Share Investor: Fisher and Paykel Healthcare

Showing posts with label Fisher and Paykel Healthcare. Show all posts

Friday, July 15, 2011

Share Price Alert: Fisher & Paykel Healthcare Ltd

I wrote about Fisher & Paykel Healthcare Ltd [FPH.NZX] just five weeks ago and indicated I was interested in buying more shares and that investors should take note but be patient as they will get this share cheaper as there was a dividend coming at that time and there looked like there would be more pressure from a falling US buck.

5 weeks ago the stock was trading at $2.95 and as of writing the stock is trading intra day at $2.62. A 33c or around 10% drop in share price in 5 weeks. No great stock picking there, this was almost inevitable but as I said in June:

"FPH is a well managed company with a good history of increasing profits and revenue based on their manufacture and sale of high end, well sought after medical products that have high margins and a reputation for cutting edge technology which more often than not beats its competition".

At current prices this stock is paying a 6.58% gross dividend, so it is a high return in this investment environment and any investor buying now would get a relative bargain.

Like I said back in June though, be patient, I think this stock still has more downside and I am hoping for something under $2.40 to start buying.

Patience is a virtue.

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c Share Investor 2011

Tuesday, June 7, 2011

I'm Buying: Fisher & Paykel Healthcare Ltd

Chart forFisher & Paykel Healthcare Corp Ltd (FPH.NZ)

This is a post made to answer a reader who phoned me the other day in relation to Fisher & Paykel Healthcare Ltd [FPH.NZX] and to explain to readers what I am looking at using the dividends provided to me from the Share Investor Portfolio over the last 3 reporting periods.

It just so happens that the readers phone call came at the same time I was considering buying FPH for the portfolio. I already have 5000 shares but would like to buy perhaps 10000 more for a long-term investment. My reader wanted to know if he should buy at its current price for a shorter term profit.

The case for buying shares in the company has been made many times by me (see links below)and perhaps the best indication of how good the company is as an investment can be found at the post Long Term View: Fisher & Paykel Healthcare which maps out what returns investors have had in the past and what they could expect in the future.

FPH is a well managed company with a good history of increasing profits and revenue based on their manufacture and sale of high end, well sought after medical products that have high margins and a reputation for cutting edge technology which more often than not beats its competition.

The only problem, if there is one, is that much of their business is done in US dollars and due to a weak US buck profits repatriated back to head office in New Zealand have been mostly static over the last 2 years.

This is where my readers request to ask if he might buy shares in the company and my perusing the company and its annual reports over the last 6 months has collided.

I have been watching the share price since I last bought shares in this company in June 2009 at $2.35 (see 3 year chart above) and have been a patient church mouse ever since for an opportunity to get back in.

The share price has taken a bit of a hit over the last 2 months (see 2 month chart below)due to the weak US dollar and over the last two weeks weakened further when their 2011 FY profit showed impacts from the dollar dragging on the bottomline.

Chart forFisher & Paykel Healthcare Corp Ltd (FPH.NZ)

Revenue and profits have grown over the years and their new products, especially their sleep apnea range has a good foot in the door in an ever increasing American market with overweight patients knocking on their doctors doors for help. This will clearly increase revenues in the future.

The currency affect will always be there so investors just have to deal with this. The company have forward hedging in place and next year expect a currency gain to the bottomline of NZ$14 million.

Now is a good opportunity to start looking at buying. The share is currently being buoyed by a 7c dividend which investors are eligible for until June 24, so one might be wise to wait until after that date to see what happens.

For investors like my phone caller wanting to take the dividend here and sell the stock if the share price stays level of rises just beware that because of that aforementioned currency negativity in the market this may not be wise.

For long term investors anything under 3 bucks is a good buy but I am going to keep waiting because I see an opportunity to get in at a far lower price. I will let you know what that is after I make my move.

For short term investors my advice is the same, be patient you can get this share for less.

Disc I own FPH in the Share Investor Portfolio

Fisher & Paykel Healthcare @ Share Investor

Share Investor's Total Returns: Fisher & Paykel Healthcare Ltd
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Discuss FPH @ Share Investor Forum
Download FPH Company Reports

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c Share Investor 2011

Friday, November 26, 2010

Stock of the Week: Fisher & Paykel Healthcare Ltd

I think I may well find a home for the $16,000.00 in dividends gained from the Share Investor Portfolio in the 2010 calender year. I am pretty bloody excited about it.

