Mouwasat Medical Services: Expanding into a competitive future. Reinstate with Underperform

Mouwasat is committing substantial capital to protect market share, which we expect to dilute margins and returns. We reinstate at Underperform on three key reasons: (1) the expansion is defensive, not opportunistic. Capacity is added to protect market share rather than capture new markets; (2) new assets are in higher-cost, competitive regions. This will pressure margins, we think, and (3) a c.SAR3.3bn project pipeline against modest cash balance puts dividend expectations at risk. We forecast revenue and net income on average -3%/-8% below consensus, with DPS c.15% below. SAR62/sh PO (in line with current price) implies c.15x 27E P/E with 1% EPS CAGR (26-31E).