Osteopore Limited

OSX Details

Q1FY21 Financial Performance: Osteopore Limited (ASX: OSX) expertise in 3D printed bioresorbable implants that are used in conjunction with surgical procedures to assist with the natural stages of bone healing. The market capitalisation of the company as of 30 June 2021 stood at ~$54.52 million. As per a recent financial performance, Osteopore has recorded a revenue growth of 21% on constant currency basis to A$318,103 in Q1FY21 compared on pcp basis. OSX has been receiving stocking orders from the US and German markets and establishing a market presence in China which leads to gain in company’s sales. In addition, the company has recorded an increased gross profit by 29% to A$217,013 in Q1FY21, compared to the same period last year. During the period, the company has signed an agreement with Terumo Blood and Cell Technologies to co-promote products. The cash position of the company stood at A$7.9 million as of 31 March 2021. The company receives total of A$48,663 as non-dilutive grant funding and tax incentives and other grant scheme in Singapore, a support from government due to COVID-19 virus outbreak.

Revenue Highlights, Analysis by Kalkine

Outlook: The company is significantly investing its capital towards commercialising activities. The company has targeted $1.1 million in Cranial procedures globally to expand its distribution network with its 23 distribution partners. OSX secured Chinese FDA clearance for Osteopore’s products that helps company to enter new market. The company is expecting an increase in elective surgeries due to decline in no. of COVID cases and pressures on hospital globally.

Key Risk: OSX is exposed to technology risk, credit risk, interest rate risk and delays in clinical trials could impact the financial performance of the company.

Stock Recommendation: As per a recent announcement, the company has received CE MARK to expand its product variant and shelf life that is accessible and benefited to more patients while undergoing cranial surgery. As per ASX, the stock of OSX is trading below its average 52-weeks’ levels of $0.400-$1.490. The stock of OSX gave a positive return of ~15.0% in the past one year and a negative return of ~1.07% in the past three months. On a TTM basis, the stock of OSX is trading at a P/B multiple of 4.0x, lower than the industry average (Healthcare Equipment & Supplies) of 5.9x. Considering the current trading levels and valuation on a TTM basis, strategic collaboration, decent cash balance, FDA approval, government relief package and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.465, as on 30 June 2021.

OSX Daily Technical Chart, Data Source: REFINITIV

Ansell Limited

ANN Details

Business Update: Ansell Limited (ASX: ANN) deals in personal protective equipment that develops, invests, manufactures, and distributes product innovation and technology that enhances human well-being. The market capitalisation of the company as of 30 June 2021 stood at ~$5.55 billion. As per a recent announcement, the company has appointed Neil Salmon as Managing Director and CEO, effective 1 September 2021.

H1FY21 Financial Performance: During the quarter, the company has recorded revenue growth of 24.5% to $ 937.8 million in H1FY21, due to strong organic growth. ANN has increased its operating profit to $144.7 million in H1FY21 against $91.8 million in H1FY20. Additionally, the company has incurred a profit of $107.1 million in H1FY21, compared to $66.4 million in H1FY20. The cash position of the company stood at $353.1 million as of 31 December 2020. 

Revenue Highlights, Analysis by Kalkine

Key Risk: Due to disruptions in ocean freight capacity, there is an increase in transportation transit times. The company is exposed to technology risk, currency risk, regulatory risk. Therefore, the company should have adequate capital to invest in advanced secured technology and mitigate external risk.

Outlook: The company expect a strong year on year sales growth in H2FY21 above from 24.5% growth reported in H1FY20. It will declare its FY21 full-year results and FY22 guidance on 24 August 2021.

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: As per a recent announcement, the company has got ASIC Form 484 from the Australian Securities & Investments Commission which notify of the cancellation of Ansell ordinary shares bought back under the current on-market share buyback between 5 March 2021 and 31 May 2021. The stock of ANN is trading above its average 52-weeks' high levels of $33.230-$44.070. The stock of ANN gave a positive return of ~24.59% in the past six months and a positive return of ~19.67% in the past one year. On a technical analysis front, the stock of ANN has a support level of ~$35.23 and a resistance level of ~$45.0. We have valued the stock using an EV/Sales multiple-based illustrative relative valuation and have arrived at a target price with a correction of high single-digit (in % terms). We believe the company can trade at a slight discount to its peer median EV/Sales (NTM trading multiple), considering the disruption of COVID-19, and delay in supplies. For this purpose, we have taken peers such as Cochlear Ltd (ASX: COH), Sonic Healthcare Ltd (ASX: SHL), Paragon Care Ltd (ASX: PGC), to name a few. Considering the current trading levels, recent rally in the stock price, government restrictions and the key risks associated with the business, we suggest investors to book profits and give a 'Sell' rating on the stock at the current market price of $43.990 (as on 30 June 2021, 11:47 PM (GMT+10), Sydney, Eastern Australia).

ANN 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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