That stock is Fisher & Paykel Healthcare Ltd [FPH.NZX] and it is on my radar again because the stock has taken a plunge over the last month or so. This is primarily based on the weak US dollar having an impact on profit. Earlier this week its first half 2011 profit result showed a dip in fortunes because of the forex impact but US dollar sales increased markedly and commentary by management indicate increasing sales revenue and as a result of that manufacturing capacity is being increased to keep up with demand.

The profit drop wasn't well received by the market and the stock has dropped by 20c since the announcement and looks to be headed further south as short term investors seem to be indicating that they expect the US dollar to remain weak for some time.

This is not going to last forever though and investors would be wise, if FPH has been on their buy list, to consider putting the stock on their watchlist and look closely for further weakness in share price.

As I said a couple of weeks ago, I am interested in a sub $2.50 purchase price and think that is entirely possible given overall market uncertainty and continued weak US dollar.

Disclosure I own FPH shares in the Share Investor Portfolio

c Share Investor 2010

Monday, November 8, 2010

Fisher & Paykel Healthcare & the US Dollar

Of late the fall in value of the US dollar against the Kiwi dollar has had a deleterious effect on the share price of Fisher & Paykel Healthcare Ltd [FPH.NZX]. This has impacted more so over the last week as the Kiwi was buying almost 80c US as the NZX came to a close last Friday. (see 1 month chart above)

The stock has dropped by over 10% in just over a week in a overall northwards market and will continue to do so as the US dollar does an impression of a kamikaze pilot on speed.

Is this bad news for the company?

Well, yes and no.

Yes because every cent the US dollar drops against ours is a couple of million dollars off the bottomline when revenue are brought back to New Zealand and onto the balance sheet.

The bulk of the "losses" via the currency change will not be shown on the November 24 2010 half year results because FPH still have some hedging in place but we will see some impact and a clearer view on how the company is going to deal with the currency issue for 2011 and onwards.

FPH is doing very well by increasing sales in US dollar terms and has historically done well for long term shareholders, the 2009 half year result was a record one and revenue growth has continued for the company for multiple consecutive years. FPH will manage currency in the future but attention instead investors should be focused on the performance of the business rather than macro issues that are largely out of its hands.

In news to come latter this morning the company is finally building a further extension to its Auckland manufacturing base to cope with increasing demand for its products.

Look for a good opportunity to lay your hands on some of these shares as the price inevitably dips below 3 bucks.

I am looking for sub $2.50.

Disclosure I own FPH shares in the Share Investor Portfolio

c Share Investor 2010

Saturday, September 4, 2010

Mondrian Investment Partners take stake in Fisher & Paykel Healthcare

Mondrian Investment Partners yesterday become a substantial shareholder in Fisher & Paykel Healthcare Ltd [FPH.NZX].

The fund manager disclosed they took a 5.01 percent stake after purchasing 483,566 shares on September 1.

This is the first shareholding the private investment company has taken in FPH and they give the following reasons for their investment choices:

"We invest in stocks where rigorous discounted cash flow analysis isolates value in terms of the long-term flow of dividends. Dividend yield and future real growth play a central role in our decision making process and over time the dividend component will be a meaningful portion of expected total return."

Hard to know who the seller was but at an educated guess it was probably The Capital Group Companies, Inc who had a 4.92% stake in February 2010 and at that disclosure had sold an almost 1% stake since they disclosed their 5.08% holding in June 2009.

FPH has had a number of stakeholders in the 5% range over the last few years but it seems even though they have stated at time of purchase that their investments are long term they have exited after a few years.

This company is a great long-term investment, one of the best growth propositions on the NZX, so any company taking a substantial holding needs to be patient when investing. They are not going to make big term gains in a few years.

The big gains will be seen 7-10 years.

Disclosure I own FPH shares in the Share Investor Portfolio

Buy Bird on a Wire: The Inside Story from a Straight Talking CEO & more @ Fishpond.co.nz

c Share Investor 2010

Wednesday, April 28, 2010

Fisher & Paykel Healthcare: 2010 Full Year Profit Result rests on Foreign Exchange Movement

The 2010 full year profit for Fisher & Paykel Healthcare [FPH.NZ] out late May (provisionally 26 May) is a hard one to calculate but it probably wont be a vast improvement on the 2009 FY resul t.

Indications are that last years $NZ62 million profit is going to be flatish to slightly up on a good revenue rise spurred on by additional innovations in sleep apnea products and the continuation of purchasing of health related products by US health providers.

This figure will vary depending on how much forward foreign exchange cover the company realises as every cent in movement up in the Kiwi/US dollar cross means $2 million less on the bottom line.

