Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on COLOPLAST-B. We currently have 5 research reports from 1 professional analysts.
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Decent quarter, driven by Ostomy and Urology, but challenges ahead
05 Sep 16
Coloplast reported a mixed bag for Q3 16 with sales slightly below while net profit marginally ahead of our as well as consensus expectations. Revenue was up by 4% to DKK3.7bn with organic growth of 8%, limited by a negative currency impact of 4% on account of currency depreciation (particularly that of the GBP, ARS and USD against the DKK). At the segment level, Ostomy Care and Urology Care lead the pack, recording organic growth of +11% and +8%, respectively. However, contrary to the previous quarter, Continence Care picked up momentum (+6% vs. +3% in Q2 16) while Wound & Skin Care slowed down significantly (+4% vs. +9% in Q2 16). The adjusted operating profit rose c.3% to DKK1.2bn (adjusted margin down 40bp to 32.7%) while a net financial income of DKK69m compared to a net financial expense of DKK140m and a lower effective tax rate of 23% vs. 24% for Q3 15, accentuated the net profit (+38% to DKK978m, margin up 650bp to 26.5%). On the flipside, higher than anticipated currency headwinds (the latest being the post-Brexit fall in the GBP) resulted in a third successive guidance downgrade during the year, with management lowering its reported sales growth expectations to 6% from the previous 6-7% for FY 16 while maintaining other previous expectations (organic sales growth of 7-8%, organic EBIT margin of 33-34% and reported EBIT margin at 33%). Separately, in its Capital Markets Day (CMD) held in June 2016, the company shared its updated corporate strategy, LEAD20, along with its revised long-term guidance. The key focus in the next five years is on the company’s Direct-to-Consumer programme, Wound care and the US markets while growing market shares across the remaining businesses and geographies (the company plans to invest DKK2bn in these targeted growth drivers). However, with the company unable to shrug-off the continued emerging markets weakness, management lowered the long-term sales growth projections to 7-9% from the earlier guidance of 7-10% while keeping its expectations of an EBIT margin improvement of 50-100bp annually.
UK Charter business recovers as currency benefit dissipates
18 Feb 16
*Mixed Q1 16* Coloplast released mixed numbers for Q1 16 (ahead of our expectation on the top-line but falling short on the bottom-line). Sales were up 7% (all sales growth numbers in organic terms, unless specified otherwise) to DKK3,656m, against our expectation of DKK3,566m. Forex tailwinds, primarily on account of the strengthening of USD and GBP against the DKK, contributed 4ppts to the top-line, which was up 11% on a reported basis. All segments reported good performances, led by Wound & Skin care (+10%; Q4 15: +9%) and followed by Ostomy Care (+8%; Q4 15: +7%) and Urology Care (+7%; Q4 15: +5%). As expected, Continence Care reported a sequential decline (+6%; Q4 15: +10%, which had benefited from stocking by a major distributor in the US). On the other hand, profitability was relatively weaker - the EBIT margin, at 32.7%, was slightly below our estimate of 33.1% - which management attributed to the ongoing manufacturing shift to Hungary as well as higher costs in emerging markets. The real miss came in terms of the bottom-line, which was negatively impacted by losses on foreign exchange contracts (the reported net margin was 22.6% vs our expectation of 25%). *Guidance downgrade in DKK terms* Although the organic growth guidance (sales growth of 7-8% and EBIT margin of 33-34%) was maintained, waning forex benefits prompted the company to downgrade DKK numbers - sales growth is now guided to be 7% (8-9% earlier) while the EBIT margin is expected to be 33% (earlier 33-34%). Management has also announced a DKK1bn share buy-back programme, which will commence in Q2 16 and will run until the end of FY 17. The company will have a capital markets day on 22 June 2016.
