The pathway to normalised collections in FY23f will be the share price catalyst to lift CSL from its disrupted period through the pandemic.
CSL reported a 13% increase in net profit to US$2,375 million (+10% on a constant currency basis) and ahead of its guidance. CSL declared a final dividend of US$1.18 per share (approx. A$1.61) franked at 10% bringing the full year dividend to US$2.22 per share, up 10% on last year.
The company provided guidance for FY22 net profit in the range of US$2,150-2,250 million.
The collection of plasma, the raw material used in many of CSL’s blood products, has been distorted by COVID-19. During FY21, 25 new plasma collection centres were opened and up to 40 new centres are planned for FY22f. Plasma-based products have a 9-12 month manufacturing cycle which means collections made throughout FY21 and 1H22f have been impacted by COVID-19 disruptions. FY23f collections begin next month and will likely see volumes return to normal through CY22 and onwards.
CSL Behring’s products all performed solidly during the year with the core immunoglobulin portfolio (including Hizentra) sales increasing 15% (CC). Sales of Haegarda (for hereditary Angiodema) increased 14% (CC) while albumin sales lifted significantly at 61% (CC).
CSL’s influenza business, Seqirus, saw sales increase 30% (CC) with seasonal flu vaccine sales up 41% on record volume of about 130 million doses.
The construction of CSL’s A$900 million fractionation plant in Melbourne (Broadmeadows) is well advanced and the company is establishing a new global headquarter also in Melbourne.
Investment view
CSL’s FY22f guidance implies the year will see high single-digit IG growth in 2H22f. But the prospect for double-digit net profit growth in FY23f is coming into view. Consensus estimates are already above 15%. The bounce in plasma collections will be the catalyst for the share price to react. CSL’s US collection run rate now sits at 22% ahead of the prior period which supports a 15% year-on-year increase in IG production in CY23f, weighted to 2H23f where growth will hit 30% above the CY21 lows.
In combination with CSL’s customary conservative guidance, we think there is considerable upside for CSL which falls outside the scope of FY22f.
Any material interruptions to the collection cycle would of course be a risk to earnings growth.
We have retained our Buy recommendation.
