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FY20 report: Is the CSL (ASX:CSL) share price a buy?

CSL Limited (ASX: CSL) has reported its FY20 report to investors, is the CSL share price a buy?

FY20 result

Biotech giant CSL reported FY20 revenue of US$9.15 billion, up 7.2%. In constant currency terms revenue rose 9% to US$9.3 billion.

There was strong growth across the business with Privigen sales rising 20%, Hizentra sales growing 34% and seasonal flu vaccine sales going up 21%.

Reported gross profit increased by 9.4% to US$5.3 billion and the gross profit margin improved from 56% to 57.1%.

EBIT (click here to learn what EBIT means) increased by 8.5% to US$2.7 billion with the EBIT margin improving from 29.3% to 29.7%.

CSL’s net profit after tax (NPAT) increased by 9.6% to US$2.1 billion. Cashflow from operations jumped 51% to US$2.49 billion.

This result was delivered despite the transition to a new direct distribution model in China where albumin sales decreased 36% which was in line with its guidance. The China transition is now complete and will improve CSL’s participation in the value chain as well as allowing it to work directly with clinicians.

CSL dividend

The CSL board declared a final dividend of US$1.07, bringing the full year dividend to US$2.02 – up 9% from last year.

Outlook

Demand for the company’s therapies remains strong, particularly the immunoglobulins and influenza vaccines.

CSL’s plasma centres and manufacturing facilities remain open and operational to maintain the supply of the medicines. CSL is involved with trying to fight the COVID-19 pandemic with multiple R&D programs in the areas of vaccines, monoclonal antibodies and plasma therapies.

CSL CEO Paul Perrault said: “Demand for CSL’s plasma, recombinant and vaccine products continues to be robust. 

The COVID-19 pandemic does, however, present a challenge for the global plasma industry. The collection of plasma has been adversely impacted in the past few months as communities respond to shelter-in-place orders, extended lockdowns and other government actions. To mitigate this, we have a number of initiatives in place to sustain plasma collections. It is our view that, at some point, the pandemic will recede and, with that in mind, we continue to invest in plasma collection and manufacturing facilities as well as our hallmark research and development programs.”

CSL has estimated net profit after tax for FY21 will be between US$2.1 billion to US$2.265 billion. That would be growth of up to 8%.

CSL is a solid business and it’s the only blue chip delivering growth at the moment. But it’s priced really expensively – the forward price/earnings ratio is in the 40s. Considering growth is just in the single digits, that’s expense. There are other ASX growth shares I’d want to buy first at the current CSL share price like Pushpay Holdings Ltd (ASX: PPH).

At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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