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CSL - CSL LIMITED


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CSL is the best ASX healthcare stock you can publicly buy in my opinion and has the share price appreciation to back it up. CSL is another stock that used to be government-owned, but Prime Minister Paul Keating kicked it out of the nest in 1994 for $2.30 a share (I wonder if he regrets that now). Just three weeks ago, the CSL share price hit a new record high of $242.10 âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ making this ASX giant a $108 billion company.

 

CSL has two primary focus areas: vaccinations and blood plasma products and is an R&D world-leader in both. The company also continues to focus on anti-venoms, immunology and other medical work in various fields.

 

An indication of this companyâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s quality is well told by recounting the swine flu scare back in 2009. The Federal Government commissioned CSL to manufacture the swine flu vaccine for the entire country âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ 21 million doses. Fortunately, it turned out that we didnâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢t need most of them, but if CSL is the governmentâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s go-to company, it says a lot in my opinion.

 

CSL shares do trade at quite a premium (currently at around 38x earnings), but the company has paid a rising dividend every year since 2013. Currently, CSL shares are offering a 0.97% yield âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ based on yesterdayâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s share price and the most recent annual payout of US$1.85 (A$2.65) per share. This gives the company a current payout ratio of 45%. Considering that in 2013, CSL shareholders got a US$1.02 per share payout and the companyâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s current payout ratio is 45%, I donâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢t think itâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s hard to conceive a doubled dividend in 10 yearsâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢ time.

- some broker spiel ðŸÃ‚¤Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¹Ã…“

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The CSL share price is near a record high of $242.10 this morning after a number of bullish notes out of popular sell side research desks including Goldman Sachs, Morgan Stanley and Credit Suisse.

 

The latest round of upgrades to price targets is on the back of brokersâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢ data points suggesting strong demand for CSLâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s core immunoglobulin products used to treat patients by healthcare providers globally.

 

Credit Suisse and Goldmans have a $249 share price target on CSL, with Goldmanâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s noting the healthcare giant is guiding for FY 2020 earnings growth of 13%-17% on sales growth around 13% if you back out the one-off hit associated with the change in Chinese albumin distribution.

 

Over the medium term this change should actually help boost CSLâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s sales and margins in a fast-growing Chinese market.

 

Overall, Goldmanâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s is forecasting 12% earnings per share growth through to FY 2022 to reach its $249 12-month share price target today.

 

The caveats being that CSL is already richly valued with it trading on 30x Goldmanâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s estimates of FY 2021âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s earnings per share, or at 24x its forecast for FY 2020âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s EBITDA at $249 per share.

 

For investors worried that CSL shares are already up 33% in 2019 alone, there are a few points to keep in mind.

 

As Goldmans and other brokers acknowledge CSL is a blue-chip delivering consistent double-digit organic growth mainly thanks to the strong underlying demand for its core immunoglobulin products.

 

This suggests it has a strong market position and a surprisingly common investing mistake is to underestimate how long these kind of strong underlying growth trends can continue.

 

Consider that CSL is largely servicing public healthcare sector demand where thereâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s unlimited and unending public pressure for more spending on public health services.

 

Another point to note on âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‹Ã…“broker valuationsâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢ on these type of growth businesses is that the common âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“sum of the partsâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‚ methodology of the present value of future cash flows is directly dependent on the discount rate used.

 

As global interest rates fall discount rates are being lowered to boost the âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‹Ã…“sum of the partsâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢ valuations.

 

Genuine blue-chip growth businesses like CSL are likely to enjoy fruitier valuations from analysts today if the growth they offer continues to become more valuable in a world where other risk-on or risk-off investment returns become increasingly feeble.

 

Another point to note, but not easy to quantify for even Australiaâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s leading healthcare analysts is that CSL is growing free cash flow at double-digit rates while reinvesting heavily back into the business to research and develop new products.

 

The likelihood of new products such as the much vaunted CSL 112 contributing to free cash flow in the years ahead is hard to quantify in terms of future cash flows, but the point is CSL is able to invest heavily and grow profits at the same time.

 

Finally, CSL also offers exposure away from the soft domestic economy and provides leverage to any further weakness in the Australian dollar. This as cash rate futures traders bet on another rate cut and chatter turns to the prospect of unorthodox central bank stimulus for the local economy.

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CSL will mark 25 years since listing on Monday, when its remarkable success will be recognised. It debuted on the Australian Securities Exchange at a price of $2.30, and while many questioned its future, its young chief executive Brian McNamee was prepared to have a crack.

 

His global growth strategy has seen it become a $244 stock, making it the second-largest publicly listed company in Australia. (This does not include BHPâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s London-listed shares.)

 

Dr McNamee, who is now chairman of CSL, says a lot of âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“very decentâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‚ people who put their money in CSL, probably not understanding what it did, had been well rewarded. A $1000 investment at listing would be worth $483,591 today.

244 X 3 actually

 

https://www.theaustralian.com.au/business/c...eac9f9679795c2f

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âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“When people say it was obvious CSL would be a success, that is utterly incorrect. We were a Ãâہ¡ÃƒÆ’‚­typically under-scaled, low-tech, technology-dependent-on-others organisation.

 

âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“We had no export and we had a very limited future, except ambition. We refused to roll over and be another company that essentially, for good or bad reasons, gets acquired as part of a global roll-up.

 

âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“We were very determined not to see that happen without at least having an attempt to give us a future.âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‚ÂÂ

Brian McNee

 

When it listed as a small-cap, it had revenue of $193m. It recorded revenue of $US8.5bn in 2019.

- now 90% of revenue generated offshore,

- more than 25,000 employees,

- sales in nearly 70 countries,

- has returned $US7bn ($10.3bn) in cash to shareholders via share buybacks since listing.

- R&D spend of $832mill in 2019.

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nip - Brian McNamee is rewriting history a tad imo. Whilst not many would have predicted CSL would grow into what it has become now everyone back then knew that CSL was an iconic operator with a big future. I've just drafted a very full explanation of why I say that but prudence has got the better of me and I've binned it. Let me just say that Brian Mc's story is more monty phython - I grew up in a shoe box I did - skit than reality, from my perspective anyway.
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yeah, triage, I remember a similar viewpoint expressed by you a while ago. They were smart to seize the occasion when it came along.

 

Tangible Assets (incl new plant & equipment) at the time were north of $2, so something with no goodwill and a bit of IP clearly was a "unique opportunity". (If only I knew that back then)

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'One million pages stolen': Aussie giant accuses former exec of espionage

 

Australian blood giant CSL has been rocked by an alleged corporate espionage attack, with a former "high level" employee accused of stealing tens of thousands of its documents - including trade secrets - in order to land a job at a key competitor.

 

CSL's main operating subsidiary, CSL Behring, has launched court action in America alleging its competitor, Dutch pharmaceuticals group Pharming, and former CSL senior medical officer Joe Chiao misappropriated CSL's trade secrets when they took 25 gigabytes of data.

 

read more - https://www.smh.com.au/business/companies/o...016-p5314d.html

 

Happy 25th ASX listing anniversary CSL - nice chart - only a 20 yr chart but one gets the picture

post-330173-1571219828_thumb.png

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