Pro Medicus Limited

This report is an updated version of the report published on the 31 August 2022 at 3:41 PM GMT

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Pro Medicus Limited (ASX: PME) ) offers a full range of radiology IT software and services to hospitals, imaging centres, and other related health entities in Australia and other regions.

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

1.3 Top 10 Shareholders: The top 10 shareholders together form ~57.46% of the total shareholding. Hupert (Sam Aaron) and Hall (Anthony Barry) hold a maximum stake in the company at ~26.02% and ~25.99%, respectively.

1.4 Key Metrics: During FY22, the company reported a gross profit of AUD 93.64mn relative to AUD 67.57mn in FY21. The gross margin has also improved from 99.3% in FY21 to 99.5% in FY22. Below captured the trend of net margin and asset turnover ratio:

Section 2: Business Updates, Financial and Operational Highlights

2.1 Recent Updates:

2.2 Insights of FY22: During FY22, the cash and other financial assets increased by AUD 28.8mn to end up with AUD 90.6mn at the end of FY22. In addition, the company increased the dividend per share by 47% in FY22 relative to FY21, which brings the full-year dividend to 22 cents per share (fully franked).

2.3 Growth Drivers: The company has a growing pipeline of contracts, and management expects cloud as an important theme of this growth opportunity.

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: Price/Cash Flow 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 August 31, 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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