Capitol Health Limited

 

CAJ Details
 
Organic Growth Initiatives Drive 1HFY20 Performance: Capitol Health Limited (ASX: CAJ) provides diagnostic imaging and related services to the Australian healthcare market, with clinics based in Victoria, Tasmania and Western Australia.
 
In a recent announcement, the company notified about the cancellation of 1,700,000 ordinary fully paid shares which were bought back under the on-market share buy-back.
 
COVID-19 Update:Due to the rising uncertainty around the impact of COVID-19, the company has deferred the payment of interim dividend. Payment of the dividend which was earlier scheduled for 3^rd April 2020, will now be paid in October 2020, with the actual payment date to be determined later. Payment would amount to 0.5 cents per share. 
 
The business has continued to be operational in light of providing the essential services in the ongoing crisis, while ensuring patient and staff health, keeping a check on the supply chain of business critical consumables and equipment, along with proper adjustment of the cost base.
 
Half-yearly Results: During the half year ended 31^st December 2019, the company reported revenue amounting to $80.6 million, representing an increase of 11% on the prior corresponding period. Underlying EBITDA witnessed a rise of 15% and stood at $13.7 million. Performance during the period was driven by organic growth initiatives, which delivered a revenue growth of 4%. The company also made additional investment in Enlitic Inc, which is moving ahead with various technological advancements and is a world leader in medical artificial intelligence. Underlying NPAT for the period amounted to $3.6 million, representing growth of 20% on prior corresponding period NPAT of $3.0 million.
 

1HFY20 Results (Source: Company Reports)
 
Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation Method
 

EV/EBITDA Multiple Based Relative Valuation Approach (Source: Thomson Reuters)
 
Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months
 
Stock Recommendation: The stock of the company corrected by ~37% in the past one month and is currently trading below the average of its 52-week trading range of $0.155 - $0.305. The business delivered a decent performance in the first half on the back organic growth initiatives and has continued to be operational in the current market turmoil. The company has also reset its vision and values and has devised a 3-year strategy to benefit from future growth opportunities. We have valued the stock using EV/EBITDA based relative valuation method and arrived at a target price with an upside of lower double-digit in percentage terms. Hence, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.180, up 5.882% on 7^th April 2020.
 
 
CAJ Daily Technical Chart (Source: Thomson Reuters)
 
 

Mesoblast Limited

 

MSB Details
 
MSB Receives USFDA Clearance for Remestemcel-L:Mesoblast Limited (ASX: MSB) develops allogenic cellular medicines and is committed to establish a broad portfolio of commercial products and late-stage product candidates.
 
In a recent announcement, the company informed the market that it has received the USFDA clearance for the Investigational New Drug application for the treatment of patients with acute respiratory distress syndrome occurring in COVID-19 patients. As a result, Remestemcel-L can now be used in the US for treatment of patients with COVID-19 ARDS.
 
Half Year Highlights for the Period Ended 31^st December 2019: During the period, the company reported revenue amounting to US$19.2 million, representing an increase of 43% on the prior corresponding period. Loss after tax witnessed an improvement of 32% and came in at US$30.1 million, as compared to prior corresponding period loss of US$44.1 million, driven by increase in sales of TEMCELL HS Inj., increase in milestone revenues from strategic partnerships, and a decrease in research and development expenditure. At the end of the period, the company has a cash balance of US$81.3 million. To build the inventory for RYONCIL, ahead of the US launch and commercial supply, the company has entered into an agreement with Lonza for the commercial manufacturing of the product.
 

Financial Summary (Source: Company Reports)
 
Valuation Methodology: EV/Sales Multiple Based Relative Valuation Method

EV/Sales Multiple Based Relative Valuation Approach (Source: Thomson Reuters)
 
Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months
 
Stock Recommendation: The stock of the company has corrected by ~20% and ~10% in the past three months and six months, respectively. The stock is currently trading below the average of its 52-week trading range of $1.020 - $3.210. The company ended 1HFY20 with a decent cash position and is expecting additional US$62.5 million through existing financing facilities and strategic partnerships. The recent approval by the USFDA for RYONCIL to be marketed in the US, marks a significant achievement for the business at a time when the US market is under extreme distress due to COVID-19. We have valued the stock using EV/Sales based relative valuation method and arrived at a target price with an upside of lower double-digit in percentage terms. Hence, we give a “Buy” recommendation on the stock at the current market price of $1.850, up 1.928% on 7^th April 2020.

 
MSB Daily Technical Chart (Source: Thomson Reuters)

Disclaimer

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.