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Sonic Healthcare Ltd – FY19 Another Steady Year of Growth.

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

Sonic Healthcare (ASX: SHL) is a leading provider of medical diagnostic services (pathology and radiology). Sonic is the dominate position in the Australian market and has established a large presence in the United States and German markets and, to a lesser extent, the United Kingdom, Switzerland, Belgium, and New Zealand markets.

Sonic Healthcare - fy19

What is the FY19 result?

Today (Tuesday 20 August 2019), Sonic Healthcare released its FY19 results. The main points are as follows:

  • Underlying EBITDA of A$1,061 million, up 10 per cent on FY19. In constant currency terms, EBITDA growth was 6.7 per cent in FY19. This outcome is in line with guidance.
  • NPAT of A$550 million, up 16 per cent.
  • Earnings per share is A$1.22 in FY19, up 9 per cent.
  • The final dividend is A$0.51 cents per share (30 per cent franked), up 4.1 per cent.

Organic revenue growth for the group as a whole in FY19 was at around 4 per cent on a constant currency basis. Sonic  Healthcare’s Australian, US and UK laboratory operations and the Imaging Division achieved higher organic growth rates, whilst the growth in the German and Belgian operations were impacted this year by regulatory changes.

 

What is the outlook?

Management expects “EBITDA growth of 6 to 8 per cent on underlying FY19 EBITDA of A$1,052 million (constant currency terms)”. The FY19 base has been adjusted for accounting changes. Management considers that Sonic Healthcare is “well positioned for ongoing strong growth” reflecting, in part, “a pipeline of acquisition, joint venture and contract opportunities” as well as “technology and innovation driving efficiencies”.

 

What is the market’s reaction?

Today (Tuesday 20 August) Sonic Healthcare is trading at around A$28.00 per share, up around one per cent in a stronger overall market. This reflects that the FY19 result is broadly in line with expectations and contains no surprises. Sonic Healthcare trades at a P/E ratio in the mid 20’s and an annual dividend yield of around 3 per cent (partially franked).

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978) (“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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