The CSL Limited (ASX: CSL) share price could be one of today’s movers after reporting its FY19 result and providing guidance for FY20.
CSL Limited (ASX: CSL) is Australia’s largest (and some might say best) healthcare company, specialising in biopharmaceuticals. Founded in the late 1900s as the Commonwealth Serum Laboratories, CSL was sold by the Australian Government to Australian investors via the share market in 1994 at $2.30 per share, at which time it doubled its size through an international acquisition. Today, CSL is a global leader in blood plasma vaccines (think: the flu) and antivenoms, providing relief for potentially life-threatening medical conditions.
CSL’s Record FY19
CSL reported that its net profit after tax (NPAT) increased by 11% to US$1.92 billion for FY19, it rose 17% in constant currency terms. Profit / earnings per share (EPS) rose by 16% in constant currency terms to US$4.236.
According to CommSec and Bloomberg, the market was expecting a net profit of US$1.91 billion from CSL, so it slightly beat that expectation.
The CSL result was driven by revenue growth of 11% with “strong growth” in immunoglobulin and albumin therapies, high patient demand for specialty products Haegarda & Kcentra, the successful evolution of the haemophilia therapies portfolio and Seqirus delivering strong profit growth.
Privigen sales went up 23%, Hizentra sales grew by 22%, Albumin sales rose by 15%, Idelvion sales increased by 40%, Haegarda sales were up 61%, Kcentra sales rose by 14% and seasonal influenza vaccine sales went up by 19%. It was a solid performance by most of CSL’s products.
One of the most important elements to CSL is the continuing research & development. CSL revealed that its CSL112 trial (cardiovascular disease) phase III is progressing, CSL312 phase II study in patients with HAE are enrolled, the CSL964 phase II/III study in prevention of GvHD with AAT has been initiated and Hizentra & Privigen has been approved for CIDP in Japan. These are the future additional profit drivers of CSL and it’s good to see further progress.
The Board of CSL has declared a final dividend of US$1 per share, bringing the total full year dividend to US$1.85 per share – up 8%. But in Australian dollar terms the full year dividend is $2.68, an increase of 18%.
Is The CSL Share Price A Buy?
CSL has provided net profit guidance of US$2.05 billion to US$2.11 billion in constant currency terms, which would be growth of 7% to 10%. This includes the one-off financial headwind of transitioning to a new model of direct distribution in China.
The healthcare company may be trading at a much higher price/earnings ratio multiple compared to most other ASX 20 shares, but I think it’s worth it with the continuing profit growth the company is generating year after year. Quality is not cheap, but I’m not buying CSL shares today myself.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.