Robust results despite headwinds; recovery on the cards
31 Dec 15
Following a series of downgrades (three to be precise), Coloplast ended a turbulent FY15 on a better note, with Q4 15 numbers coming in slightly ahead of the more conservative market expectations (both top-line and profitability). Q4 sales were up 13% yoy to DKK3.6bn, with a 5% forex benefit complementing the robust 8% organic growth. Profitability remained strong with the adjusted EBIT increasing 14% to DKK1.2bn (margin improved by c.30bp to 34.5%). However, at the reported level, the company posted an operating and net loss of DKK1.8bn and DKK1.4bn, respectively, due to the DKK3bn mesh litigation provisions recognised in September 2015. For the full year, both sales and adjusted EBIT were up 12% to DKK13.9bn and DKK4.6bn, respectively. The company announced a final dividend of DKK8 per share taking the total dividend for the year to DKK12.5 per share (+9% yoy). For FY16, management expects organic revenue growth of 7-8% at CER (8-9% in DKK) and an EBIT margin of 33-34% (both at CER and DKK).
Another downgrade; this time on mesh litigation
02 Oct 15
Troubles continue to pile up for Coloplast, with the company announcing its third successive guidance downgrade this year (previous downgrades in January and June 2015, respectively). The current downgrade was brought on by the company recognising an additional DKK3bn provision (DKK2.3bn post tax) related to the transvaginal mesh implants litigation (this is in addition to the DKK1.5bn provision recognised in May 2014, taking the total provision to DKK4.5bn). The move was triggered by US court orders to Coloplast to commence discovery proceedings in 200 cases (the company had historically chosen settlement over court proceedings, which are typically less expensive). The associated impact on profitability also saw the company slashing its FY15 EBIT margin guidance from 32% to c.10% in constant currency (c.11% reported). The guidance for the effective tax rate also goes up from 24% to 28%. However, underlying growth guidance has been maintained at 7% organic, 12% reported growth (remember though that this is the revised guidance, pruned from the earlier 8–9% organic, 13–14% reported). Management has also indicated that this will not impact the dividend levels with any shortfalls to be bridged using additional debt financing (this should not be a concern as the company is currently cash positive). The announcement came a month after the company’s Q3 15 results which came in broadly in line with ‘revised’ guidance – revenue up 13% yoy to DKK3,540m (against our DKK3,527m estimate), driven by underlying growth of 7% (8% in Q3 14 and Q2 15 each) and further supported by a 6% currency benefit. New product launches supported growth across segments— Continence Care up 11.5%, Urology Care up 17%, Ostomy Care up 11% and Wound & Skin Care up 18%. However, ongoing operating and regulatory issues dampened the bottom line and the company recognised DKK100m of provisions (inventory write-down and provision for bad debt and US litigation), resulting in the EBITDA and operating margins falling by c.300bps to 33.8% and 30.3%, respectively (although at the adjusted level, margins remained mostly stable).
Coloplast hits a speedbump; downgrades guidance
18 Jun 15
In a surprising turn of events and just weeks after upgrading its FY 15 guidance, Coloplast announced a guidance cut, trimming its growth expectations to 7% organic and 12% reported growth (vs. the previous 8-9% organic growth and 13-14% reported). Management cited the reasons as weakness in its two core markets – the UK and the US (with a larger impact from the UK). While the UK market continued to be challenged by issues in its Charter Healthcare business, the US growth has been weighed down by the Department of Justice subpoena (on charges of kickbacks to distributors), which cramped its external marketing activities, adversely impacting sales. Other peripheral issues, such as write-downs related to its shelved partnership with Devon Medical (for NPWT products), legal provisions associated with the DoJ investigation and increased bad debt provisions (due to negative developments in Greece) also contributed to the downgrade. As a result, margin expectations have been cut from 34% to 32% – half of which stems from operational difficulties and the other half driven by one-off expenses. The market has reacted sharply to the news, with the stock plummeting c.12% following the announcement.
