Primary Health Care 

Strategically sound acquisition: Primary Health Care Limited (ASX: PRY) has announced the acquisition of Montserrat Day Hospitals, operator of seven specialist day hospitals and haematology / oncology clinics in Queensland, Western Australia, and New South Wales. The acquisition offers PRY strategic advantage as it is aligned with the company’s core business of providing frontline community healthcare. In a recent filing, the company revealed that Golden Acumen Holdings has reduced its stake thereby leading to a decline in the voting power from 15.93% to 14.23%. The company has otherwise posted good numbers for the full year 2018 with revenue coming in at $1,740.3 Mn compared to 1,658.6 Mn in FY17. The growth of 4.9% was registered in revenue. Net profit after tax came in slightly higher for FY18 at $92.3 Mn compared to $92.10 Mn in FY17. The company has managed to reduce its Net Debt over the years.

Net Debt Trend (Source: Company Reports)

The stock has generated negative YTD return of 19.54% and looks under pressure at the current juncture. The share price has however rebounded from the low of $2.64 and moving higher. Going forward, any upward movement in the stock is expected only if it covers the gap and closes above it. Investors should wait and watch as to how the recent acquisition would impact the performance of the company.  
 

Mayne Pharma Group 

Strong Pipeline: Mayne Pharma Group Ltd (ASX: MYX) has launched six generic products in the United States, filed eight products with the US Food and Drug administration including generic NuvaRing and a New Drug application for SUBA. The company managed to improve the second half performance, supported by the strategic investments made by the company.

The company has a strong pipeline of over 30 products for the United States market, targeting the sales over US$5 Bn. Also, a total of 15 products are under FDA observation on which the approval might come soon. On the financial front, the Company has posted a 7% drop in revenue for FY18 at AUD$530.3 Mn compared to $572.6 Mn in FY17. However, the company did manage to turnaround in the second half posting increase of 18% in revenue compared to the corresponding period in FY17. Meanwhile, the stock has delivered stellar performance generating YTD return of 61.70% and still looks to have some momentum. The stock has made roughly a rounding bottom pattern and any movement above the resistance level of $1.220 can take it higher. We believe that investors should keep a close watch on the stock, tracking the FDA approvals, strategic decisions and stock price of the company, while challenges of the generic sector do keep on hovering around.
 

Sigma Healthcare 

Improved Outlook: Sigma Healthcare Limited (ASX: SIG) has recently declared a dividend of AUD 0.01500 with record date October 15, 2018 and pay date as 29 October 2018. The company has recently posted 1H 2019 results with sales revenue coming in at $1,957.6 Mn compared to $1,998.2 Mn in 1H FY18, posting a decline of 2.0%. Net Profit after tax for 1H FY19 dropped 31.2% at $13.8 Mn compared to the previous comparable period of $28.9 Mn. Based on the performance, the company declared interim dividend of 1.5 cents per share fully franked as the company maintained the payout ratio at 80% of the underlying NPAT.


Dividend Payout Ratio (Source: Company Reports)

The company is upbeat about its FY19 performance, expecting an underlying EBIT of $75 Mn, in line with the guidance. For FY20, the company has kept its underlying EBIT forecast unchanged between $40 Mn- $50 Mn. Meanwhile, the stock has been under pressure generating negative YTD return of 42.79%. There are however offshoots of improvement visible with the stock price moving steadily higher. At the current moment, the resistance level of $0.595 is crucial and any upward movement in the stock needs to be watched. Investors should keep an eye on the organic growth, operating cost and capital management as these factors can fuel the stock over time. Till then we suggest investors keep a close watch on the stock.
 

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