This report is the updated version of the report uploaded on 29 November 2022 at 6:17 PM (GMT +13)

FPH Details

Fisher & Paykel Healthcare Corporation Limited (NZX: FPH) is the global leader in medical devices as well as systems for use in respiratory care and acute care, and in the treatment of obstructive sleep apnea.

Financial Results for the H1 FY 2023

• For the six months ended 30^th September 2022, FPH’s total operating revenue stood at $690.6 Mn, above the $670 Mn which was guided by the company in the August trading update.
• FPH’s directors approved an increased interim dividend of 17.5 cps.
• In the Hospital product group, which includes humidification products used in respiratory, acute as well as surgical care, revenue for the H1 amounted to $438.7 Mn.

Outlook

FPH is expecting that H2 revenue for FY 2023 would be higher than H1. It is now targeting constant currency operating expense growth of ~8% for the full year.

Key Risks

The group is susceptible to risks such as regulatory risk, market risk, foreign exchange risk, etc.

Fundamental Valuation: EV/Sales Multiple Based Relative Valuation

Stock Recommendation

Over the last 6 months, the stock rose by ~11.95%. It has made a 52-week low and high of NZD18.02 and NZD33.48, respectively.

The stock has been valued using EV/Sales based relative valuation (on an illustrative basis), and the target price so arrived reflects a decline of low double-digit (in % terms). A slight discount has been applied to EV/Sales Multiple (NTM) (Peer Average) considering the risks associated with the business. Also, FPH’s gross margin stood at 59.8%, down from 63.1% in the prior period as well as below its long-term target of 65%.

Considering the resistance and target level achievement, current trading levels and risks associated, it is prudent to liquidate the stock at the current levels.

Hence, a ‘Sell’ rating has been provided on the stock at the current price of NZD23.49 as of 29 November 2022 (New Zealand Time: 1:36 PM (GMT +13)). 

Technical Overview:

Daily Price Chart

Markets are trading in a highly volatile zone currently due to certain macro-economic 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 share price chart and stock valuation is based on November 29, 2022, and all other data such as stock price performance as of November 30, 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.

Disclaimer

Kalkine New Zealand Limited is a Financial Advice Provider (“FAP”) and is authorised by a Transitional FAP license issued by Financial Markets Authority (“FMA”) to provide financial advice. Kalkine provides only general financial advice through its research reports following a person becoming a member. The reports contain buy/sell/hold and other recommendations in relation to equity financial products. The recommendations and opinions [on this website] / [in this report] do not take into account any of your investment objectives, financial situation or needs. Before you make a decision about whether to acquire a financial product, you should obtain the Product Disclosure Statement from the product issuer. You should consider the appropriateness of advice taking into account your own objectives, financial situation and needs and seek independent financial advice before making any financial decisions. If you act on the advice in the research reports, you may have to pay fees, expenses or other amounts (but not to Kalkine).  Further information about the complaints and dispute resolution process, as well as information about Kalkine’s duties are available on Kalkine’s website.  Please read our Financial Advice Provider (FAP) disclosure statement and Complaints Handling Guide, which are available on the website.