CSL Limited

This report is an updated version of the report published on the 29 March 2023 at 3:56 PM (GMT+11)

Section 1: Company Overview and Fundamentals Insights

1.1 Company Overview

CSL Limited (ASX: CSL) is a biotechnology company that is engaged in developing biotherapies and influence vaccines. Its portfolio covers recombinant and plasma-derived products, therapies for iron deficiency and nephrology, and plasma collection networks.

1.2 The Key Positives, Negatives, Investment Highlights, and Risks

1.3 Top 10 Shareholders: The top 10 shareholders together form ~18.73% of the total shareholding. The Vanguard Group, Inc. and State Street Global Advisors Australia Ltd. are holding a maximum stake in the company at ~5.00% and ~3.20%, respectively.

1.4 Key Metrics: The company reported a high pretax margin of 27.3% in 1HFY23 compared to the industry median of 2.5%. CSL also reported a high return on equity during 1HFY23 of around 10.7% compared to 0.1% of the industry median. Below is captured the trend of the fixed asset turnover ratio and cash cycle days:

Section 2: Business Updates and Financial Highlights

2.1 Business Updates:

2.2 Results Highlights of 1HFY23 (For the Period Ended 31 December 2022): The company witnessed a 36% year-on-year increase in plasma collections in 1HFY23, backed by targeted marketing programs and enhanced digital initiatives.  

2.3 Operational Update: During 1HFY23, the company’s CSL Behring division registered growth across products.   

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary

The stock has witnessed a decline of ~0.71% in 3 months, whereas over the last 6 months, it has increased by ~0.42%. The stock has a 52-week low and 52-week high of AUD 254.300 and AUD 314.280, respectively and is currently trading slightly below the average of 52-week high-low average.

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation (Illustrative)

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.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is March 29, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

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

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