Stocks’ Details

ResMed Inc

Mixed 1HFY18 Performance: ResMed Inc (ASX: RMD), a world leading health care company, delivered decent revenue growth of 13% to $1,124.9 Mn in 1HFY18 from $995.8 Mn in 1HFY17. The rise in net revenue was attributable to an increase in unit sales of devices, masks and accessories. Apart from this, movement in foreign currencies against the US dollar positively impacted net revenue by approximately $21.7 Mn during the same period. Gross profit stood at $655.4 Mn in 1HFY18 from $578.3 Mn in 1HFY17, an increase of $77.1 Mn or 13% on YoY basis. The increase in gross margin was primarily due to manufacturing and procurement efficiencies during the same period. However, Profit after tax (PAT) declined by 37.4% YoY to $95.7 Mn in 1HFY18 from $152.8 Mn in 1HFY17 on the back of higher finance cost and rise in income tax during the period. Besides this, the US tax reform significantly revised the US corporate income tax from 35 per cent to 21 per cent and this will lead to a reduction of net deferred tax assets and rise in income tax expenses of $6.7 Mn. Further, the Board of Directors declared quarterly cash dividend of $0.35 per share. Going forward, we expect that the growth of the group will be fuelled by geographic expansion, research and product development efforts, acquisitions and an increasing awareness on respiratory conditions like chronic obstructive pulmonary disease. RMDshare price was up by 24.32 per cent in the past six months and declined by 1.36 per cent in the past five days, as at April 09, 2018; and the stock is trading at a high level. Hence, we maintain our “Expensive” recommendation on the stock at the current market price of $ 12.370, while the group will release its Q3 results on April 26, 2018.


Key Financial Metrics (Source: Company Reports)
 

Ramsay Health Care Limited

Decent First Half Results for 2018: Ramsay Health Care Limited (ASX: RHC) has exhibited good scale and diversity with continued earnings growth in a changing health economy. Demand for health care is rising in both traditional and in non-traditional care settings, therefore, the Group is looking at out-of-hospital opportunities, including its pharmacy strategy so that it can deliver innovative, cost-effective and patient-centred care to the community. The group delivered strong first half year result at the back of solid performance in domestic market, despite facing challenges in European market. Revenue grew by 3% to $4,445.8 Mn in 1HFY18 on the back of strong domestic performance. EBITDA stood at $663.8 Mn in 1HFY18, marking a growth of 2.3% on YoY basis. Group EBIT is up 1.5% to $470.4 million in 1H 2018 due to strong performance in the Australian business. The Australian operations posted 9.1% EBIT growth on the previous corresponding period due to above market volume growth and the benefits of recent cost efficiency programs. Furthermore, net profit after tax for the half year amounted to $288 Mn from $267.8 Mn in 1HFY17, marking YoY growth of 7.5%. As a result of this, the Board of Directors declared fully-franked interim dividend of 57.5 cents per share which is up by 8.5% as compared to previous corresponding period.

The Company’s brownfield development programme continued strongly and reflected an increase in demand for health care services. A further investment of $146m for expansion was approved by the Board of the company during the first half of 2018. Of which, $57 Mn worth of brownfields were completed lately in the first half of 2018 while the Company is set to open $147 Mn worth of developments in the second half of FY18 and $156 Mn in the first half of FY19. The stock was down 10.24% in three months as on April 09, 2018; however, given the potential into the business and on-going development, we maintain our “Buy” recommendation on the stock at the current price of $ 63.300.
 

Half year Performance (Source: Company Reports)

 
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