Healthscope Limited (ASX: HSO)

HSO Details

Trading ex-dividend: Healthscope, the second largest private hospital operator in Australia, traded ex-dividend on September 06, 2017 and witnessed a stock price slip of 2.3%. The stock has fallen 21.69% in last one month, as at September 05, 2017, at the back ofthe weaker than expected results for the twelve months ended 30 June 2017. Particularly, statutory NPAT for the period was down 38.8% to $110.9 million against FY2016 figure of $181.1 million owing to an impairment loss of $54.7 million with regards to the sale of the group’s standalone Medical Centres (to Fullerton Primary Care) and non-operating expenses after tax of $17.4 million. On the other hand, the group revenue was up 3.8% to $2,318 million.
 

Revenue Growth from Hospitals (Source: Company Reports)

HSO’s Hospitals division, which is the major contributor to total earnings, represented 82% of group operating EBITDA in FY2017. Further, Hospitals’ revenue was up 3.4% to $2,014.0 million, and operating EBITDA of $359.4 million was up 1.3%. Moreover, major hospital expansion projects (including Knox Private and Gold Coast Private) that were completed in FY2016 and FY2017 led the revenue growth of 8.4% and this outperformed the market revenue growth, while softer private hospital market conditions prevailed. The group expects its Hospitals FY18 operating EBITDA to be broadly in line with FY17.At the back of the overall result, HSO declared its full-year dividend of 7.0 cents per share (cps) against FY2016 full year dividend of 7.4 cps. Given the softness in performance,we put a “Hold” on the stock at the current price of $ 1.67

Nanosonics Limited (ASX: NAN)

NAN Details

Aims to benefit from partnerships at a global level: Nanosonics’ stock has risen about 6% in last one month (as at September 05, 2017) and is still enjoying the rally. The group had recently inked a new three-year Capital Reseller agreement with GE Healthcare which will come into effect at the end of the current GE Healthcare Distribution agreement. Under the agreement, GE Healthcare will be provided with Capital Reseller rights as part of its global ultrasound program. In return, NAN expects to witness an increase in sales and profit for its Northern American business and this will also boost shareholder value. NAN is also expanding into the Japanese market by establishing a strategic relationship with Sakura Seiki, which is one of the Japan’s organisations in infection prevention, for the introduction of Trophon EPR into the Japanese market. These strategic partnerships are expected to expand the reach of the company at the global level. The group’s performance has also reverberated well with the recent momentum with FY17 revenue up 58% to $67.5 million. The group now intends to invest in R&D for two new products over the next two years. The stock is thus expected to witness more momentum going forward. We give a “Speculative Buy” recommendation on the stock at the current price of $ 2.62

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