Fisher & Paykel Healthcare Corporation Limited

Team Veye | 19 Mar 2020 ASX - FPH
Fisher & Paykel Healthcare Corporation Limited
Call Buy
Asx FPH
sector Healthcare

Fisher & Paykel Healthcare Corporation Limited (ASX: FPH) designs, manufactures and markets medical device products and systems for use in respiratory care, acute care, surgery and the treatment of obstructive sleep apnea. The Company’s segment includes North America, which includes all activities controlled by entities or employees based in the United States and Canada; Europe, which includes all activities controlled by entities or employees based in the United Kingdom, France, Germany, Sweden, Turkey and Russia, and Asia-Pacific, which includes all activities controlled by entities or employees based in Australia, Japan, India, China, South Korea, Taiwan, and Hong Kong, and Other segment includes New Zealand, Latin America, Africa, the Middle East, and other countries. (Profile source: Reuters)

 

From the Company Reports

Fisher & Paykel Healthcare provides FY20 trading update

Fisher & Paykel Healthcare Corporation Limited on 17 March 2020 announced that it had further updated its revenue and earnings guidance for the financial year ended 31 March 2020.

(Chart source: TradingView)

The full-year guidance update provided in February, based on an NZ: US exchange rate of 64 cents, was for operating revenue to be approximately $1.2 billion and net profit after tax to be approximately $260 million to $270 million.

Since then, the NZ dollar has weakened against most currencies. Assuming an NZ:US exchange rate of approximately 61 cents and an NZ:EU exchange rate of approximately 55 cents for the rest of the financial year, the company expects full-year operating revenue to be approximately $1.24 billion and net profit after tax to be within the range of approximately $275 million to $280 million.

Fisher & Paykel Healthcare updates revenue and earnings guidance on stronger Hospital and Homecare sales

Fisher & Paykel Healthcare Corporation Limited on 21 February 2020 announced that it had updated its revenue and earnings guidance for the financial year ended 31 March 2020.

The full-year guidance previously provided in November, based on an NZ: US exchange rate of 64 cents, was for operating revenue to be approximately $1.19 billion and net profit after tax to be approximately $255 million to $265 million.

Coronavirus impact

Mr. Lewis Gradon, Managing Director and CEO said the company has received inquiries about possible impacts to the company’s supply chain resulting from coronavirus. Fisher & Paykel Healthcare does not have a manufacturing facility in China; however, some of its suppliers of raw materials are based in China.

Fisher & Paykel Healthcare launches new Evora™ compact nasal mask for sleep apnea

Fisher & Paykel Healthcare Corporation Limited on 3 February 2020 announced the launch of F&P Evora™, a new nasal mask for the treatment of obstructive sleep apnea (OSA).

(Graphic Source – Company Reports)

F&P Evora is a compact nasal mask that sits comfortably under the nose. The mask features CapFit™ headgear, which is designed to be put on like a baseball cap in one simple and intuitive movement. In a clinical trial*, 98 percent of participants described Evora as “simple to take off and put on in the dark,” and 95 percent of respiratory therapists found the mask “simple to fit.”

Evora also features a ‘floating’ seal, which sits inside stability wings. These technologies work together to allow for freedom of movement during sleep while keeping the mask comfortably in place.

Evora offers OSA patients the performance benefits of a nasal mask, with the streamlined design and minimalism of a nasal pillow mask, said Lewis Gradon, Managing Director and CEO of Fisher & Paykel Healthcare. Its unique and innovative features make fitting the mask much easier for the patient and the respiratory therapist.

Strong Half Year Result for Fisher & Paykel Healthcare: Net Profit Up 24%

Fisher & Paykel Healthcare Corporation Limited on 27 November 2019 announced its financial results for the half-year ended 30 September 2019. Net profit after tax was $121.2 million, up 24%, and operating revenue was $570.9 million, 12% above the first half last year

(Graphic Source – Company Reports)

In the Hospital product group, which includes humidification products used in respiratory, acute and surgical care, operating revenue increased 19% to a record of $353.6 million. This represented 17% growth in constant currency, during an extended flu season in the United States. Products in the Hospital group made up 62% of the company’s operating revenue.

In the Homecare product group, which includes products used in the treatment of obstructive sleep apnea (OSA) and respiratory support in the home, operating revenue rose 2% to NZ$214.7 million, or a decline of 1% in constant currency.

Gross margin increased by 26 basis points to 67.1% compared to the first half last year, with benefits from product mix offsetting the additional start-up costs of the company’s second Mexico manufacturing facility.

(Graphic Source – Company Reports)

Overview of key results for the first half 

  • 24% growth in net profit after tax to a record of $121.2 million. 
  • 23% increase in interim dividend to 12 cps (2019: 9.75 cps). 
  • 12% growth in operating revenue to a record $570.9 million, 9% growth in constant currency. 
  • 19% growth in Hospital operating revenue, 17% growth in constant currency. 
  • 23% constant currency revenue growth for new applications consumables; i.e. products used in non-invasive ventilation, Optiflow nasal high flow therapy, and surgical applications, accounting for 63% of Hospital consumables revenue. 
  • 2% growth in Homecare operating revenue, 1% decline in constant currency. 
  • 1% decline in constant currency revenue in OSA masks. Investment in R&D was 9% of revenue, or $54 million.

 

Financials

Stock Overview
Sector Health Care
Risk Low
Market Cap 14.197B
Daily average Volume (10 Days) 20.683M
EPS (FY) 0.3506
PE RATIO 19.9706
Yearly Dividend Yield  0.94%
Target Price (s) $32.50
Stop Loss 25.80
Recommendation Buy
52 weeks High 27.96
52 weeks Low 14.00
Directors Lewis Gradon, Managing Director & Chief 
Non-executive Directors Michael Daniell
Pip Greenwood

 

Veye’s Take

Fisher & Paykel Healthcare’s half-year Net profit after tax was $121.2 million, up 24%, and operating revenue was $570.9 million, 12% above the first half last year. It had a strong start to the 2020 financial year, mainly driven by the Hospital product group, which delivered an operating revenue growth of 19 percent. FPH’s respiratory humidifiers and consumables are directly involved in treating patients with coronavirus. The company has seen an increase in demand globally and thus ramped up its manufacturing output. At the same time, FPH benefited from stronger sales in its Homecare product group and a weakening of the NZ dollar. There were better-than-expected sales in its Homecare product group combined with continued strong growth in the Hospital product group. This includes an increase in demand from China related to the COVID-19 coronavirus outbreak. The stock has been moving in an uptrend for four months now. After the fall last week, the stock soon reversed and has formed an inverse head & shoulder pattern. The stock can have good growth potential as the company continues to innovate to improve care and develop new applications for its technologies. Veye recommends a "Buy" on “Fisher & Paykel Healthcare Corporation Limited” at the current price of $27.00 


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