Stocks’ Details

CSL Limited

Expects Strong R&D Pipeline: CSL Limited (ASX: CSL) is engaged in the development, manufacturing and distribution of pharmaceutical and diagnostic products.

FY19 Financial Highlights for the Period ended 30 June 2019: CSL announced its FY19 annual results, wherein the company reported sales at US$8,205 million, up 11% on y-o-y basis. Operating revenue stood at US$8,538.6 million as compared to US$7,915.3 million in FY18. Research and development expense stood at US$831.8 million as compared to US$702.4 million in the previous financial year. The company reported operating profit and net profit at US$2,504.0 million and US$1,918.7 million as compared to US$2,380.3 million and US$1,728.9 million in the previous financial year. During the year the business launched HAEGARDA® and witnessed strong growth in KCENTRA® across the US.


FY19 Income Statement Highlights (Source: Company Reports)

Guidance: The Management is planning to open 40 collection centres in FY20, while the company is looking for capacity expansion across the manufacturing facilities. CSL is experiencing robust demand from the plasma protein segment and looking forward to commercialization of five global product launches. In addition, it has a R&D pipeline for Cardiovascular disease, transplant and gene therapy.

Valuation Methodology: Price to Book Multiple Approach
 
Price to Book Value Based Valuation (Source: Thomson Reuters), *1 USD = 1.45 AUD

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: The stock of CSL is quoting at $296.500 with a market capitalization of $133.67 billion. The stock is trading at the upper band of its 52-week trading range of $184.00 to $299.90. The stock has generated decent returns of 20.83% and 33.04% in the last three months and six months, respectively. The company has a strong presence across 100 countries and possesses a deep R&D pipeline which is expected to drive future growth.Considering the aforesaid facts and recent price movements, we have valued the stock using one relative valuation method, i.e., price to book value multiple approach and concluded that the stock is trading at expensive valuation and might see some correction, moving forward. Hence, we recommend an ‘Expensive’ rating on the stock at the current market price of $296.500, up 0.679% as on 14 January 2020. 
 

Macquarie Group Limited

Steady Growth in Loan Assets: Macquarie Group Limited (ASX: MQG) provides financial services including banking, advisory, investments and fund management services.

H1FY20 Operational Highlights for the Period ended 30 September 2019: MQG declared its half-yearly results, wherein the company reported net operating income at $6,320 million, up 8% on y-o-y basis aided by a higher fee, commission income and other operating income. Operating expenses came in at $4,480 million as compared to $4,762 million in H1FY19. MQG reported total assets of $219.5 billion at the end of H1FY20, up 8% from FY19, driven by an increase in loan assets, trading assets, interests in associates and joint ventures and derivative assets. Loan assets stood at $85.1 billion, rising 8% from FY19, aided by net new mortgage and business banking-related loans which was offset by net repayments in vehicle finance products in BFS. Harmonised Basel III Common Equity Tier 1 Capital Ratio stood at 14.0% and APRA Basel III CET1 capital ratio stood at 11.4% as at 30 September 2019.


H1FY20 Financial Highlights (Source: Company Reports)

Guidance: As per the FY20 guidance, performance for the 12 months ending 31 March 2020 is expected to be slightly down as compared to FY19, while the short-term performance is dependent on factors including market conditions, foreign exchange impact, potential regulatory changes, etc.

Valuation Methodology: Price to Book Multiple Approach

Price to Book Value Based Valuation (Source: Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: The stock of MQG is quoting at $141.130, with a market capitalization of $49.44 billion. The stock has generated returns of 10.83% and 9.64% in the last three-months and six-months, respectively. At the current market price, the stock is quoting at the upper band of its 52 weeks trading range of $113.110 - $141.330. The company is well positioned to deliver superior performance in the medium-term driven by deep expertise in major markets, strength in business and geographic diversity. Considering the current trading levels, we have valued the stock using one relative valuation, i.e., price to book multiple approach which shows that the stock might see some correction, moving forward. Hence, we recommend an ‘Expensive’ rating on the stock at the current market price of $141.130, up 1.168% as on 14 January 2020. 

Audinate Group Limited

Expansion of Total Addressable Market: Audinate Group Limited (ASX: AD8) operates as a service provider of professional audio networking technologies.

FY19 Financial Highlights for the Period ended 30 June 2019: AD8 declared its full-year results, wherein the company reported revenue at $28.3 million, depicting a growth of 44% on y-o-y basis. EBITDA during the period came in at $2.8 million as compared to $0.6 million in the previous financial year. The business reported operating cashflow at $3.6 million. During the year, the company launched strategic software products namely Dante Application Library & Dante Embedded Platform. The company reported expansion across Germany, Japan, USA, EMEA & China, through new sales offices and resources. 
 

FY19 Financial Highlights (Source: Company Reports)

Guidance: The company expects the revenue split to revert to historic H2 bias in FY20. In order to drive future incremental revenue growth, the company is also focusing on design wins for newly launched products.

Valuation Methodology: Price to Book Multiple Approach

Price to Book Value Based Valuation (Source: Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: The stock is trading at $8.680 with a market capitalization of $590.52 million. The stock is quoting at the upper band of its 52-week trading range of $3.570 to $9.300. The stock has delivered positive returns of 21.69% and 5.62% in the last three months and six-months, respectively. The company is well positioned to deliver long-term growth and is looking to expand its total addressable market with the addition of video & software products. Considering the aforesaid facts and current trading levels, we have valued the stock using one relative valuation method i.e. price to book multiple and arrived at a target price of lower single digit upside (in % terms). Hence, we recommend a ‘Hold’ rating on the stock at the current market price of $8.680, down 0.344% as on 14 January 2020.
 
 
Comparative Price Chart (Source: Thomson Reuters)

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