Stocks’ Details
 

Ramsay Health Care Limited

Decent Increase in Revenue: Ramsay Health Care Limited (ASX: RHC) is a global hospital group owning and operating a comprehensive range of healthcare facilities across Australia, France, Indonesia, Malaysia and the United Kingdom. As on 24 March 2020, the market capitalization of the company stood at $10.25 billion. During 1H20, the company reported an increase of 22.5% in revenue to $6.3 billion and a growth of 17.4% in EBITDAR to $1.1 billion. In the same time span, NPAT of the company stood at $273.6 million. The decent financial performance of the company enabled the Board to declare a fully franked interim dividend of 62.5 cents per share, up by 4.2%, on previous corresponding interim dividend. 


1H20 Financial Highlights (Source: Company Reports)

Future Expectations and Growth Opportunities: The company reported positive signs for its business in the UK and Europe in terms of volume and tariff growth. RHC is also investigating acquisition and expansion opportunities with government and other private healthcare providers.

Valuation Methodology: Price to Cash Flow Multiple Based Relative Valuation

Price to Cash Flow Multiple Based Approach (Source: Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: As per ASX, the stock of RHC is trading close to its 52-week low of $48.5, proffering a decent opportunity to enter the market. During 1H20, gross margin of the company stood at 74.9%, higher than the industry median of 36.7%. In the same time span, Return on Equity of the company was 10.5% as compared to the industry median of 6.8%. Considering the trading levels, higher margins and decent outlook, we have valued the stock using price to cash flow based relative valuation method and arrived at a target upside of lower double-digit (in percentage terms). Hence, we recommend a “Buy” rating on the stock at the current market price of $52.680, up by 3.905% on 24 March 2020.

Paradigm Biopharmaceuticals Limited

Participants in US FDA EAP Have Commenced Treatment: Paradigm Biopharmaceuticals Limited (ASX: PAR) is a biopharmaceutical company which is engaged in researching and developing therapeutic products for human use. As on 24 March 2020, the market capitalization of the company stood at $238.37 million. The company has recently announced that it has started dosing all the ten patients with Zilosul® under the FDA approved Expanded Access Program (EAP) in the US. It also has stated that it is providing an opportunity for shareholders and investors to view a virtual presentation by Paul Rennie at the NWR Small Cap Virtual Conference to be held on 26 & 27 March.

The company has also released its interim results for the period ending 31 December 2019 wherein it reported a substantial increase of $574k in revenue to $602k and current assets of $77.24 million.


1H20 Financial Highlights (Source: Company Reports)

Positive Pre-IND meeting with US FDA: The company has announced a positive and informative pre-IND meeting with the US FDA wherein it discussed clinical, pre-clinical and CMC (Manufacturing) data with the US FDA.

Stock Recommendation: As per ASX, the stock of PAR is trading close to its 52-weeks’ low level of $1.130. The company has witnessed an improvement in EBITDA margin and Net margin over the span of two year. During 1H20, Debt/Equity ratio of the company stood at 0.01x, lower than the industry median of 0.12x. On the TTM Basis, the stock is trading at a price to book value multiple of 3x, higher than the industry average (healthcare) of 2.7x. Considering the current trading levels, improvement in net margin and higher price to book value multiple, we suggest investors to keep an eye on the stock and have a watch stance on the stock at the current market price of $1.630, up by 35.27% on 24 March 2020, owing to its recent release regarding the commencement of treatment in the US. 

Clinuvel Pharmaceuticals Limited

CLINUVEL to Launch SCENESSE in USA: Clinuvel Pharmaceuticals Limited (ASX: CUV) is a global biopharmaceutical company focused on developing and delivering treatments for patients with a range of severe genetic and skin disorders. As on 24 March 2020, the market capitalization of the company stood at $759.44 million. The company has recently announced its plan to launch its novel drug SCENESSE in the US with the first patient to be treated in mid-April 2020. 

Key Financial Highlights: During 1H20, the company witnessed an increase of 11% in revenue to $9,971 million and reported an eighth consecutive half year of profit. The company has a solid foundation to finance its growth with cash balance of $3.18 million.


1H20 Financial Highlights (Source: Company Reports)

What to Expect: The company is increasing its patient treatment access from existing and new countries. It is also open to value adding opportunities and synergistic benefits.

Stock Recommendation: As per ASX, the stock of CUV is trading very close to its 52-weeks’ low level of $12.920, proffering a decent opportunity for accumulation. During 1H20, net margin of the company stood at 10.8% and ROE of the company was 1.85. In the same time span, current ratio of the company stood at 15.38x, higher than the industry median of 6.01x. Considering the current trading levels, decent financial performance and new market opportunities, we recommend a “Buy” rating on the stock at the current market price of $16.560, up by 7.742% on 24 March 2020. 

 
Comparative Price Chart (Source: Thomson Reuters)

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