Healthscope Ltd

HSO Details
 
Takeover Offer from Brookfield Asset Management Inc:Healthscope Ltd.’s (ASX: HSO) stock rose 4.5% on May 14, 2018 after the company received an unsolicited, non-binding indicative takeover offer from Brookfield Asset Management Inc, for the acquisition of all the shares in HSO by way of a scheme of arrangement. This offer is at an indicative price of $2.50 cash per share, which represents a premium of 23% to HSO’s closing share price of $2.03 on 24^th April 2018. Brookfield is a global alternative asset manager, having a portfolio of around US$285 billion and is involved in the Australian hospitals industry through its Multiplex and Global Integrated Solutions (Brookfield GIS) businesses. HSO had EARLIER received the takeover proposal from the BGH – AustralianSuper Consortium on 26^th April 2018 at an indicative price of $2.36 cash per share. While the new offer looks better; however, the takeover offer by Brookfield is subject to a significant number of conditions, including satisfaction of a "level playing field condition". As per "level playing field condition", HSO cannot grant any potential acquirer of Healthscope (including the BGH – AustralianSuper Consortium) access to due diligence, unless each such potential acquirer confirms to HSO that they are not under any agreement, arrangement or understanding to vote any shares owned or controlled by that party (or any of its affiliates) against any superior proposal that is unanimously recommended by the HSO Board. Brookfield also requires that any other potential acquirer is not granted access to due diligence on terms that are materially superior to those granted to Brookfield. Meanwhile, HSO continues to assess BGH – AustralianSuper Consortium proposal and has now commenced an assessment of the Brookfield proposal. Further, there is no certainty that either proposal will result in a transaction. On the other hand, HSO stock has risen 33.88% in three months as on May 11, 2018. As of now, we give a “Hold” recommendation on the stock at the current price of $ 2.580.
 

HSO Daily Chart (Source: Thomson Reuters)
 

Ramsay Health Care Ltd

RHC Details
 
Joint venture with Ascension:Ramsay Health Care Ltd.’s (ASX: RHC) stock rose 1.88% on May 14, 2018 with some positive momentum. The company has very recently signed for a joint venture with Ascension, which is the largest private, tax-exempt, non-governmental health organisation in the United States to develop a new global supply chain. The joint venture will combine the purchasing power of St. Louis-based Ascension, which is the world’s largest Catholic health system and is expected to generate further commercial benefits for the two health systems. Further, the joint venture will be undertaken with minimal cost to each group and the initial savings are projected to be slightly EPS positive to RHC in the short term. On the other hand, RHC is facing challenging environment in Europe, but the company is investing in a major transformation project in the French operations that will centralise non-core hospital resources and distinguish this business for the long term. Further, in Australia, people aged over 65 account for more than 15% of the total population, which is indicative of rising healthcare demands from the ageing population, and ensures RHC’s growth further in admissions and procedural volumes. The increasing proportion of people with chronic disease and mental illness is also boosting treatment volumes.
 

1H 18 Group Financial Performance (Source: Company Reports)
 
Meanwhile, RHC has delivered decent performance as for 1H 2018, it reported 7.5% rise in Core net profit after tax to $288.0 million. The Group Revenue grew 3.0% to $4.4 billion and Group EBIT is up 1.5% to $470.4 million in 1H 2018. The EBIT grew due to the strong performance in the Australian business. The Australian operations has posted 9.1% EBIT growth on the previous corresponding period due to above market volume growth and the benefits of recent cost efficiency programs. Additionally, RHC has reaffirmed the FY18 Core EPS growth of 8% to 10%. Based on the foregoing, we give a “Buy” recommendation on the stock at the current price of $ 65.580.
 

RHC Daily Chart (Source: Thomson Reuters)
 

Medical Developments International Ltd

MVP Details
 
FY18 Topline is expected to be flat or slightly down:Medical Developments International Ltd.’s (ASX: MVP) stock plunged 13.29% on May 14, 2018 after the company for FY18 expects gross revenue to be flat or slightly down on FY17. FY18 sales revenue is expected to be lower than market expectations primarily due to lower device sales in Australia and lower than expected sales growth rates for devices in the USA and Europe. Both the USA and Europe respiratory device businesses are expected to deliver good sales growth, but some delays in key contracts and partnership agreements have impacted the initial growth rate expectations. Further, the underlying profit for FY18 is expected to be $0.3m as the company continues to invest in the required infrastructure ahead of the expected roll out of Penthrox across Europe, Mexico, Canada and the Middle East. Additionally, for the global growth of Penthrox, MVP expects another 15 new country Marketing Authorisations in the next 12 months including Italy, Spain, Switzerland, Saudi Arabia, Hong Kong and South Korea. However, the sales into these new markets are not expected to provide any upside until the second half of FY19. Meanwhile, MVP stock has fallen 7.38% in three months as on May 11, 2018 and is trading at a very high P/E. Based on the foregoing, we give an “Expensive” recommendation on the stock at the current price of $ 6.220.
 

MVP Daily Chart (Source: Thomson Reuters)
 

OncoSil Medical Ltd

OSL Details
 
Update on the progress of its CE Mark application:Post rising about 22.22% in last one month, Oncosil Medical Ltd.’s (ASX: OSL) stock fell 6.1% on May 14, 2018 after the company provided an update on the progress of its CE Mark application and released results of the extraordinary general meeting wherein approval of subscription of shares by directors including Dr Chris Roberts has been carried out. The downfall looks to be an adverse reaction by the market while OSL has recently, i.e., on May 11, 2018, submitted detailed clinical report outlining emerging performance and safety data for the OncoSil device to the British Standards Institute (BSI), which is the regulatory body overseeing the company’s CE Mark application. This report provides BSI with the safety data for all study participants enrolled to date (N=46). Further, the performance (efficacy) data for 25 patients who have been implanted with the OncoSil device have reached the 8 and 16 week Radiological (CT) assessments. While there may be some concerns across the market over the R&D tax rebate overhaul in light of the budget announcement, and how it looks for this clinical-stage medical device company seeking to advance radiation for cancer patients, we maintain a “Speculative Buy” recommendation on the stock at the current price of $ 0.155.
 

OSL Daily Chart (Source: Thomson Reuters)

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