From the 2010 Interim Profit Report from last year (see excerpt below) you can see that FPH's profit calculations were based on an average of 64c to the US dollar and over the last 6 months that average would be closer to 70-72c. The forward exchange cover makes the profit calculation hard to calculate.

"Currency exchange rates continued to be very volatile. During the six months, the NZD:USD spot exchange rate ranged from 0.55 to 0.73 with an average spot rate of 0.64. Our hedging policy again served us well. We had in place at 30 September 2009 a mix of foreign exchange contracts and collar options, up to five years forward, with a face value of approximately NZ$600 million. The US dollar and Euro instruments were at weighted average rates of approximately 0.52 US dollars and 0.44 Euros to the New Zealand dollar and are to protect the company from exchange rate volatility." FPH 2010 Interim Report

Having outlined the above though, underlying revenue and profit in US dollars (most FPH business is done in US dollars and translated back to the NZ dollar where their head office is) will be well up and this is the most important indication of company progress.

The exchange rate factor, while important to shareholders in terms of returns in dividends and realised New Zealand dollar profit, should be secondary to real profit in constant US dollar terms.

FPH shares have been steadily rising over the last couple of weeks and closed flat at $3.49 yesterday.

Disclosure I own FPH shares in the Share Investor Portfolio

Fisher & Paykel Healthcare @ Share Investor

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c Share Investor 2010

Friday, March 19, 2010

Long Term View: Fisher & Paykel Healthcare Ltd

Saturday, September 12, 2009

Stock of the Week: Mainfreight Ltd

In this Stock of the Week I am going to look at Mainfreight Ltd [MFT.NZ] a particular favourite of mine because of its superior management and outstanding results over a long period.

While the stock has been substantially cheaper over the last year (see chart above) and it has been at a high of over 8 bucks over the last 2 years, it is still around 40% off that high and that is my overriding reason for including it in this series.

I bought some more in July at $4.20 after watching it plumb the depths of $3.25 months earlier.

At close of market today the stock was up to $5.13 but has been trading under 5 dollars for the last few months.

The stock is still undervalued in my opinion. Its recent profit announcement wasn't a good one but good management has so far kept the deleterious effects of the global logistics slowdown to a minimum.

Long term the company has grown considerably and once the global recession is over this growth should continue as it has done historically.

Until then prospective investors should see the low share price as an opportunity to make their move.

Please keep in mind the stock can be quite volatile because of relatively low turnover and could of course get cheaper from here.

Once again, good luck!

Disclosure: I own MFT shares in the Share Investor Portfolio

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c Share Investor 2009

Monday, July 20, 2009

Stock of the Week: Fisher & Paykel Healthcare

In this Stock of the Week I am going to look at Fisher & Paykel Healthcare [FPH.NZ] a long term favourite of mine.

While the stock has been cheaper over the last year (see chart above) and it has been close to a high of 5 bucks over the last 2, it is still more than 10% off its recent highs and that is my overriding reason for including it in this series.

That and the following important positive points:

1. The company has an enviable history of good revenue growth and profit

2. Looking into the future, its cutting edge technology and high R & D spending make for continuation of point number one.

3. Profit and sales have been recession-proof in the past and that is evidenced in their last profit result.

Even though the stock price is just over 10% off a 6 month high of NZ$3.46, it has found a comfortable niche in share price between $2.80 and $3.20 for the last year, so there is room in that 40c range for short termers to trade and long termers to pick up more shares if the stock moves to the bottom of that range.

I managed to add 3000 more FPH to the Share Investor Portfolio on June 16 2008 for $2.35.

Please be aware though that the stock price is particularly sensitive to currency fluctuations, with any upwards pressure on the Kiwi dollar having a negative impact on share price and vice versa. If the NZ dollar trades out of the 60c range in either direction then you are likely to find opportunities from either side of the share price equation.

It is a quality stock with something for everyone.

Good luck!

Disclosure I have FPH shares in the Share Investor Portfolio

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c Share Investor 2009

Tuesday, May 26, 2009

Analysis - Fisher & Paykel Healthcare: FY Profit to 31/03/09

Lets take a quick look at today's profit announcement for Fisher & Paykel Healthcare Ltd [FPH.NZ]

Key Points:

1. Real revenue growth up by 10% to US$299.3 million.

2. Profit up over 70% and revenue up 28% is an excellent result- In New Zealand dollar terms.

3. A big contribution from a favourable exchange rate.

4. Nice contribution from the sleep apnea products.

5. Steady DIV of 7 cents - a DIV re-investment plan to be initiated.

6. Outlook positive for 2009-2010.

The stockmarket has reacted negatively to this result, marking shares down 20c at time of writing because profit guidance by management for the next year is lower than expected by analysts.

