: between January and mid-October, it has added 34 businesses.
It doesn’t show any sign of stopping either. In November, after buying a mosquito control business, it upgraded guidance for its second-half M&A spend to at least £100m — though that’s down from the more than £200m it spent in the six months to end June.
So far this year shares are up around 40 per cent according to Reuters, after it followed 23 per cent revenue growth and a 31 per cent rise in full-year pre-tax profits with a 25 per cent climb in revenues and more than 600 per cent rise in statutory profit before tax (boosted by a major disposal of assets to a joint venture) in its interims.
The name sounds like a children’s cartoon character, but Softcat is actually in the much more down to earth business of IT infrastructure and software resales.
The FTSE 250 group’s shares have added more than 70 per cent so far this year, according to data from FactSet — although they have come off a bit in the past month. Still, Softcat has more than doubled its market cap since it listed in 2015.
Softcat’s management said at its full-year results in October that its 24 per cent revenue growth and near-20 per cent climb in annual pre-tax profits were due to the good old-fashioned practice of “winning new customers and selling more to existing customers”, as it boasted of “48 quarters of top line and bottom line year-on-year organic growth”.
It remains to be seen whether Softcat can keep that kind of performance up under new chief executive Graeme Watt when he takes the helm in April. Investec doubts it (nothing personal to Mr Watt); in a note published before his appointment, Julian Yates said:
We retain our concern around sustainability of long term profit growth as the business expands into new locations and services which may require additional investment to generate the same return thus damping margins.
(All charts Cat Rutter Pooley / FT)