CSL Limited

CSL Details

Poised for Growth: CSL Limited’s (ASX: CSL) stock slipped down by 1.2 percent on June 15, 2018 as there seems to be some bit of profit booking ahead of the full-year result. However, the company has recently upwardly revised its profit guidance for the full year. The management previously expected profit to rise by around 8.6% to 12.1% for FY18 but now it anticipates the growth to be between 17.7% and 19.8% to US$1,680 Mn and US$1,710 Mn at constant currency basis for the full year. Management expected an improved positive outlook for the full year at the back of high demand of its product mix portfolio, particularly immunoglobulin products such as Idelvion and Haegarda across the global market. ROE and ROIC as at December 2017 stood at 31.0% and 13.5%, respectively, against values as at June 2017 of (17.5%) and (7.4%). On the balance sheet front, Current ratio and Quick ratio stood at 2.86x and 1.42x, respectively in the six months as at 31 December 2017 while debt to equity ratio was moderately down to 1.16x in 1HFY18 from previous six months (1.26x).
 

Rising Patient Counts in Haemophilia Market (Source: Company Reports)
 
The company seems to be benefitting from rising demand of its product mix portfolio across the globe coupled with the strong balance sheet, robust return ratio, and strong footprint in the domestic and international market. The stock price rallied up to 5.59 percent in the past one-month post earning guidance and currently trading close to its 52-week high levels ($191.84). Hence, we maintain our “Expensive” recommendation on the stock at the current market price of $ 184.52, considering the already high run-up and intense competition in clinical space (particularly in Haemophilia market) despite positive outlook.
 

CSL Daily Chart (Source: Thomson Reuters)
 

Telstra Corporation Limited

TLS Details

Upcoming business update:Telstra Corporation Limited’s (ASX: TLS) stock climbed up 1.379 per cent on June 15, 2018 while the market is keeping an eye on the release of an update due this week wherein it is expected that TLS would provide more insight on its efforts to manage intense competition and narrow margins on its fixed and mobile products. Further, the Group has reiterated its FY18 total dividend to be 22 cents per share fully franked including the ordinary and special dividend. It is to be seen whether the group continues to maintain this guidance. The group also maintains a dividend policy to pay a fully franked dividend in the range of 70% - 90% of underlying earnings. Besides this, the group notified that its EBITDA (earnings before interest, tax, depreciation, and amortization) would come in at the bottom end of its guidance of between $10.1 Bn and $10.6 Bn after absorbing incremental restructuring costs for the same period. RoE stood at 11.8% in 1HFY18 while ROIC came at 5.1% in 1HFY18. However, the company is currently focused on reducing costs, thus, resulting to bottom line growth in years to come. In the past one year, the stock has declined by 32.81% and is trading slightly above its 52-week low levels ($2.715). Hence, we maintain our“Hold” recommendation on the stock at the current market price of $ 2.940, considering the intense competition within the industry while the group is gearing up for 5G technology wave.
 

TLS Daily Chart (Source: Thomson Reuters)
 

Westpac Banking Corporation

WBC Details

Distribution Update: Westpac Banking Corporation (ASX: WBC) has recently announced fully franked dividend payment of AUD 0.9274 with distribution base of 2.0561% per annum for WB sub notes (WBCPD - CAP NOTE 3-BBSW+3.20% PERP NON-CUM RED T-03-19). It will be paid on September 10, 2018 with the record date of August 31, 2018. Moreover, the group also disclosed its interest payment of AUD 1.07 with interest rate of 4.245300 % per annum for WB Sub notes (WBCHB - SUB TR BND 3-BBSW+2.30% 22-08-23 SUB RED TR T-8-18) and it will be paid on August 22, 2018 with record date of August 14, 2018. Besides this, the group informed the market that Alexandra Holcomb is retiring from his role as Company’s Chief Risk Officer on June 25, 2018 and that David Stephen will join the Board in the coming months. Further, the management stated that they maintained the credit ratings of AA- from Fitch Ratings and A1 from Moody’s and AA- from S&P Global Ratings. WBC disclosed to ASX that one of its directors, Peter Stanley Nash had a direct & indirect interest in the company and acquired 2,876 more ordinary shares via on-market Purchase at an issue price of $27.52 per share. This does indicate for management’s confidence despite the recent Royal Commission investigations. Further, the group delivered a decent performance across the business during first half of the year wherein Net Profit after tax increased by 7% to $4,198 Mn in 1HFY18 as compared to prior corresponding period. The Group managed to maintain a strong balance sheet with CET1 capital ratio of 10.5% which is in line with the benchmark set by Australian Prudential Regulation Authority (APRA).The stock was down by 13.47 per cent in past six months and by 9.06 per cent in the past one month as at June 14, 2018. However, it moved up 2.198% on June 15, 2018 with an update on insider buying. Given the trading conditions, WBC still looks “Expensive” at the current market price of $ 27.900.
 

WBC Daily Chart (Source: Thomson Reuters)
 

Nanosonics Limited

NAN Details

Performance Rights and Issue of shares Update: Nanosonics Limited (ASX: NAN) disclosed its performance right update wherein 8,769 Performance Rights (NANAD) have been exercised under the Nanosonics Omnibus Equity Plan which has been issued into the Nanosonics Deferred Employee Share Plan Trust. On the other hand, JCP Investment Partners Ltd, a substantial holder of the Group changed its holding from 9.42 per cent of the voting power to 8.38 per cent of the voting power. On the financial front, the topline contracted by 4% in 1HFY18 as compared to 2H FY17. PAT declined by 48% and amounted to $2.2 Mn in 1HFY18 from $4.2 Mn in 2HFY17. The Company had US$66.5 million in cash balance at the end of the 31 December 2017. The group’s bottom line performance for the full-year is now subject to R&D expenses, income tax and fluctuation in foreign exchange.
 

First-Half Year Performance Highlights (Company Reports)
On the other hand, NAN’s trophon adoption is becoming the first choice of customer and growing rapidly around the world. Based on this, the company was lately granted a receipt of the Medical Device Licence from Health Canada and clearance from US FDA for the trophon2 system, which will be available in the market in Q1FY19. Henceforth, the company focuses on to increase its marketing and distribution team and expand its infrastructure across the globe. In past six months, the price was up by 16.73 per cent and is trading at a point near to 52-week high level ($3.190). Hence, we maintain our “Hold” recommendation at the current market price of $3.090, as it might be prudent to wait for further performance drivers. 
 

NAN Daily Chart (Source: Thomson Reuters)

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