Cochlear Limited

Cochlear Limited (ASX: COH) with a market cap of $10.17 bn has made several small investments in the year 2018 and has remained focused towards the product innovation activities all through the year. COH has successfully launched two products namely Nucleus 7 sound processor and Baha SoundArc in FY18.

COH’s alliance with GN Hearing:COH has signed a new agreement with GN, one of the global leaders in providing the intelligent audio systems. The agreement will help in further expansion of the research & development capacities of both the companies and providing technology driven and latest and integrated solutions at an effective cost to millions of people around the world with disabling hearing loss.

Other updates and Financials:Cochlear lately announced that the court ordered entry of a judgment against it in the patent infringement lawsuit by the Alfred E. Mann Foundation for Scientific Research (AMF) and Advanced Bionics (AB); and the damages in the amount of US$268.05 million has been awarded against the Company in the patent infringement lawsuit. This has been indicated to be appealed by COH. Meanwhile, Cochlear reported NPAT growth of 10% to $245.8M for the year ended 30 June 2018 and there was a 14% increase in the fully franked final dividend up to $1.60 per share, supported by the combined growth from the earnings and the strong free cash flows. 11% year on year increase in the total dividends up to $3.00 per share was reported during FY18.

Technically,the scrip is in downtrend from the month of September, with no signs of retracement. Relative strength index and Moving average and convergence indicator (MACD) in negative territory with no sign of positive divergence on price charts indicate the trend to remain sideways to bearish. At current juncture the scrip is good to avoid.

Fundamentally,the market cap of COH was recorded at $10.17 bn, with P/E of 41.22x and beta over 1x as on November 12. At current juncture scrip is trading at the price levels of $175.45. COH has made several investments in FY18 and is targeting its investment on IT platforms which will increase the capital expenditure levels to $80-100 million per annum over the next few years. With overall downtrend and projected capital expenditures to impact the overall financial performance, the scrip can be avoided at the current levels of $175.45.
 

Nuheara Limited

Nuheara Limited(ASX: NUH) in line with its set targets for the FY18 has launched its second product, IQbuds BOOST with Ear ID in the month of April 2018 and has made its global retail presence both online and in store across the USA, Europe, the Middle East and recently in Asia. NUH with its continued focus on the global expansion and reach has its association with various distribution partners. Force technology holding approximately 4000 reseller partners is the key distribution partner to service Australia and New Zealand. Value Trade that has its network across 5000 consumer electronics retailers has been given the distribution responsibility for Japan.

Weaker Financial metrics: NUH reported 60% rise in the cash used for the operating activities that amounted to $6,529,060 in FY18 ended on June 30, 2018 as compared to the outflow of $4,070,267 in FY17. The rise in the outgoings was backed by the payment made to the suppliers for the manufacture of IQbuds and IQbuds BOOST along with the cost associated with the commercialization activities pertaining to the Group’s hearing and wearables platform. Net outflows from the investing activities reported was $4,165,765, out of which $4,043,428 was used towards the development cost. Group posted 53% rise in the net loss after tax at $7,416,412 in FY18 as compared to the net loss after tax of $4,839,623 for the year ended 30 June 2017.  The group has a net current asset position of $15,018,701 in FY18 as compared to $6,517,639 in FY17.

Technically,the scrip is in downtrend from the month of June, with slight signal of retracement in the current month of November. Relative strength index and Moving average and convergence indicator (MACD) consolidating in negative territory with no sign of positive divergence on price charts indicate that the trend is a bit volatile.

The market cap of NUH was recorded at $56.16m, with a high beta. At current juncture scrip is trading at the price levels of $0.063. Weaker performance backed by the cost increment due to the commercialization activities and new product development while there is strong focus on global presence and delivering technology driven excellent products that support long term growth strategy, give a mixed view. We maintain a wait and watch stance on NUH at the current levels of $0.063.
 
 

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