08 Dec 16
Elderstreet stake acquired 02 GENERAL NEWS Globalworth premium In this issue Venture capital firm Draper Esprit has taken a 30.8% stake in venture capital trust manager Elderstreet. Both investment managers focus on the technology sector and they will be able to co-invest. Elderstreet has investments in a number of AIM-quoted companies through its VCTs. The purchase was funded by an issue of Draper Esprit shares worth just over £250,000. Simon Cook, the chief executive of Draper Esprit, is a former partner at Elderstreet so he knows the business and the people who run it, although he did leave more than 14 years ago. Cook has previously acquired portfolios from 3i and Cazenove, two other firms where he has worked. Draper Esprit has an option to acquire the remaining shares in Elderstreet, which has more than £25m under management. Adding Elderstreet to the group enables Draper Esprit to offer investors a range of EIS funds, VCTs and an ISA qualifying listed evergreen patient capital fund. The enlarged group has venture capital assets under management of more than £350m. At the end of September 2016, Draper Esprit had a net asset value of 352p a share, which is similar to the current share price. The June 2016 flotation price was 300p a share. Draper Esprit is quoted on Ireland’s Enterprise Securities Market as well as AIM.
N+1 Singer - Morning Song 05-12-2016
05 Dec 16
RTHM is acquiring a profitable Canadian listed mobile specialist for equivalent of US$42.5m consideration in shares (88.235m). This helps adds to two growth vectors RTHM is targeting; (i) adds unique exclusive audience (10m unique) and (ii) Exclusive demand Yahoo and Facebook. The business has 15 premium and owned and operated apps which provide users with rewards for activity. The business is expected to deliver c$9m of EBITDA in FY18 including $2m of cost synergies. This equates to just 4.7x EV/EBITDA. This marks what we see the first step in RTHM activity to scale the business and deliver on margin potential (see our initiation notes). Our initial estimates for EPS revisions are very significant - for FY18 are 2.3 cents (currently 0.6) and for FY19 4.3 (currently 2.5). There is a call at 830 for investors and we will revise post this.
Panmure Morning Note 02-12-16
02 Dec 16
We expect CareTech to report FY results to September on 8th December. A positive trading update in October indicated that performance for the year was in line with market expectations therefore we are focusing on the outlook. We expect a confident statement since the end of 2016 showed positive trends across fee rates, expansion in places and occupancy. We believe CareTech is well positioned for further expansion, and remains at an attractive valuation. We retain our BUY and 380p price target.
Small Cap Breakfast
07 Dec 16
Creo Medical group—Schedule 1 update.. £20m raise. Expected market cap £61.2m, admission expected 9 December. ECSC—Schedule 1 from provider of cyber security services. Raising £5m. Vendor sale £0.8m. Target date 14 Dec. Expected market cap £15m. RM Secured Direct Lending - The secured direct lending fund intends to float on the Main Market on 15 December raising up to £100m
N+1 Singer - Morning Song 06-12-2016
06 Dec 16
With FY16 volume and revenue already disclosed in the pre-close, the focus in today’s prelims is on PBT (£100.3m versus our £101m) and EPS (96.8p versus our 95.4p). No special dividend triggered this year (none forecast) and DPS is held at 46.8p (N1SE: 48.0p). On end markets, recent commentary is reiterated – the core business is growing, whilst consumer electronics will be subdued in the current year (competitive capacity from Solvay). On currency, there will be a material benefit in the current year (a little more than the £14m to £15m previously indicated), and a further tailwind next year if current rates are maintained (quantum TBC). There is also an investment of £10m today in a minority interest in Magma Global, Victrex’ oil and gas mega programme partner. Although the share price is now close to our TP of 1730p, we feel that there is enough in today’s announcement to retain a positive stance on medium term opportunities with strong cashflow and a special dividend potentially to look forward to in the current year.
Panmure Morning Note 05-12-16
05 Dec 16
This week will see Chi-Med present data on both fruquintinib and epitinib at the 17th World Conference on Lung Cancer, concerning two proof-of-concept trials in non-small cell lung cancer (NSCLC). This morning, the poster presentation ‘A Phase I Study of Epitinib To Evaluate Efficacy And Safety In EGFR Mutation Positive (EGFRm+) NSCLC Patients With Brain Metastasis’ is available for investors to view on Chi-Med’s website.