CSL - CSL Limited

[Dona Ferentes]

How does one determine a fair price for CSL? I have been hearing about CSL for a long time and realise what a high quality company it is, but every metric I've used points to it being overvalued by a wide margin.

I know people have been saying it looks expensive for years, but that does not necessarily mean it is not expensive now. So to all CSL holders, how would you determine if you are paying too much for this stock?

can't answer that..... however, I'm not buying (or selling). However, and thanks to a Tim Boreham article somewhere in this thread, he articulates why CSL is worthy. #s 3, 4 and 5 ring true. #2 is also

1. CSL’s success can be boiled down to a number of factors – and well beyond the fact that four of the nine board members have Australia Day gongs.
2. True, CSL is well managed and has had a notably stable executive team and board.
3. The company has remained focused on its core areas of crucial life-saving plasma-derived products and flu vaccines. But it has also used its clinical starts to develop relevant adjacent products.
4. CSL has not gone overboard on raising dilutive capital. After a spate of share buybacks there’s a modest 453 million shares on issue.
5. The company is also willing to anticipate demand and spend on capacity ahead of time. It’s active in the lab and will spend well over $1bn on research and development this year.
6. Finally, CSL has had a decent dose of luck, having long held an entrenched position and having benefited from weak competitors at times.

 

[mullokintyre]

can't answer that..... however, I'm not buying (or selling). However, and thanks to a Tim Boreham article somewhere in this thread, he articulates why CSL is worthy. #s 3, 4 and 5 ring true. #2 is also

1. CSL’s success can be boiled down to a number of factors – and well beyond the fact that four of the nine board members have Australia Day gongs.
2. True, CSL is well managed and has had a notably stable executive team and board.
3. The company has remained focused on its core areas of crucial life-saving plasma-derived products and flu vaccines. But it has also used its clinical starts to develop relevant adjacent products.
4. CSL has not gone overboard on raising dilutive capital. After a spate of share buybacks there’s a modest 453 million shares on issue.
5. The company is also willing to anticipate demand and spend on capacity ahead of time. It’s active in the lab and will spend well over $1bn on research and development this year.
6. Finally, CSL has had a decent dose of luck, having long held an entrenched position and having benefited from weak competitors at times.

Well, I added some this morning. Come back to my original buy price. Was happy to buy at that price a few months ago, still happy to buy at that price.

 

[galumay]

I know people have been saying it looks expensive for years, but that does not necessarily mean it is not expensive now. So to all CSL holders, how would you determine if you are paying too much for this stock?

Its tough with a business as good as CSL, its going to spend long periods of its life trading at a significant premium to value. No doubt its a fairly expensive company at the current share price on any metric, and it will need faultless management execution and very strong long term growth to give you a superior return in the future it you buy at that price.

The counterpoint is that businesses as well run as CSL will probably only be trading at fair value a few times in an investor's lifetime, so if you want to own part of this great business you may just have to pay up. The outstanding metric for me is the ROIIC over the last 10 years, at over 17% thats a strong indicator of the strength of the business. The CAGR of the SP over that 10 years has been 25%+.

My personal view is that anything under $250 & I would be getting interested in taking a position. Even at the current price I think there are a lot riskier investments that are priced higher relative to valuation.

 

[Dona Ferentes]

CSL delivered a strong first half result for 2021 with reported net profit after tax of $1,810 million, up 44% at CC2 reflecting:
o Solid growth in our core immunoglobulin portfolio led by HIZENTRA®
o Successful transition to own distribution model in China
o Strong growth in the leading HAE product HAEGARDA®
o Exceptionally strong performance by Seqirus
o CSL’s diversified portfolio and resilient business model in the midst of COVID-19 pandemic
o Full financial recognition of contracted income for UQ COVID-19 vaccine in first half, after program termination

• Earnings per share $3.98, up 44% at CC
• Interim dividend of US$1.04 per share, up 9% ... Converted to Australian currency, the interim dividend is approximately A$1.34 per share down 9%
• FY21 net profit after tax is anticipated to be in the range of approximately $2,170 million to $2,265 million at constant currency

(win some lose some on the Dividend !)

 

[UMike]

Yet after an initial rise has fallen over 5%.

Was feeling pretty smug early yesterday.

 

[Knobby22]

Yet after an initial rise has fallen over 5%.

Was feeling pretty smug early yesterday.

Yes, the CEO was cautious and everyone is used to CSL promising future profit upgrades which didn't occur this time..
He also stated collection of plasma has slowed due to Covid and they need this for the drugs. The next half will be constrained.
Maybe growth will temporarily stall?

 

[Dona Ferentes]

“I am pleased to report a strong result during an unprecedented time of uncertainty during the most severe pandemic of our lifetime,” chief executive Paul Perreault said in the statement.

For analysts the most important news in the statement was the comment from the CEO who revealed CSL’s “plasma collections have been adversely affected during the pandemic.”

“To combat this, we have implemented a number of initiatives to increase plasma collections and introduced a customer fulfilment process to ensure the equitable distribution of medicines to patients.”

That means extra costs, a question analysts had been wondering about and one that will be a focus of interest from now on.

 

[UMike]

Gone down alot topped up a bit more.

