Stocks’ Details

Ramsay Health Care Limited

Completion of Rights Issue: Ramsay Health Care Limited (ASX: RHC) is a global hospital group, which owns and operates a comprehensive range of healthcare facilities. Recently, the company, via a release dated 25^th June 2019 announced that it has appointed Ms. Henrietta Rowe as Group General Counsel and Company Secretary. Ms. Henrietta Rowe has expertise in corporate legal affairs, which include mergers and acquisitions, capital management, executive remuneration and contractual advice, and corporate governance. In another update, it was stated that Mr. Bruce Soden has decided to step down from the role of Group Finance Director and Chief Financial Officer in the 2H of this year. A global search process is being conducted for a new Group Chief Financial Officer for RHC.

In a release dated 11^th April 2019, the company announced that its French subsidiary, Ramsay Générale de Santé referred the renounceable rights issue amounting to EUR625 million. It added that the subscription period for the RGdS Rights Issue has been completed on 5 April 2019 and the total subscription orders made under the RGdS Rights Issue of EUR566,760,513.70, which represented a total subscription rate of 90.66%, corresponding to the issue of 34,432,595 new shares. The subscription price of RGdS new shares was EUR16.46 per RGdS new share. The following picture provides an idea of group performance for the six months ended 31^st December:

  
Group Performance (Source: Company Reports)

What to Expect: As per the presentation of the half-yearly results, the company stated that, in Australia, it maintains a market leadership position in terms of the strength and diversity of its portfolio, and it is delivering high quality services. It is focused on achieving synergies related to the Capio transaction, integrating the business with RGdS and divesting non-strategic assets.

Stock Recommendation: The company has maintained a strong consistent growth in dividends from the past few years, which might attract the attention of the dividend-seeking investors. Additionally, it declared fully franked interim dividend amounting to 60.0 cents per share in 1H FY19.

On the stock’s performance front, it produced returns of 10.68% in the time span of six months and witnessed a rise of 17.21% on YTD basis. Currently, the stock is trading above the average of 52 weeks high and low levels of $74.12 and $51.89, respectively with PE multiple of 34.090x. Hence, considering the above-stated facts and current trading levels, we give a “Hold” rating on the stock at the current market price of A$67.570 per share (down 0.192% on 28^th August 2019).
 

Nanosonics Limited

Key Highlights of FY19 Results: Nanosonics Limited (ASX: NAN) is focused on research, development and commercialisation of innovative technologies in infection control and decontamination. The market capitalisation of the company stood at ~A$1.95 Bn as on 28^th August 2019. Recently, the company has released its results for the full year 2019, wherein it stated that the sales for the period stood at $84.3 Mn, reflecting a rise of 39% on the prior corresponding period. The company delivered capital revenue amounting to $32.8 Mn with a rise of 28% on pcp. It added that the capital revenue reflects a range of selling models each with different revenue profiles including direct sales, sales through distributors, equipment rental and the Managed Equipment Service model in the UK where no capital revenue is recognised. The free cash flow for the year amounted to $2.6 Mn in FY19 as compared to $6.2 Mn in pcp.


Total Revenue (Source: Company Reports)

Future Prospects: For FY20, the company expects continued growth in the installed base in North America with FY20 adoption similar to FY19.  It will continue to establish the trophon technology as the standard of care for the high-level disinfection of all semi-critical ultrasound probes in those markets where trophon is currently presented. It anticipates accelerated investment in growth with total FY20 operating expenses expected to be around $67 million. It expects a material rise in sales and margin from consumables in North America, the full impact of which would be realised in 2H FY20.

Stock Recommendation: The net tangible asset backing per ordinary security stood at 32.16 cents as at 30^th June 2019 as compared to 26.40 cents as of 30 June 2018. Currently, the stock is trading close to its 52 weeks high level of $6.690 with high PE multiple of 143.170x. Hence, considering the above-stated facts and current trading levels, we give an “Expensive” recommendation on the stock at the current market price of A$6.410 per share (down 1.385% on 28^th August 2019).
 

Opthea Limited

A Quick Look at Full Year Report: Opthea Limited (ASX: OPT) is engaged into developing innovative, biologics-based therapies for the treatment of eye disease. As per ASX, it has a market capitalisation of A$674.43 Mn as on 28^th August 2019. Recently, the company announced that Regal Funds Management Pty Ltd, substantial holding of the company increased its voting power from 11.55% to 12.83% on 23 August 2019.

In other update, the company released its preliminary final report for the year ended 30^th June 2019. The company stated that the major expenditure of the group has been in relation to R&D, in particular, costs associated with the Phase 2b and Phase1b/2a clinical trials of OPT-302 for wet AMD and DME and sourcing of standard of care anti-VEGF-A agents used in the clinical studies. The following picture provides an overview of the key numbers:

 
Consolidated Cash Flow Statement (Source: Company Reports)

Future Developments: The group is mainly focused on developing biological therapeutics for eye diseases. The company continues to advance the clinical development of OPT-302 to key commercial milestones by progressing patient recruitment into the company’s Phase 2a clinical trial with OPT-302 in persistent DME patients, as well as trial close-out activities for the Phase 2b wet AMD study.

Stock Recommendation: The net tangible asset backing per ordinary security stood at $0.12 as at 30^th June 2019 in comparison to $0.19 as at 30^th June 2018. The stock of OPT delivered returns of 229.27% and 315.38% in the time span of one month and three months, respectively. Currently, the stock is trading close to its 52 weeks high level of $3.35, and therefore, probability for correction increases. Hence, in view of aforesaid facts and current trading levels, we give an “Expensive” recommendation on the stock at the current market price of A$3.170 per share. The stock was up 17.407% at market close on 28 August 2019, on account of positive market sentiments).


Comparative Price Chart (Source: Thomson Reuters) 

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