Stocks’ Details

ResMed Inc

Settlement of Disputes: ResMed Inc (ASX: RMD) has disclosed that it has reached on a consensus to reach the settlement with M/s Fisher & Paykel Healthcare on all the matters and disputes concerning the patent infringement between both the parties for venues across the globe. This settlement involves no payment by either of the parties. During the Q2 FY2019, the company’s revenue rose by 8% to come in at $651.1 million, thus witnessing a rise of 9% on a constant currency basis. This rise was on the back of surging sales across the company’s mask and device product segments in the United States of America, Canada, and Latin American regions. Gross margins have risen by 70 bps over the pcp, to come in at 58.90%. This rise was primarily on the back of benefits garnered from manufacturing and procurement efficiencies, improved product mix and higher margin contribution from MatrixCare, partially offset by declines in average selling prices.

 
Q2FY19 Financial Summary (Source: Company Reports)
 
The company’s ROE for the period ended 31 December stands at 6.5% which is decent enough considering the concerned industry median of 2.4%. Also, the stock price has fallen by 10.16% year till date. Thus, considering a better than Industry ROE and a robust margin, we, therefore, maintain our “Buy” recommendation on the stock at the current market price of $14.57 per share (up 1.11% on 13 March 2019).
 

Ramsay Healthcare Limited

Decent Outlook:Ramsay Healthcare Limited (ASX: RHC) has declared that Mr. Soden has sold 50,000 RHC ordinary shares on market on 7 and 8 March 2019 primarily for the purpose of satisfying his personal income tax obligations arising in connection with the vesting and exercise of his past LTI awards. The sale of these shares was made in accordance with the Company’s Securities Trading Policy. Following the sale, Mr. Soden has a relevant interest in 295,227 RHC ordinary shares and 260,287 performance rights.

The company has reported 1H FY 2019 results, its Core NPAT up 1.0% to reach at $290.8 million & also the EBITDA was up 9.8% to reach at $728.6 million. This growth was achieved on the back of volume growth and sustained focus on achieving operational efficiencies.

The Board has declared an ordinary dividend of AUD 0.6, the record date for which was March 7, 2019 & the Payment Date shall be March 29, 2019.

As regards the outlook for FY 2019, the company seems to be well positioned to meet growth in demand and respond to market challenges on the back of its Scale, diversity and quality of our portfolio. The company’s brownfield programme is on track to deliver $242M in completed projects in FY’19. The company has a Strong pipeline of brownfield opportunities.

 

RHC’s Dividend Payments (Source: Company Reports)
 
The company’s ROE stands at 11.2% in for the period ended 31 December 2018 which is decent enough considering the concerned industry median of 8.50%. Also, the stock price has gained over the past six months by 15.47%. Thus, considering a better than Industry ROE and a decent outlook, we, therefore, maintain our “Buy” rating on the stock at the current market price of $62.77 per share (up 0.822% on 13 March 2019).
 

Sonic Healthcare Limited

 
Robust Australian demand- a growth catalyst:Sonic Healthcare Limited (ASX: SHL) has declared an ordinary dividend of AUD 0.33, the record date for which was March 11, 2019& the Payment Date shall be March 26, 2019.
 
For 1H FY 2019, the company reported Revenue from ordinary activities, up by 8.50% on pcp. This rise was on the back of the fact that Laboratory division achieved revenue growth of 10% in the half year. This was offset by the fall in the US revenue impacted by Medicare (‘PAMA’) fee cuts effective from 1 January 2018. Underlying EBITDA grew 7% and came in at $ 485 Mn. The EBITDA growth in the Laboratory division was boosted by the Pathology Trier acquisition. The US, Australian and Swiss laboratory businesses performed particularly strongly. Sonic’s Imaging business reported moderate earnings growth following strong growth in the prior year.
 
As regards the outlook, the company is well set for ongoing strong growth. It has a rich pipeline of acquisitions, joint ventures and contracts ahead. The company has enough geographical diversification, that provides ample growth opportunities and risk mitigation. The management’s procurement and other synergy initiatives delivering ongoing benefits.
 

SHL’s Financial Highlights (Source: Company Reports)
 
The company’s ROE stands at 4.9% for the period ended 31 December 2019 which is lesser as compared to the concerned industry median of 8.5% and it also witnessed a fall of 50 Bps over the pcp. Also, the stock price has fallen over the past six months by 5.37%. Thus, considering a flat ROE and a high exposure towards foreign exchange fluctuations, we, therefore, maintain a wait & watch stance on the stock at the current market price of $24.37 per share (up 0.911% on 13 Mar. 19).
 
Meanwhile, the stock price has risen over the past one month by 2.72%, however over the period of past six months the stock is down by 5.37%. However, if we look at the YTD performance, the stock is up by 10.78% and traded at higher PE level of 21.88x as compared to the concerned industry median of 14.5x. Hence, considering decent financial performance in 1HFY19 but gloomy stock performance over the past one year, we therefore, suggest investors to keep a close watch on the stock at the current market price of $24.37 per share (up 0.911% on 13 March 2019) and wait for more growth catalysts along with better entry levels and wait for more growth catalysts to get better entry levels. 


Stock Price Comparative Chart (Source: Thomson Reuters)    
 

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