Fisher & Paykel Healthcare Corporation Limited

FPH Details

Latest Developments: Fisher & Paykel Healthcare Corporation Limited (ASX: FPH) develops and manufactures medical device products and systems used in acute care, surgery, respiratory care, and the treatment of sleep apnea. On 19 April 2022, FPH issued ~1,305 shares at ~NZ$11.81 per share after cancelling options and the issue of shares as per the share option plan.

Key Metrics Performance in 1HFY22:

• The revenue for the Hospital product group (humidification products deployed in respiratory, acute, and surgical care) stood at ~$670 million, down by ~2% Y-o-Y in 1HFY22.
• FPH posted a ~6% Y-o-Y increase in interim dividend distribution from ~16 cps (cents per share) in 1HFY21 to ~17 cps in 1HFY22.

 Comparative Revenue Position; (Analysis by Kalkine Group)

Key Risks: The company faces the COVID-19 led disruptions, restricted hospital access, higher capex and infrastructure investment, and regulatory changes.

Outlook Highlights; (Analysis by Kalkine Group)

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of FPH gave a negative return of ~26.94% in the past three months and a negative return of ~31.10% in the past six months. The stock is currently trading near its 52-weeks’ low level of $20.220. The stock has been valued using the P/E-multiple-based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at some discount than its peers’ mean P/E multiple, considering continuing COVID-19 impacts, a decline in top and bottom line in 1HFY22, and the estimated impact on the gross margin. For this purpose of valuation, few peers like Resmed Inc (ASX: RMD), Ramsay Health Care Ltd (ASX: RHC), Pro Medicus Ltd (ASX: PME), and others have been considered. Considering the low trading levels, continued growth reported in hospital consumables revenue and in the sales of OSA masks in 2HFY22, physical infrastructure expansion plans, an indicative upside in valuation, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $20.330, down by ~1.406% as of 22 April 2022. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

FPH Daily Technical Chart, Data Source: REFINITIV  

Micro-X Limited

MX1 Details

Latest Developments: Micro-X Limited (ASX: MX1) develops medical and security imaging products using its cold cathode X-ray technology and serves the security and health markets.

1HFY22 (31 December 2021) Results: MX1 incurred ~$3.6 million expenditure on its R&D activity primarily due to the development and production of its product and projects – the IED X-ray Camera, Rover, the Checkpoint, and the CT projects. MX1 reported ~$1.2 million in cash receipts (sales of the Nano units and branded Rover unit).

Key Metrics Improvement; (Analysis by Kalkine Group)

Key Risks: The company faces the risk of regulatory delays on projects, the COVID-19 impact on slowing down sales activities, technological changes, and adequate funds for R&D activity.

Plans:

• On 8 April 2022, Peter Rowland, the CEO & MD of MX1, will be presenting at the ShareCafé Small Cap “Hidden Gems” webinar at 12.30 PM (AEST) to update on the commercial and development activities for the Miniature baggage scanner and Brain CT imager development programmes.
• MX1 seeks to obtain the certification for the Rover Mark II and accelerate sales volumes for the Mobile DR range in 2022.
• MX1 intends to complete the technical development of its IED X-ray camera, Argus and is advancing pre-launch marketing activities for commercial roll out in the 2HFY22.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of MX1 gave a negative return of ~21.99% in the past three months. The stock is currently trading lower than the 52-weeks’ average price level band of $0.150 - $0.370. The stock has been valued using the Enterprise Value to Sales based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight discount than its peers’ mean EV/Sales multiple, considering the negative net margins, negative ROE, and continuing COVID-19 disruptions. For this purpose of valuation, a few peers like Ramsay Health Care Ltd (ASX: RHC), Integral Diagnostics Ltd (ASX: IDX), Healius Ltd (ASX: HLS) have been considered. Considering the current trading levels, new distribution contracts signed, progress on its projects, product launches, an indicative upside in valuation, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.195, up by ~2.631%, as of 22 April 2022. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

MX1 Daily Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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