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HHG Investor Presentation - Fletcher Building and Fisher & Paykel Healthcare

HHG is hosting the Investor Relations team from Fisher & Paykel Healthcare and Fletcher Building. The presentation which is to be held on the 4th of October 2017 at 9:30am through to 11:30am, at the recently completed function centre of the Sudima Hotel, Christchurch Airport and will be followed by refreshments. 

The invitation to attend the investor presentation is open to clients and friends of clients, so if you know someone who may be interested please let us know & feel free to bring them along. Speak with your adviser or call 0800 10 40 50.

Fletcher Building (FBU)

Gross Yield: 6.71%
Current Price: $8.07
Consensus Target Price: $8.44

Fletcher Building Limited delivers building products, construction materials and services across Australasia, Asia, the Americas, Europe, the Middle East and the South Pacific. Its main divisions are Heavy Building Products, Light Building Products, Laminates & Panels, Distribution, and Construction. 

Fletcher Building have certainly had their fair share of bad news of late. Their latest result aired much of that dirty laundry, which included over $200m in write downs on major projects. 

This did create negative headlines in the press, but it also masked a reasonable performance in the company’s other divisions which saw Fletcher Building report $525m EBITDA (Earnings before Interest Tax Depreciation and Amortisation). 

Net Profit is expected to return to normal levels going forward.  

The recent run of bad updates has seen the share price drop 22% this year. If the problems in the Buildings and Interiors business unit do prove to be a one off then we could see a reasonable rebound in earnings for 2018.  

Fisher & Paykel Healthcare (FPH)

Gross Yield: 2.09%
Current Price: $12.94
Consensus Target Price: $10.99

Fisher & Paykel Healthcare's respiratory and acute care, or RAC, and obstructive sleep apnoea, or OSA, businesses possess solid growth prospects.

We estimate the overall market opportunity at close to 130 million patients, split equally between RAC and OSA, with an estimated 20 million-25 million patients currently undergoing treatment for these disorders.  

RAC in particular enjoys strong competitive advantages because of the dominant market share and high switching costs, which act as barriers to entry and give Fisher & Paykel a narrow competitive advantage. 

In OSA, the transition to home sleep testing will likely boost industry growth rates as more patients undergo treatment compared with conventional sleep labs.  

The growth in Fisher & Paykel depends somewhat on the fortunes of their Australian competitor ResMed. ResMed are forecasting a big uptick sleep apnoea mask growth in 2018 as they ramp up supply. This means that Fisher & Paykel Healthcare are going to face even more competition going forward, something could impact their margins. Fisher & Paykel Healthcare will have to continue to innovate to maintain, or grow market share, something that is not without its risks. 

 

 

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