Resmed Inc

Section 1: Company Overview and Fundamentals Insights

1.1 Company Overview

Resmed Inc (ASX: RMD) is engaged in the development, manufacturing, distribution and marketing of medical devices and cloud-based software applications that diagnose, treat and manage respiratory disorders, including sleep-disordered breathing, chronic obstructive pulmonary disease, neuromuscular disease and other chronic diseases.

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

1.3 Top 10 Shareholders: The top 10 shareholders together form ~6.92% of the total shareholding. First Sentier Investors (Hong Kong) Limited and Vanguard Investments Australia Ltd. are holding a maximum stake in the company at ~2.26% and ~1.26%, respectively.

1.4 Key Metrics: The company reported a high net margin of 21.8% in 2QFY23 compared to the industry median of 2.8%. Further, the quick ratio improved in 2QFY23 to 1.82x compared to 1.54x in 2QFY22. Below is captured the trend of the return on equity and current ratio:

Section 2: Business Updates and Financial Highlights

2.1 Business Updates:

2.2 Results Highlights of 2QFY23: During 2QFY23, the company reported net income of USD 224.9mn versus USD 201.7mn in 2QFY22, while gross margin decreased by 30bps and non-GAAP gross margin declined by 80bps due to unfavorable product mix and foreign currency movements.

2.3 Operational Update:  The income from operations rose by 13%, and non-GAAP income from operations increased by 14% in 2QFY23 on a YoY basis.

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 February 1, 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.

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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