Healius Limited

This report is an updated version of the report published on the 21 September 2022 at 3:55 PM GMT.

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Healius Limited (ASX: HLS) is an Australia-based healthcare company, which offers a range of medical & health-related services through Pathology, Imaging, and Day Hospitals segments.

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

1.3 Top 10 Shareholders: The top 10 shareholders together form ~47.77% of the total shareholding. Perpetual Investment Management Limited and Australian Retirement Trust. hold a maximum stake in the company at ~9.25% and ~7.39%, respectively.

1.4 Key Metrics: During FY22, the company reported a gross margin of 86.4%, which increased from 85.8% in FY21. The asset turnover ratio in FY22 was 0.59x, up from 0.45x in FY21. Below is captured the trend of EBITDA margin and return on equity:

Section 2: Business Updates, Financial and Operational Highlights

2.1 Recent Updates:

2.2 Insights of FY22: During FY22, HLS reported an EBIT of AUD 467.4mn, resulting in annual growth of 83.0%. Further, the company has determined a total dividend of 16.0 cents per share in FY22, which increased from 13.25 cents per share in FY21.

2.3 Growing Cash Flow: During FY22, the company returned 45% of free cash flow back to shareholders in the form of dividends and buybacks. The company depicted a growth in cash at the end of the period from AUD 72.7mn in FY21 to AUD 81.3mn in FY22.

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 not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is September 21, 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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