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CSL has hosed down speculation of a share split to increase the liquidity and affordability of its sky-high stock. The ASX-listed pharmaceutical firm, whose share price has more than doubled in the past three years to a shade under $200, says there is no reason to emulate the three-for-one spit it undertook in 2007.


Chairman John Shine told WednesdayÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s annual general meeting some shareholders have inquired about the possibility of a split, but that the market has changed notably in the past decade. He said shareholders generally understood a split would not change the fundamental value of the company.


ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“Despite the increase in CSLÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s share price over the past four to five years, private investors have not been deterred from buying CSL shares, with the number of shareholders increasing from less than 100,000 to more than 150,000,ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ Professor Shine said.

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CSL: The secrets to their success

Troy Angus, Head of Large Caps at Paradice Investment Management, says it comes down to a few main factors.

A relentless focus on their core competency; blood plasma therapies

Flawless execution. CSL have successfully navigated the ups and downs of the plasma therapies markets to ensure new supply came online when it was needed

A management team of the highest quality, which Troy calls ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“literally world class.ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ÂÂ



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  • 1 month later...
Most investors think of a company's price-to-earnings (PE) multiple as defining its value. For them, a stock on a PE multiple of 12 times is cheap, while one on 24 times must be expensive. But is it that simple?


The PE multiple is calculated by dividing the share price by the upcoming year's earnings. This necessarily requires a forecast, and in practice most rely on the consensus derived from an average of brokers' estimates. However, as with all forecasts, these can change over time and end up wrong. Value stocks can turn out to be value traps, where the earnings are found wanting, and a seemingly low PE turns out to be anything but. ... In the end, it is just as important to focus on the "E" assumed in the PE than the multiple itself. ....


... CSL has traded for decades on PE multiples many have considered too expensive. However, from any point over this time its shares have delivered outsized returns, thereby proving they were undervalued after all. Since its float in 1994, CSL's share price has risen from 77ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ (on a split-adjusted basis) to about $170. This price rise can be split into two parts. Its forward PE has risen from 17 times to now 29 times, up about 70 per cent.


Meanwhile, its forward earnings have risen from 4.5ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ per share to $6, up more than 13,000 per cent. In taking a longer-term perspective, the example illustrates that growth is a far more important driver of valuation than the starting PE.


Accounting rules can discriminate between the growth investments of intangibles-based companies and capital-intensive ones. ... CSL invests approximately $1 billion on research and development mostly aimed at finding new medicines. This amount is immediately expensed in the year incurred and thereby reduces earnings, even though doing so creates a timing mismatch with the revenues that are usually generated some years out. CSL's earnings and PE multiple are penalised by the investment.


Were CSL's R&D investment to be ... capitalised and expensed over time, earnings would be approximately one-third higher, and the current PE multiple of 29 times would reduce to a more palatable 22 times...

Julian Beaumont is the investment director of Bennelong Australian Equity Partners
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  • 2 months later...

CSL boosted its half-year net profit 6.8 per cent to $US.16 billion ($1.6 billion) and raised its dividend 8 per cent to US85Ãâہ¡ÃƒÆ’‚¢, helped by strong sales of its core immunoglobulin and speciality products.


Full-year profit will be at the upper end of the range of $US1.88 billion to $US1.95 billion set last August, an increase of 10 per cent - 14 per cent at constant currencies.


Underlying net profit rose 10.1 per cent at constant currencies, on 10.5 per cent higher sales of $US4.4 billion at constant currencies, and earnings per share aso rose 10 per cent to $US2.56.


- again!

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