FPH - Fisher Paykel Healthcare Corp

Started by Left Field, Jul 06, 2022, 01:43 PM

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Basil

Quote from: Old mate on Aug 19, 2022, 12:18 PMWonder what fisher funds reckon? Still buying more?

Fisher funds have yet to do a mea culpa for their ATM stake so their usual pattern of buying more on the dips will likely follow.  Whether that leads to future underperformance or outperformance remains to be seen.

Shareguy

Quote from: winner (n) on Aug 19, 2022, 11:49 AMWhat has happened ,,,,,, profits are now less than late 2019

You got me thinking Winner.  According to Annual report I have EPS of

2019. $36.02 eps
2020. $49.06
2021. $90.4
2022. $65.0
2023. $43.05 Craig's  forecast

Share price hit $20 November 2019.  Even with todays announcement 2023 EPS would of thought to be above 2019.


winner (n)

Quote from: Shareguy on Aug 19, 2022, 03:14 PMYou got me thinking Winner.  According to Annual report I have EPS of

2019. $36.02 eps
2020. $49.06
2021. $90.4
2022. $65.0
2023. $43.05 Craig's  forecast

Share price hit $20 November 2019.  Even with todays announcement 2023 EPS would of thought to be above 2019.



I reckon Sep19 was really the last pre-covid norm

Rolling annual earnings at Sept19 were 233m or 40.7 cents/share

Rolling annual earnings this Sept22 likely to be 236m or 40,9 cents / share

So lets say Sept19 and Sept22 annual (rolling 2 halves) earnings are basically the same

Sep19 share price was just over $17 .... PE over 40

So today share price say $20 - pe nearly 50

I like this bit of sage wisdom The moment you pay top dollar for top dollar, you are hoping both the P/E and the margin is sustained indefinitely.


Even at $20 maybe paying top dollar and hoping for the PE (high 40s) is sustained and more importantly the margin is sustained (and today's comments about margin a worry eh)

So shareguy that's how I see the present situation - profits back to late 2019 levels with a bit of headwind

But markets are funny things eh so maybe all this will wash over and we will be back to normality and a share price of $35 again

Shareguy

Thanks Winner. Thay say second half is going to be better, let's hope so.

The pandemic has accelerated growth.  FPH are now in a lot more countries so consumables should benefit long-term.

I still think it's a quality blue-chip bottom draw share that's going through a few teething problems. 

Will be interesting to see what Craig's say after downgrading end of July to $21.

Have had a substantial holding for over 15 years.  The only mistake was listening to my broker and selling some at $4 then I think $12 as he said "overvalued". 

Stockgathering

Quote from: Basil on Aug 19, 2022, 11:22 AMUgly numbers.  Many parallels to ATM with heavy stocking pre-pandemic and now sales falling off.
Coincidence that the decline in FPH started within a month of the decline of ATM ?

Ugly numbers is going to lead to analysts recalibrating their long term growth assumptions...10 years hardware sales in 2 years, (gosh have they ever explained it in anywhere near such stark terms before ?)

I can see some serious analysts downgrades coming.  Quick back of the envelope, if they make $90m (mid point of guidance this half and say $95m in 2H that's $185m / 577.3m shares = 32 cps.  Even after this mornings decline at $19.60 they trade at approx 61 times FY23 earnings....WOW.

Current consensus is for 49 cps in FY23 growing to 64cps in FY24 and 76 cps in FY25
I can see analysts radially pulling back on those projections and seriously downgrading their DCF valuation.

If I held I would SELL.  Thankfully I have never believed in the hype of super high PE stocks with modest growth rates.

First of 3 downgrades to come ?
Lot of people though the dog was way too bearish with his $15 call earlier this year.
Even at $15 they'd be on a FY23 of ~ 47 which now looks stretched to me.