On first glance this might frighten the unwary FPH shareholder but if you have been watching the US/NZ dollar exchange rate you will know that this had favoured the company in a major way over the last year and as revenue is reported in kiwi dollars this has had the effect of boosting revenue higher than real revenue growth from increased sales.

This favourable boost to company revenue through exchange rate crosses is not going to continue over the coming year and may in fact negatively impact the bottom line, as it has done in the past.

These facts are already known by the market and there should be no surprise to anyone about the exchange rate factor and its effect on company profit. Shareholders shouldn't expect the same "windfall" profits next year.

All I can say is the analysts put the anal in their name -try looking outside the office next time you quote forward profit projections.

Of course the material sales revenue figures are the all important ones and must be the main stress in this profit report and that has increased 10% to US$299.3 million-mostly on the back of their sleep sector products.

Shareholders should take note that the company is still growing, and your focus needs to be on the bottom line health of the business and not on exchange rate fluctuations which will occur regardless of what the company does.

The company like the name, is in good health.

You can find the full Fisher & Paykel Healthcare FY 2009 profit announcement here .

Disclosure I own FPH shares in the Share Investor Portfolio

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c Share Investor 2009

Wednesday, May 20, 2009

Schroder Investment Management takes big Fisher & Paykel Healthcare Stake

Back in August last year I wondered whether Schroder Investment Management, a large multinational investment company, had added to their large Fisher & Paykel Healthcare [FPH.NZ] shareholding (they didn't) but they have been making large share movements in that area this year.

After ditching about 25% of their holding on March 19 (PDF) to take their position to 4.7% of total FPH shares issued, today in an NZX disclosure (PDF) it was revealed that Schroders have taken their holding to just under the magic 10% mark, their biggest shareholding in the company to date.

I make no bones about it, I see this company as one of the NZXs stars and pick it as one of the best long-term performers for the next ten years if the last ten are anything to go by. Having Schroders take such a large stake certainly gives pause for thought that I actually might have known what I was doing when I bought shares in the company but as I pointed out in that August article Schroders share the same investment style that I do so it is no surprise that both of us would make the same pick:

We are long-term investors: establishing the fair value of a security takes the discipline to avoid being caught up in market fashions and the confidence to be contrarian when necessary. We focus on the ability of a business to generate sustainable value and earnings growth. We look at the quality, as well as quantity, of earnings and we meet company managers and ensure that we fully understand their marketplace and business strategy. We believe that, over time, the mis-pricing of stocks versus fair value will be recognised by the market, and that our long-term approach to research will lead to long-term outperformance.

Having said that, Schroders did sell a small portion of their holding in March and I have no idea as to why (one can only assume for a short-term profit) but increasing their holding to just below 10% is certainly an interesting move.

As their statement above suggests they have been buying FPH at relative bargain prices compared to historical values and to be sure any serious "mis-pricing" of this stock in comparison to its concrete revenue and profit results will see this small shareholder take advantage of that situation.

Fisher & Paykel Healthcare will be reporting its Full Year 2009 profit results Tuesday May 26, 10.00am (NZ Time) - A conference call will be held at 1.00pm to discuss the results and you can listen to it here.

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Friday, July 15, 2011

Share Price Alert: Fisher & Paykel Healthcare Ltd

Tuesday, June 7, 2011

I'm Buying: Fisher & Paykel Healthcare Ltd

Friday, November 26, 2010

Stock of the Week: Fisher & Paykel Healthcare Ltd

Monday, November 8, 2010

Fisher & Paykel Healthcare & the US Dollar

Saturday, September 4, 2010

Mondrian Investment Partners take stake in Fisher & Paykel Healthcare

Wednesday, April 28, 2010

Fisher & Paykel Healthcare: 2010 Full Year Profit Result rests on Foreign Exchange Movement

Friday, March 19, 2010

Long Term View: Fisher & Paykel Healthcare Ltd

Saturday, September 12, 2009

Stock of the Week: Mainfreight Ltd

Monday, July 20, 2009

Stock of the Week: Fisher & Paykel Healthcare

Tuesday, May 26, 2009

Analysis - Fisher & Paykel Healthcare: FY Profit to 31/03/09

Wednesday, May 20, 2009

Schroder Investment Management takes big Fisher & Paykel Healthcare Stake

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