CSL---ex top 10 holding--still losing my religion

 CSL FH25 –Still losing my religion --part 2

  • Revenue $8.48 billion, up 5% at CC
  • NPAT $2.01 billion1 , up 6% – NPAT $2.04 billion1 at CC, up 7%
  • NPATA $2.07 billion, up 3% – NPATA $2.11 billion at CC, up 5%
  • NPATA earnings per share $4.292 , up 3% – NPATA earnings per share $4.36 at CC up 4%
  • Interim dividend of US$1.30 per share – Converted to Australian currency, the interim dividend is approximately A$2.08 per share, up 16%
  • Guidance reaffirmed – FY25 NPATA anticipated to be in the range of approximately $3.2 billion to $3.3 billion at CC, up approximately 10-13%. 





Notes on result

Behring, driven by Hizentra and Privigen, noted can sell all the Albumin they can make. GM is higher and Cpl lower but noted that the achievement of pre-C19 margins is now pushed out to 2027, not 2026. A large Kcentra contract was lost due to pricing. Haemophilia was better and Hemenix is touted as a new market leader. Behring GM forecast to be 100bp + a bit for the FY, despite stronger FH. Andembry is expected to replace Haegarda over time as the best in class.

Seqirus weaker, there appears to be pushback in the US against vaccinations for the flu. CSL noted interest in “outbreak” capacity regarding the spread of Avin flu. Kostaive is licenced in Japan.

Vifor mixed about being the leader but walking away from price-driven competition. Vifor is expected to maintain margin.

Overall CSL described Behring as on expectations, Seqirus lower and Vifor higher.

Valuation

The issue is that CSL new products are not generating enough to replace older legacy products as they lose momentum. The move to acquire Vifor and once the turnaround was complete at Seqirus, has not replaced Behring's growth profile.

CSL can generate growth but not at the same level and that has impacted the rating. CSL’s past track record was outstanding and they have not been able to maintain it.

My base case is CSL at $270 with 9% eps growth over the next 5 years with a 25X exit multiple generating 6% cagr. A 10% return is generated at $235. Possible funding source.  

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