Ugly numbers indeed, still a good company I think but at present share price of about 20 dollars not a good investment I would have thought.
Full year NPAT looks now possibly as low as $200m for the 2023 financial year. How low do we think the Share Price is likely to go. Even on a 2023 P/E of 30 if say NPAT turns out to be close to 200m than the SP would be about halve what it is now. And P/E will still be 30, that seems high for a company earning the same as 4 years ago.

Basil

#35
Quote from: Stockgathering on Aug 19, 2022, 04:58 PMUgly numbers indeed, still a good company I think but at present share price of about 20 dollars not a good investment I would have thought.
Full year NPAT looks now possibly as low as $200m for the 2023 financial year. How low do we think the Share Price is likely to go. Even on a 2023 P/E of 30 if say NPAT turns out to be close to 200m than the SP would be about halve what it is now. And P/E will still be 30, that seems high for a company earning the same as 4 years ago.

Welcome to the forum, I couldn't agree more.  In addition to fundamentals I see from a TA point of view the long term downtrend from ~ $37 in Sept 2020 is still intact.

"The moment you pay top dollar for top dollar, you are hoping both the P/E and the margin is sustained indefinitely" Winner.

I think its clear that along with sales declining sharply both the margin and the metrics this trades on are very fragile and vulnerable.
Took quite a while for ATM to lose its "market darling" status so I expect it will take a while for reality to bite with this one too.

kasper

Great long term hold, profit still higher than pre covid levels so around $21 fair value for now based on that alone, too busy skiing to listen to a lot of barking. PS-Not selling any of my good sized holding.

kasper

Quote from: winner (n) on Aug 19, 2022, 12:00 PMFPH annual (rolling 2 halves) sales now 31% down from their peak ..... A2 annual sales down 31% from their peak

That's so spooky

Wonder who will recover the best?
Completely different animals, one is a one trick non essential pony whereas the other sells into over 120 countries and is an essential product.

winner (n)

#38
Quote from: kasper on Aug 19, 2022, 09:19 PMCompletely different animals, one is a one trick non essential pony whereas the other sells into over 120 countries and is an essential product.

Spot on .... but I'm not comparing company finances per se

More a study of market and investor behavior / sentiment - like how do markets / investors / punters / sentiment react when high flying stocks on high multiples have significant sales decline and margin problems - in this regard there is a simiarity between A2 and FPH

Basil

#39
Quote from: winner (n) on Aug 20, 2022, 10:55 AMSpot on .... but I'm not comparing company finances per se

More a study of market and investor behavior / sentiment - like how do markets / investors / punters / sentiment react when high flying stocks on high multiples have significant sales decline and margin problems - in this regard there is a simiarity between A2 and FPH

I know exactly where you are coming from even if others lack objectivity.  It will take quite a while for investors to fall out of love (sentiment) with FPH which for many years has been perceived as a blue chip market darling which could do no wrong just like it took a long time for investors to fall out of love with previous market darlings like RYM and ATM.   I think a very big part of the market psychology with blue chip market darlings is early investors in stocks like these have done extraordinarily well.  Because of the level of embedded profits many investors develop "attachment" issues. 

The bottom line as I see it is they have had 10 years hardware sales crammed into 2 years because of the pandemic.  I think objectively people should just soak that statement the company made in and mull over the impact on hardware sales going forward.   To me, when you bring forward demand like that in such a huge way its as certain as night follows day that subsequent hardware demand will be very seriously affected.

Combine that almost certain large reduction in demand with lower margins and the really lofty metrics this trades on and from a fundamental perspective its hard to see any other outcome than a material decline from here.  From a TA point of view the unbroken downtrend that started at ~ $37 just on two years ago speaks for itself.

My investment thesis when chasing big bucks is that when TA and FA both make a really compelling case for a buy there is almost always really serious money to be made.  In my opinion the exact opposite is the case here and I expect the well entrenched downtrend to continue for quite some time.

