FPH - Fisher Paykel Healthcare.

[kiwi_on_OE]

It is possible to spin the FPH slightly more positively. Revenue has been flat in NZD for the last few years, but with much of it's business in USD, it's interesting to observe that revenue in USD has increased at about 10% pa. (271m in 2008, 417m in 2012). A few years ago it needed a low NZD to make a profit, maybe now it has got to the stage where it can make a profit even with a higher NZD.

[modandm]

Per this article: http://www.sharechat.co.nz/article/1...ealthcare.html

it is still on over 15x, this for a company that is not growing earnings at even 5%. The company is still overvalued. I called it at $3.10 when pe was over 20x and outlook was 0 growth.

Investing in a company because it has a dividend yield of 8% is very naive, and I would suggest there is further weakness ahead - I could see a 12x multiple as being appropriate.

Compare it to a company like Apple - which is growing at a good clip and trading on 10x ex cash... You would be mad to own FPH. Same story for AIA. New Zealand investors are far to focused on simple dividned yield and should be considering what the earnings profile is over the next few years. SKC is an example of a NZ company which is growing at 5-10%pa has upside with the convention centre, is relatively ungeared, and is trading on 15x. I know which I would rather own SKC vs FPH. Quality of earnings and barriers to entry also higher with SKC.

FPH a classic 'growth story' that isn't growing - better to call it what it is - a yield story in a defensive sector - but if you do it will have to derate like I say - 10-12x.

[modandm]

It is possible to spin the FPH slightly more positively. Revenue has been flat in NZD for the last few years, but with much of it's business in USD, it's interesting to observe that revenue in USD has increased at about 10% pa. (271m in 2008, 417m in 2012). A few years ago it needed a low NZD to make a profit, maybe now it has got to the stage where it can make a profit even with a higher NZD.

It does make a profit. No one is saying it doesn't. The problem is the profit is not growing while you are paying a multiple for it that suggests it should be actually growing its profit at 5-10% every year.

[biker]

The multiple may well indicate the market is anticipating a growth in profit and/or a major player wishing to integrate FPH's innovation , creativity , technology and products into their business.
The share price movement could well indicate the market is getting impatient. Hopefully a case of wealth transfer from the impatient to the patient.
Time will tell.

[blobbles]

Anyone know why the 14c drop (so far) is happening? I would have expected bad news but can't see any reason. Am I missing something?

[percy]

Anyone know why the 14c drop (so far) is happening? I would have expected bad news but can't see any reason. Am I missing something?

Does not look too good.Share price has dropped below 30day moving average on quiet large volume.
I have been expecting good new from FPH as I see Remed in Aussie have had good increases in sales.Thought FPH would have had the same,so I am surprised.

[Silverlight]

It's down as expectations FPH's margins will suffer on the new US medicare bid program, see ResMed in Australia, down 8% as well.

Bit overblown, good buying opportunity.

[blobbles]

Just what I thought to Silverlight, at a pretty consistent 7% ROI... that's a hell of a lot better than banks will give me! Plus potential for upside through growth... hmmm...

[Silverlight]

Here is a lot of the details on the new Medicare tender process:

CMS.gov press release

Reductions to product bids around circa 50% lower, which is quite a big cut. This however will be to the headline products/ machines, which make up about 25% of FPH's revenues, and US only, which is 45%, so the bid process will impact roughly 12% of FPH's revenues, with potential to reduce earnings 50% for the % of these revenues that are provided through Medicare?

FPH does not breakdown sales to the level of who their direct customers are, let alone in the US alone, i.e. Medicare/ Private Hospitals/ Private Insurers/ Individuals, so hard to extrapolate further on potential impact.

The other 75% FPH's earnings are driven from consumables and accessories for their headline products, you buy a $1k - $10k humidifier, one off cost, but FPH makes more money over the long haul as the customer buys replacement tubes, seals etc, for safety, one time uses etc, I doubt these additional purchases are directed by the bid program, which probably targets which machine you purchase in the first place. Overall this is still effecting less than 12% of revenues, and FPH is in a growth industry.

This short term pull back is probably a good opportunity to add to your holding if you are underweight your targets.

[stoploss]

Nice work , seems you can make money even with the Kiwi dollar going up ....RAK what's the story .........