CSL Limited (CSL)
BUY

Plasma flowing

 14 Feb 2023
Sector: Health Care

1H23 RESULT

Need To Know

  • Plasma collections 10% above pre-pandemic.
  • FY23 guidance reaffirmed at $2.7b-$2.8b constant currency NPATA (~13-18% growth).
  • Interim dividend of US$1.07 per share.

CSL delivered 25% constant currency revenue growth to $7.18b, driven by the acquisition of Vifor, with flat NPAT at $1.62b including the associated acquisition costs. Guidance for the full year was reaffirmed, implying ~13-18% growth. FX headwinds for the half was $138m, with full year expected to be a $175m impact driven by a stronger USD.

Plasma collections strong, up 36% on 1H22, with levels now 10% above pre-pandemic. The Mexico border re-opening has seen collections improve, as well as new centres in the US and Germany. 

IG rebound. Product supply for immunoglobulins continued to improve in a post Covid environment, with revenue growing 19% to $2,227m. Growth was strong across all geographies, especially in EU and emerging markets. 

Flu continued growth. Sequiris revenue grew 9% to $1,653m in seasonal flu vaccines against a backdrop of reduced rates of immunisation. The business is seasonal, and it expects less than 20% of total revenue in 2H. 

Vifor contribution was solid, with revenue growing 15% (on the 1H22 unaudited ~5-month equivalent results). Integration and cost synergies are on track and CSL signed a long-term exclusive licensing agreement for Korsuva in China.

Behring margins improving, although still below pre-pandemic driven by higher collection costs, long inventory cycle and inflationary pressures. CSL expect gross margin to improve over the medium term, driven by collection efficiency and the result has provided the first evidence of the returning margin. 

Investment View

Improved plasma collection volumes and increased patient demand have underpinned a strong result and reaffirmation of guidance. The Vifor acquisition appears to be progressing to expectations, with synergies on track. 

CSL’s product pipeline continues to be strong with product launches of HEMGENIX (first gene therapy for haemophilia B) being approved by the FDA. We expect margins to continue to improve and for CSL to execute on its strategy. We retain our buy recommendation.

Figure 1: Vifor strong margins accretive to group margins. Solid constant currency growth for the group

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Company Overview

CSL Limited (CSL) is a biotechnology company engaged in developing and delivering biotherapies and influenza vaccines that treat people with serious diseases and chronic medical conditions.

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