Virtus Health Ltd

VRT Details

Slump in full year profit: Virtus Health Ltd (ASX: VRT) reported a full year revenue decline of 1.8% to $256.5m on prior corresponding period (pcp), while posting earnings before interest, tax, depreciation, amortisation and impairment (EBITDA) of $64.8m, down 5.9%. Australian segment EBITDA was down 7.6% to $65.8m. However, significant operational enhancements were completed in FY17 leading to Diagnostics EBITDA growth of 37% and, International segment continued to deliver earnings and cycle growth with EBITDA growth of 24.4% to $7.1m. NPAT attributable to ordinary equity holders decreased by 14.6% to $28.1m. The Group segment EBITDA increased in H2 FY17 compared to pcp because of operational efficiencies and cost savings achieved by material changes to the Australian business, and diversified model.


Financial summary (Source: Company Reports)

In the Australian eastern state markets, there was an overall market volume decrease of 0.2% for Assisted Reproductive Services. While cycle volume in Virtus clinics decreased by 3.7% like for like, growth was achieved in Queensland and Tasmania. Further, Virtus NSW clinics achieved a better result than the NSW market which declined 5% in FY17. Virtus remains the overall market leader with 42.1% share of the Australian eastern state market. An organisational re-structure with new leadership and significant reductions in operating expenses has seen improvements in Victorian profitability in the last quarter. Diagnostic revenue increased by nearly 9% in FY17, delivering an EBITDA improvement over the prior year of 37% largely driven by the new applications of genetic testing and screening in reproductive medicine which are improving success rates for patients and providing access to new patients, including the fertile population. The stock fell over 3% on August 22, 2017 at the back of the weak result. Given the outcome, we maintain a “Hold” recommendation at the current price of $ 5.48

Corporate Travel Management Ltd

CTD Details

Share price fall despite a decent result: Corporate Travel Management Ltd (ASX: CTD) witnessed a share price fall of 5.4% on August 22, 2017 despite reporting a revenue growth of 23% year on year (yoy) to $325.9m. Growing market share and the integration of international acquisitions has allowed the company to achieve an underlying EBITDA of $98.6 million, representing 43% growth on the previous year. Importantly, on a constant currency basis, underlying EBITDA was $104.0 million, up 51%, demonstrating the strength of the underlying business. ANZ segment’s underlying EBITDA was up 28% to $36.3 million due to seamless end-to-end automation and integration with travel consultants. North American underlying EBITDA was up 69% to $35.9 million, while on a constant currency basis, underlying EBITDA was up 75% to $37.2 million, led by combination of client wins, integration success, leveraging scale. Despite the recent price fall, the stock is still at slightly high levels. We maintain a “Hold” recommendation at the current price of $ 21.85

Greencross Ltd

GXL Details

Growth in LFL sales and continued network expansion: For the year, Greencross Ltd (ASX: GXL) reported a revenue increase of 11% to $817 million driven by strengthening growth in LFL sales and continued network expansion. Additionally, result this year was also boosted by an extra week in the financial year compared to the previous period, but that is not factored into LFL sales calculation which remains a 52 week on 52-week comparison. However, gross margin % declined marginally by 30bps due to Australian Retail where the GXL reinvested in consumers as part of Group Loyalty relaunch in Q4. EBITDA increased by 15% to $100 million driven by sales growth. Underlying EBITDA, after adding back acquisition, due diligence and restructuring costs, increased by 9% to $104 million. Underlying EBITDA excluding planned start-up losses from immature in-store clinics was $105 million. Reported NPAT increased by 21% to $42 million while underlying NPAT (excluding abnormal items) increased by 7% to $43 million. Margins in Australian Veterinary improved by 10bps to 77.7% with particularly strong performance from the specialty and emergency business. New Zealand gross margin increased by 50bps from 48.6% to 49.1% as a result of an increased contribution from higher margin veterinary services and higher private label retail sales. Despite the decent result, it appears that GXL fell short of market expectations and the stock price fell around 2.7% on August 22, 2017. Given the fundamentals, we maintain our “Buy” recommendation at the current price of $ 5.96

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