RESMED INC

Decent Financial Growth: ResMed Inc (ASX: RMD) is a leading connected health company which provides cloud-connected health care services and devices to patients across 120 countries. The company has an expertise in treating Sleep Apnea and COPD with its award-winning and innovative devices and masks. Recently, the group’s subsidiary Brightree LLC has acquired cloud-based software-as-a-service (SaaS) provider Apacheta Corporation for an undisclosed amount. The objective of this acquisition is to expand the SaaS portfolio of ResMed. This acquisition will develop SaaS offering in the area of route sales, field marketing, pick-up and delivery, transportation and field services, in turn, it will generate revenue synergies with Apacheta.


Financial Metric (Sources: Company Reports)

On the analysis front, the Group has posted the revenue of $2.3 Bn in FY18, up 13.6% (YoY), up CAGR 9% over the last five year. And, it has maintained the Net Interest Margin at 19.4% in FY18 which is higher than the industry average of 6.5%. Both quick ratio and current ratio indicate decent health of the company at 1.56x and 2.08x, respectively and broadly in-line with the Industry median of 2.06x and 2.73x, respectively. In the past six months, the stock had a decent run on the bourses generating 14.07% and is trading at higher PE multiple of 53.39x. Although there are numerous positive factors that would ensure better value to shareholders, we assume that the price has discounted all the positive developments at the current juncture. We, therefore, recommend the investors to keep a watch on the stock and wait for upcoming Q2FY19 earning release which will be published on January 24, 2019.
 

CSL Limited

Constant revenue growth & robust fundamentals:CSL Limited (ASX: CSL) is into the health care segment and is engaged in the development, research, manufacturing, and marketing of cell culture media, human plasma fractions and pharmaceutical and diagnostic products. It is a global leading biotherapeutics company, and its segments include Seqirus, CSL Behring and CSL Intellectual Property. The company has its presence in Australia, Switzerland, United Kingdom, and the United States.

Key highlights:

• CSL has a promising gene therapy platform post acquisition of Calimmune.
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• The strategic partnership between CSL and Vitaeris will support an emerging transplant portfolio.
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• The Plasma division of CSL opened 27 new collection centres in the US.
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Five-Years Summary (Sources: Company Report)

On the financial front, the operating revenue has a CAGR growth of 7.54%, and a consistent increase over the past five yearswith FY2018 sales revenue standing at $7,915.3 million an increase by 19% on Y-O-Y basis as compared to $6,615.8 million in FY 2017. The net income stood at $1,728.9 million for FY18 compared to $1337.4 million in FY 2017.The total operating cash flow in FY 2018 stood at $1,902.1 million as compared to $1,246.6 million in FY 2017, a significant increase by 50% approximately, on the back of increase in receipt from customers, however the net cash outflow from investing activities increased in FY 2018 and stood at $1,534.1 million, with marginal increase in investment in capex. On the valuation front, Operating margin for FY18 was recorded at 28.8% which is higher the previous year operating margin of 24.4%. Further, the Net margin at 21.8% remains higher than the previous year. CSL has consistently generated value for the shareholders with ROE for FY18 at 47.7% as compared to 46.7% in FY18 and 23.6% industry average. Meanwhile, the share price has fallen 4.24% in the past six months and is trading at PE multiple of 36.640x. We assume that all positive factors have been discounted at the current juncture.We, therefore, suggest the market players to watch the stock at the current market price of $188.530.
 

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