CSL Limited (CSL)
BUY

Plasma Recovery

 18 Aug 2022
Sector: Health Care

Need to know:

  • FY22 Results inline market
  • Guidance looks weak, but is likely to prove conservative
  • Plasma collection volumes +24%yoy, and ahead of pre-COVID levels

Investment implications

FY22 earnings:  $US2.3bn vs inline with market, EPS $US4.81 vs $US4.88 market, DPS $US2.22 vs $US2.10 market.

FY23 Guidance: 7-11% revenue growth, NPAT $US2.4-2.5bn. At face value, this looks soft vs the market looking for +20% revenue growth and NPAT of $US2.8bn. CSL guidance excludes earnings from the Vifor acquisition (we expect $US150-200m).

Market consensus is messy for FY23E given the mixed treatment of CSL’s Vifor acquisition at present (approved post-June 30, 2022). In our view, CSL guidance is largely in line with market consensus ex Vifor. The market is likely to leave FY23E forecasts unchanged.

Plasma volumes improving:  CSL points to strong plasma collection volumes as COVID recedes. Volumes are now above 2019 levels.  Volume growth for FY23E should continue to benefit from increased collections and 27 new centre openings in 2022.

Overall thoughts: A result held back by well-discussed issues regarding plasma collection volumes and higher costs – both due to COVID. There is not enough in our view to see CSL share price rally away near-term (has performed strongly going into this Result), particularly given CSL premium multiple 36x PER FY23E.

Earnings guidance appears conservative given collection centre volume growth in 2H22, and commentary from key US peers. CSL will hold a Vifor investor day in October, where formal guidance is likely to be given.

Both 2023E/24E have the prospects of being +20% earnings growth years given the inclusion of Vifor. This helps underpin our Buy rating on CSL.

This commentary reflects our initial view. For detailed reports for companies under Sandstone Insights coverage, see our latest research notes for our investment view and specific risks associated with investing in these companies.

FIGURE 1: CSL PLASMA VOLUMES STRONGLY RECOVERING

 

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Stock overview

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Company overview

CSL is a global biotechnology company specialising in immunodeficiency and haemotology therapies.

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