Cleopatra Hospital Company (CHC) (CLHO.CA) reported its 2Q16 results yesterday. Recurring earnings were flat Y-o-Y at EGP20.4mn, excluding one-off provisions, receivable impairments, and amortisation). Revenue softened 4% Q-o-Q to EGP202mn due to seasonality (slower activities in Ramadan). EBITDA came in at EGP45mn and EBITDA margin fell to 22.2% vs. 25.6% in 1Q16 on higher salaries (new hires, overtime in Ramadan) The company reported EGP12mn one-offs: i) EGP6.4mn provision related to a human resources redundancy plan that will result in cost savings in the short-to-medium term; and ii) EGP6mn receivables impairment related to old receivable balances. Accordingly, reported earnings stood at EGP7mn. The company has not booked fees related to the IPO yet and likely will book it in 3Q16. Results are not comparable to 2Q15 since Nile Badrawy and Cairo Specialized Hospital were consolidated in in September 2015 and Al Shorouk hospital was acquired in late January 2016. We do not have interim estimates for Cleopatra as historical pro forma quarterly financials are not available. Our estimates for the full year call for revenues of EGP856mn (vs. EGP411mn in 1H16) and recurring earnings of EGP93mn (vs. EGP41mn in 1H16); we think that the company is largely on track to achieve our full year recurring estimates; especially as the month of Ramadan mostly fell during 2Q16 and typically experiences lower sales and margins. That being said, improved EBITDA margin in 2H16 is key to achieve our estimate. Additionally, we assume IPO proceeds will be used to reduce finance costs, until they are utilised for acquisitions or expansions. On another note, CHC’s Board of Directors (BoD) met on 25 August and approved studying the  acquisition of the remaining stake in Cairo Specialized Hospital (CSH, currently 52.7%-owned). The approval included hiring a local financial advisor for the transaction. (Earnings release, company disclosure, Wafaa Baddour)   Cleopatra Hospital Company (CHC): EGP9.20 as of 28 August 2016, Rating: Buy, FV: EGP11.70 per share, MCap: USD166mn, CLHO EY / CLHO.CA