By Jenny Ruth
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Tuesday 15th March 2011 |
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Medical supplies company EBOS Group's shares appear fairly priced but an acquisition could change that perception, says McDouall Stuart.
It values EBOS shares at $7.29.
"With cash of $17 million, no debt and a $106 million funding facility in place, the company is focused on further acquisition opportunities. A broad range of opportunities are being evaluated," the broker says.
"The company has a five-year goal of matching New Zealand revenue in Australia. With Australian sales at just under 10% of New Zealand sales, a major acquisition is likely in the near to medium term," it says.
Since directors, senior management and their associates own about 30% of EBOS and they have more than 20 years of successful stewardship of the company, "both the chief executive (Mark Waller) and chief financial officer (Dennis Doherty) should ensure that any acquisition is well considered."
EBOS' involvement in the healthcare industry in Australia and New Zealand will continue to benefit from population demographics, McDouall Stuart says.
It is forecasting net profit will fall to $24.8 million in the year ending June from $25.5 million the previous year before rising to $28.1 million in 2012 and $30.9 million in 2013.
"The company is optimistic of its prospects in the resilient health sector and is confident of its growth prospects."
Recommendation: Hold.
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