Fisher & Paykel Healthcare

By Dan Stratful (AFA)

Thursday 26th July 2012

Fisher & Paykel Healthcare's (NZX: FPH ) full year results for the year ending 31 March 2012 (FY12) showed very little growth in reported New Zealand dollar (NZD) terms.

However, in constant currency terms, sales increased with FY12 respiratory and acute care product group operating revenue increasing by 18% in US dollar (USD) terms while obstructive sleep apnea product group revenue increased by 7% when measured in USD terms.

Reported net profit however, came in at NZ$64.1 million, which was no real improvement on the NZ$63.9 million (excluding the one off non cash deferred tax charge relating to legislative changes) it reported in FY11.

With 99% of FPH's revenue derived from overseas, FPH is highly exposed to foreign currency movements which have proved unfavorable in recent years and this looks set to continue.

FPH expects underlying revenue growth to accelerate in FY13 as a number of new products are introduced around the world. FY13 net profit of between NZ$62 million to NZ$70 million is expected based on an NZD:USD exchange rate of 75c to 80c.

In FY14 Analysts' expect net profit to come in at NZ$80 million, and on a price: earnings (PE ratio) basis FPH's shares are the cheapest they've been in years current trading at 15.6x FY13's profit forecast and 12.9x FY14's profit forecast, well down the PE of over 20x is used to trade on several years ago.

From a dividend yield point-of-view the shares are also attractive, which due to the steep drop off in the share price, now stands at 8.8%pa - based on the FY12 gross dividend (including imputation credits).

FPH estimates its markets are worth US$3 billion and growing and all FPH shareholders can hope for is a weaker NZD in the future.

About Fisher & Paykel Healthcare:
FPH designs, manufactures and markets products and systems used in respiratory care, acute care, and the treatment of obstructive sleep apnea. Its products and systems are sold in over 120 countries worldwide through direct sales offices and a network of distributors.

Status: HOLD

FPH's shares today traded at $1.95

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