BlackPeter

#40
Quote from: Basil on Aug 20, 2022, 01:16 PMI know exactly where you are coming from even if others lack objectivity.  It will take quite a while for investors to fall out of love (sentiment) with FPH which for many years has been perceived as a blue chip market darling which could do no wrong just like it took a long time for investors to fall out of love with previous market darlings like RYM and ATM.   I think a very big part of the market psychology with blue chip market darlings is early investors in stocks like these have done extraordinarily well.  Because of the level of embedded profits many investors develop "attachment" issues. 

The bottom line as I see it is they have had 10 years hardware sales crammed into 2 years because of the pandemic.  I think objectively people should just soak that statement the company made in and mull over the impact on hardware sales going forward.   To me, when you bring forward demand like that in such a huge way its as certain as night follows day that subsequent hardware demand will be very seriously affected.

Combine that almost certain large reduction in demand with lower margins and the really lofty metrics this trades on and from a fundamental perspective its hard to see any other outcome than a material decline from here.  From a TA point of view the unbroken downtrend that started at ~ $37 just on two years ago speaks for itself.

My investment thesis when chasing big bucks is that when TA and FA both make a really compelling case for a buy there is almost always really serious money to be made.  In my opinion the exact opposite is the case here and I expect the well entrenched downtrend to continue for quite some time.

Well, I guess its quite easy to kick anything or anybody while they are down  ... and that's the reason so many people like to do it. Does not mean its right, but it is easy. As well  - as we all know, if a stock is in an uptrend than the chances are 60% that it stays there, and the same is true for a downtrend ... i.e. it is reasonably safe to kick a downtrending stock and still appear as an expert.

So - yes, the odds are with you (and if its just to cater for this over- (or under-?) swing of negative hype coming up). 

Still no reason to highlight only the negatives and ignore the positives.

FPH is an outstandingly successful company producing stuff people need.

They do make part of their money with selling the initial hardware (like car manufacturers making money when they sell their new cars), but they actually make more moneny with selling all the necessary consumables (in the car industry this would be spares, various filters, belts, spark plugs, bulbs).

If FPH sold 10 years worth of hardware in only 2 years, then these ventilators (or whatever the correct term is) will need (if used) as well 10 times the amount of consumables.

I would not expect the healthindustry to stop buying new FPH products for the next 8 years, but I would expect new ventilator sales to drop somewhat ... and consumables to go up and stay up.

I'd expect a return to the median growth ... and actually, I think that's were we already are. Mabye a wee under swing, but hey - who can really time the bottom ... and from there it will go up again.

Pretty sure that anybody buying FPH at todays prices will be pelased in a decade to come, but sure - if you can not only talk about bottoms, but are able to recognise and seize them in real time, than feel free to pick the bottom.

Good luck ... though I guess it is a bit like playing musical chairs with hundred participants ond just one chair, but hey .... the one getting the chair will brag for eternity and the other 99 will just tell porkies.

winner (n)

BlackPeter .....you didn't mention that Lewis said they got confidence that they can continue to build on their proven 50-year track record and reach more patients with their respiratory therapies.

kasper

Quote from: winner (n) on Aug 19, 2022, 12:00 PMFPH annual (rolling 2 halves) sales now 31% down from their peak ..... A2 annual sales down 31% from their peak

That's so spooky

Wonder who will recover the best?
Lol I think you already know the answer to your question but maybe it was a trick question? On another note I see after 5 downgrading+5 unchanged analysts the avg tp is now $22.26 with the PE dropping to 35 next year on projected earnings so all just a temporal storm in a teacup really, but I'm sure there will be endless bored barking for a while yet from some kennels.

kasper

Finished up 3.1%, not bad after a down day on the US, bit of an overreaction by a few punters on Friday I reckon.

winner (n)

Good article by Tim Hunter in NBR if you can access

The madness of crowds
Expectations of the gains from Covid for Fisher & Paykel were bullish, until they weren't.

https://www.nbr.co.nz/hunters-corner...ess-of-crowds/


From our vantage point in what was once the future, we can see the market miscalculated F&P Healthcare's performance by billions of dollars, which is a lot. The result for some investors was probably costly, so it's worth looking back to see what we can learn.