ASX:CMP
Compumedics Ltd
Investment Summary
The fund managers believe Compumedics Ltd (ASX: CMP) is positioned to capitalize on the post-COVID recovery in the medical device sector. In their opinion, the company has endured significant disruptions but is now seeing increased demand and normalizing supply chains. They highlight that CMP's core Diagnostic Medical Device segment is expected to achieve $40m revenue in FY23, driven by a anticipated recovery in profits. Although Medical Innovation investments currently impact earnings, they point to emerging products like Brain Imaging and eHealth as potential long-term growth drivers. Notably, recent sales orders surged by 73% year over year, providing management confidence for a strong second half, with guidance suggesting $32m revenue and $2.5m profit. The fund managers believe these factors underscore CMP’s potential, representing a compelling investment opportunity as the company navigates its post-pandemic trajectory.
Commentary From The Managers
Mereweather Capital
28 Feb 2025
$0.26
- Mereweather Capital notes a challenging first half for Compumedics (CMP) with revenue down 11% and a shift from profit breakeven to a $1.1m loss.
- Despite this, Mereweather Capital sees potential as CMP invests in building a team in the US for the growing home sleep testing market.
- The departure of Philips has created a significant opportunity for CMP’s innovative new products.
- Sales orders taken in advance rose by 73% year-on-year, indicating strong future revenue potential.
- Management has guided for approximately $32m in revenue and $2.5m in profit for the second half, an improvement over the first half's $23.5m in revenue and $1.1m loss.
- Mereweather Capital continues to monitor CMP’s financials closely as they strive for recovery and growth.
Mereweather Capital
21 Nov 2022
$0.22
- Mereweather Capital acknowledges the significant impact of the pandemic on the medical device sector, particularly Compumedics (ASX: CMP).
- Post-pandemic recovery shows normalization of input prices and shipping lanes, with demand resuming.
- CMP's cumulative sales total $730m, with $620m generated offshore.
- The company operates in two segments: Diagnostic Medical Devices and Medical Innovation.
- Historically steady revenue for the core segment is between $35-40m with profits of $3-6m.
- Management guides for $40m revenue in FY23, indicating potential growth beyond record levels due to easing disruptions.
- The lower AUD may enhance profit margins compared to previous years.
- Upcoming Falcon home sleep testing device aims to expand into the home testing market.
- Mereweather Capital forecasts $41m revenue and $5m net profit from the core business in FY23.
- Medical Innovation includes developing technologies like Brain Imaging, eHealth, and Consumer Applications.
- Initial sales of MEG machines have occurred, with additional future sales expected.
- eHealth's Nexus 360 software shows steady growth contributing approx. $2m revenue.
- Efforts to penetrate the consumer sleep market via Somfit products are ongoing but present challenges.
- Current enterprise value is about $40m, and projected net profit is expected to be around $3-5m.
- Mereweather Capital sees significant upside potential from CMP's future growth opportunities.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.