Fisher & Paykel Healthcare Corporation Limited

This report is an updated version of the report published on the 2 November 2022 at 3:55 PM (GMT+11)

Section 1: Company Overview and Fundamentals Insights

1.1 Company Overview

Fisher & Paykel Healthcare Corporation Limited (ASX: FPH) is engaged in the designing, manufacturing, and marketing of medical devices and systems which are used for acute and chronic respiratory care, surgery, and the treatment of obstructive sleep apnea.

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

1.3 Top 10 Shareholders: The top 10 shareholders together form ~31.50% of the total shareholding. The Mitsubishi UFJ Financial Group Inc and Pinnacle Investment Management Group Ltd hold a maximum stake in the company at ~7.25% and ~5.08%, respectively.

1.4 Key Metrics: The Net margin in FY22 was around 22.4% compared to the industry median of 17.1%. The company reported a higher return on equity during FY22, around 23.6%, compared to the industry median of 12.0%. Below is captured the trend of the debt-to-equity ratio and current ratio:

Section 2: Business Updates and Financial Highlights

2.1 Business Updates:

2.2 Results Highlights of FY22: During FY22, the company increased its expenditure in R&D activities by 13% from NZD 136.7mn in FY21 to NZD 154.0mn in FY22. Further, the operating revenue decreased across all regions except Asia Pacific, where revenue rose by 26% on a YoY basis in FY22.

2.3 Financial Summary: The company anticipates that the 2HFY23 revenue will be higher than 2HFY22 due to the expected increase in hospitalisation rates and higher consumption of hospital consumables because of seasonal patterns. Further, the improvement in the global supply of Continuous Positive Airway Pressure (CPAP) hardware and the recent launch of the new Evora full face mask could contribute to homecare segment growth.

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary

4.2 Fundamental Valuation

Valuation Methodology: P/E 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 November 2^nd, 2022. 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.

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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