ASX:HLS
Healius Ltd
Investment Summary
The fund managers believe that Healius Ltd (HLS.ASX) demonstrates strong potential for growth, reflected in the **18% rise in share price** following the positive trading update for the 2024 financial year. In their opinion, the company's projected **underlying EBIT of $60-65m** indicates a substantial improvement in operating performance in the second half of the fiscal year. The managers note that **increasing pathology volumes**, along with a **moderating inflation rate** and a renewed focus on **costs and productivity**, are likely to enhance profit margins from prior lows. Additionally, the ongoing sale of the imaging business is generating competitive interest, which could yield **sufficient proceeds to strengthen the company's balance sheet.** As the **second largest player** in a consolidated Australian pathology market, the fund managers see compelling long-term value and significant **upside potential** in the stock price.
Commentary From The Managers
Spheria Asset Management
30 June 2024
$1.44
- Spheria Asset Management notes that Healius (HLS.ASX) share price increased by 18% during the month.
- The company provided a trading update for 2024 financial year, indicating significant second half improvement in operating performance.
- Healius expects to generate $60-65m of underlying EBIT for the full year to 30 June 2024.
- Improving pathology volumes, moderate inflation rates, and focus on costs and productivity contribute to margin improvement.
- The imaging business is currently for sale, attracting interest from multiple parties, enhancing competitive tension.
- Sale proceeds are expected to leave Healius with a net cash balance sheet.
- As the second largest player in Australia’s pathology market, with the top three comprising ~70%, Spheria remains optimistic.
- Spheria Asset Management is attracted to Healius over the long term and sees potential for material upside to the current share price.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.