Might be one of those companies that is too big for me to understand the mechanics of the peaks and troughs.

 

[frugal.rock]

I notice in the news that the EU/ Italy have stopped Astra Zeneca delivering covid vaccine to Australia.

Politicians in the news here plugging that CSL is going to make 50 million doses right here in Australia on behalf of Astra Zeneca.

I would have expected this news to have some positive impact on CSL SP ?.

One could consider it oversold due to immediate current market conditions as well as the gap down yesterday morning from dividend scalpers.
All seems overdone on kneejerk reactions to me.
Just my

Gone down alot topped up a bit more.

Might be one of those companies that is too big for me to understand the mechanics of the peaks and troughs.

Logged in to say my bit, and there was CSL at the top of the recent list...
It's an omen...lol.

I don't hold. A good time to reconsider that though, I think....

 

[Dona Ferentes]

a convergence of influences is putting pressure on CSL ....
- the vaccine development costs are all up front, and i remember reading there would be skinny margins, anyhow. Community relations and political pressure would dictate this (imagine the commentariat blowback if the battlers were being ripped off)
- growth is slowing. it has been well telegraphed
- there is a widespread move out of 'growth' into 'value' stocks and CSL metrics were richly priced
- AUD is high, which would be an inducement for OS funds to lighten up.

As a LT hold for me, it may even be an opportunity to embark in a bit of estate planning and do off-market transfers to the next generation, and enjoy the lower CG implications

.... now below $250, first time since late 2019

 

[Dona Ferentes]

also went ex-dividend A$1.34 yesterday (currency meaning in AU terms it is lower than previous 2 years)

 

[Dona Ferentes]

CSL back above $300

 

[UMike]

And BOOM straight back to $290 and falling.

Before I could put in a sell order. (Stupid restaurant keeps me so busy)

 

[Dona Ferentes]

And BOOM straight back to $290 and falling.

and BOOM straight back (good posture!) to above $300 after results Ann. ... now $306

Revenue up 10% with net profit after tax up 10%
and a nice lift ..... final dividend of $US1.18 per share (around $A1.61 a share), bringing the full year dividend to $US2.22, up from $US2.02 previous year

CSL Behring
• HIZENTRA® +15%
• HAEGARDA® +14%
• KCENTRA® +7%
• ALBUMIN +61%
• Digital transformation initiatives

Seqirus
• Seasonal influenza vaccines +41%
• Record volume ~130 million doses distributed globally
• Next generation influenza vaccine manufacturing facility to be constructed

Critical operations maintained during COVID19 pandemic demonstrating CSL resilience and agility

Outlook for FY22
CSL Behring
• Underlying IG demand expected to remain strong
• IG & albumin sales reliant on current plasma collections and cycle times
• Plasma collections expected to improve with CSL plasma initiatives and COVID19 vaccine rollout
Seqirus
• Seqirus product differentiation and COVID19 expected to drive strong demand for influenza vaccines CSL Group Margin
• Gross margin easing expected following increased plasma collection costs, partially offset by modest margin expansion arising from growth in differentiated influenza vaccines

...... Revenue Growth c. 2 - 5% @CC
..... NPAT c. $2,150 - $2,250m @CC

 

[UMike]

Still Holding..... I mean what else is there to do with the $$$ ?

 

[Dona Ferentes]

The CSL business model depends to a certain extent on blood, and thus plasma, donor collections. There have been appeals for more volunteers to donate in Australia; the big market, the USA, pays each donor. The slides below spell out some of the challenges.

 

[Greynomad99]

I hold CSL and to me it looks like a breakout above $308 would be a strong sign of higher prices. Price seems to have made a probable Wyckoff pattern which suggests higher weekly troughs and peaks going forward. No specific target yet but a break above $320 would be time to pop the champagne corks and based on Elliott Wave theory something above $345 is likely.

 

[Dona Ferentes]

CSL boss Paul Perreault has told its annual general meeting it still expects to post an FY 2022 profit between $US2.15 billion and $US2.25 billion. He also said CSL expects revenue growth on a constant currency basis to finish between 2 per cent and 5 per cent.

Increased costs are expected to hurt the gross margins for its core plasma collection business, offset by some modest margin expansion for its Seqirus flu vaccine business.

.... low single digits. It wasn't worse, and I'm wondering if the flu vaccine biz will provide a bit of upside ... I've seen mention of Covid/flu jabs, one-stop shop in winter months.

 

[Greynomad99]

Could CSL make $400?
Almost certainly if you wait long enough, but here's a brief charting argument why it could be on the horizon.

CSL - 24 June 2022 - Robert Norman Share Charting

 

[Dona Ferentes]

CSL is in talks to buy Swiss-based Vifor Pharma Group in its largest acquisition since it listed on the Australian Securities Exchange nearly three decades ago.

Bank of America Merrill Lynch is advising the $130 billion giant on how it can most effectively fund buying Vifor, which could include an equity raising of about $4 billion.

The $10 billion Vifor develops, manufactures and markets pharmaceutical products in iron deficiency, kidney-related and cardio-renal therapies. Vifor is headquartered in Switzerland and listed on the Swiss Stock Exchange, with sales of CHF1.77 billion ($2.7 billion).