FPH - Fisher Paykel Healthcare.

[winner69]

In a recent FPH presentation they had a slide that showed the 'addressable market' was $20 billion. FPH current revenues about $2 billion

My DCF (the $34.25 one) has revenues in 2030 as nearly $10 billion ..... goodness gracious me

[Ferg]

Care to share some of those variables winner? I like the train of thought of how hard they have to paddle to maintain the current valuation.

@BP: it's not a case of forecasts normally being wrong - IMO they are always incorrect, it's just a case of by how much.

[winner69]

Care to share some of those variables winner? I like the train of thought of how hard they have to paddle to maintain the current valuation.

@BP: it's not a case of forecasts normally being wrong - IMO they are always incorrect, it's just a case of by how much.

OK Ferg

I've revisited revenue assumptions and come up with some 'realistic' forecasts. These being flat in F22 and then returning to much the past trajectory. Gives about 11% pa growth over the next 10 years.

Assumed margins returning to 66% of sales and assumed realistic expense increases. Reality check is EBITDA margin increasing from 40% of sales to 44% ...hmmm. Ongoing capex as guided by FPH. Discount rate 8.5%.

For what its worth that gives a DCF value $28.34

Chart shows assumed sales trajectory over the next 10 years

I'm still can't justify increasing my exposure to FPH at current prices .... just keeping a close watch on squiggly lines on the chart to tell me when I should be selling some (or all)

All this a a load of codswallop eh .... but sort of shows how good FPH has to perform over many years to justify current share price

Dont forget what my signature means

[Ferg]

Thanks winner. I definitely have not forgotten your signature!

I interpreted your earlier post (about changing variables to justify the DCF) as being somewhat tongue in cheek given your dry wit. But it is still a serious topic nonetheless.

Some might say the current SP is "priced for growth" - and I would add the caveat of being over and above realistic/historic growth rates. That said, you will find the DCF is highly sensitive to the discount rate - but I expect you already know that.

Thanks for sharing!

[Rawz]

What does the DCF model say if the terminal value is set to 40 or 50?

Actually don’t worry

[Monarch]

OK Ferg

I've revisited revenue assumptions and come up with some 'realistic' forecasts. These being flat in F22 and then returning to much the past trajectory. Gives about 11% pa growth over the next 10 years.

Assumed margins returning to 66% of sales and assumed realistic expense increases. Reality check is EBITDA margin increasing from 40% of sales to 44% ...hmmm. Ongoing capex as guided by FPH. Discount rate 8.5%.

For what its worth that gives a DCF value $28.34

Chart shows assumed sales trajectory over the next 10 years

I'm still can't justify increasing my exposure to FPH at current prices .... just keeping a close watch on squiggly lines on the chart to tell me when I should be selling some (or all)

All this a a load of codswallop eh .... but sort of shows how good FPH has to perform over many years to justify current share price

Dont forget what my signature means

Your discount rate seems very high. Are you considering the risk profile of this company? How did you arrive at 8.5%?

[Muse]

OK Ferg

I've revisited revenue assumptions and come up with some 'realistic' forecasts. These being flat in F22 and then returning to much the past trajectory. Gives about 11% pa growth over the next 10 years.

Assumed margins returning to 66% of sales and assumed realistic expense increases. Reality check is EBITDA margin increasing from 40% of sales to 44% ...hmmm. Ongoing capex as guided by FPH. Discount rate 8.5%.

For what its worth that gives a DCF value $28.34

Chart shows assumed sales trajectory over the next 10 years

I'm still can't justify increasing my exposure to FPH at current prices .... just keeping a close watch on squiggly lines on the chart to tell me when I should be selling some (or all)

All this a a load of codswallop eh .... but sort of shows how good FPH has to perform over many years to justify current share price

Dont forget what my signature means

Good work Winner. I'm in your camp - I don't see value anywhere near the current share price. FPH and RYM in particular are why I don't want to buy ETF's of the NZ market when money comes in that I want to put to work.

Call me crazy but I can't help but seeing revenue and more importantly NPAT falling from the current peak. When those results are showing reasonable double digit decreases on the prior corresponding period I think that will be a big catalyst for SP falls.

I saw a scatter plot of forward PE's and 2 year EPS's cagrs and FPH was off the scale expensive.

[winner69]

Your discount rate seems very high. Are you considering the risk profile of this company? How did you arrive at 8.5%?

The 8.5% is my (rather modest) expected returns. 'Risk' per se is managed through a safety margin and with current share price $33.00 v DCF $28.34 that's non existent.

[Biscuit]

... just keeping a close watch on squiggly lines on the chart to tell me when I should be selling some (or all)....

Problem is, several times in the past I have sold down FPH and every time I do it turns out with hindsight to be the worst decision I ever made.

[alokdhir]

With hospitalisations reaching past last year's peak and rising ...I think rates vs new waves is trying a duel for SP ...its becoming another bumper half year for FPH ...maybe coming back of big boys will put some life back in SP

NZD and phenomenal covid wave world over are positives with rising rates on other side of sea saw ...still feel SP will improve soon !!