Too many “constant threats”, Oddo BHF is no longer a buyer of Korian and further lowers the target price for Orpea, company news

Too much is too much for financial analyst Christoph-Raphael Ghana of the private bank Oddo BHF. As of today, he no longer advises buying Korian on the stock market (his advice changes from “ahead” to “neutral”, with the target price reduced from 35 to 20 euros) and again lowers its target price on Orpea (the board has been changed to “neutral”). »During the disaster in January), from 43.5 to 26.7 euros.

“The worst case scenario is written every week”there is “Constant threats” to managers Ehpad Orpea and Korian since the book investigation Undertaker Journalist Victor Castanet came out almost five months ago, revealing the shortcomings and abuse of Orpea. The world leader’s share price in nursing homes has fallen 75% since the beginning of the year, and its competitor Korian – a little more than 40%; their shares fell another 5% today. in “Media flood” targets Orpea more than Korian, which at least we note in Oddo BHF, “He continues to communicate to be different from Orpea. » However, although new critical information about the industry appears almost every week, the abuse of trust is only growing.

” This weeksummarizes the analyst, We later learned that Corian had been the subject of a complaint from the residents’ families, and that a brief report had been published on Orpea by its external auditors (Grant Thornton and Alvarez & Marshall), whom he had commissioned to assess and shed light on and therefore [le groupe] was searched for topics raised by the joint mission of the General Inspectorate for Social Affairs and the General Inspectorate for Finance. »

“A few more quarters” under pressure

Many allegations against Orpea are confirmed by a report by independent auditors. “It seems that there are surpluses in the appropriations received from the authorities (by consuming appropriations received from state authorities), surplus formed in this way, could contribute to the result of the group, [ainsi que] the practice of discounts at the end of the year, when certain suppliers are financed by state grants and are not reported to the authorities [et] that the compensation was paid with the consent of the former CEO or members of his team to outside business participants, [et enfin que] capital companies or business transactions, in particular with regard to external growth operations abroad, have been or may have been the result or purpose of improperly favoring third parties, in particular employees and / or former employees or partner companies, without obvious justification. »

These shortcomings have prompted the state to decide to tighten controls, which will have a financial impact on the leaders of Expad, who will first have to hire staff.. “All facilities will be inspected by the end of 2025 (compared to 10% of nursing homes inspected annually, now between 5 and 50 inspections per region and per year, ie 850 per year for just over 7,400 nursing homes)explains Christoph-Raphael Hanet. To do this, the regional health agencies will recruit hundreds of agents. One can imagine the creation of an independent evaluation agency, close to the German MDK, which is largely funded by operators or a certain tax and is responsible for the rating of nursing homes. »

Koryan is the subject of complaints of “unintentional murder” filed with a dozen prosecutors in several regions. These complaints against X will be initiated by about twenty families for “endangering the lives of others”, “failing to help a person in danger” and “unintentional murder”. They were submitted to Aix-en-Provence, Bobigny, Bourges, Le Mans, Marseille, Nantes, Niort, Paris, Poe and Versailles. This is the first major class action lawsuit against Corian. Oddo BHF analyst believes that ” Corian’s practice and organization have changed with the arrival of Sophie Boisard in 2016. [mais] the fact remains that a shortage of nurses and, more broadly, medical staff can sometimes lead to quality deficiencies. »

In terms of the “hierarchy of values”, Corian is above Orpea. Group “Started a profound transformation (real estate policy, internationalization, restructuring of the portfolio, efforts to interact with employees, CSR goals, remuneration of the CEO according to ESG criteria, more balanced management than Orpea before the scandals). » The working capital of Korian (62%), like Orpea (80%), makes the takeover possible, but the pressure of the media at the moment, its reputational impact is likely to revive any potential buyer at the moment. At Oddo BHF we believe so “It is likely that stock market prices will remain a few blocks below fundamental levels, time to calm down in terms of financing and real estate valuation, that the market better understands margin relocation, that the regulatory context is stabilizing, that environmental media and legal decisions. »