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Daily ShareChat: Abano

By Jenny Ruth

Wednesday 4th August 2010

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Investors in Abano Healthcare Group will require confirmation the company can still grow earnings before the share price improves to its $6.28 a share valuation, says McDouall Stuart.

"This could take time," the broker says.

The sale of Abano's New Zealand-based Bay Audiology business in November last year removed a key earnings growth engine but has considerably strengthened the company's financial structure, it says.

"The company will aim to restore momentum with the dental operation on both sides of the Tasman in the near term and the Australian and Asian audiology assets in the next few years," it says. "Radiology in New Zealand also has growth prospects."

Abano's New Zealand dental practices rose to 50 in the year ended May from 42 a year earlier and its Australian practices rose to 26 from 18 previously. Operating earnings from the dental operations rose 35% to $6.9 million in the year.

While a planned share buyback should help narrow the discount to valuation, this has been deferred until clarification of the potential sale of NHC Group, the company which bought Bay Audiology and which Abano owns a 6.5% interest.

McDouall Stuart is forecasting Abano's net profit will fall from $4.4 million (before one-offs) in the year ending May to $4 million next year before rising to $6.1 million in the year ending May 2012.

Recommendation: Buy.

Daily ShareChat articles report how the main experts in the market might view a certain share and we provide this commentary as a useful resource for investors. Content on this site does not in any way constitute a recommendation to buy, hold or sell any particular share. Investors should always seek professional advice before making any investment decisions.

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NZX Annoucements for ABA

31 Jan 2012	RELINT: ABA: Ongoing Disclosure Notice - R.Keys
31 Jan 2012	RELINT: ABA: Ongoing Disclosure Notice - A. Clarke
30 Jan 2012	SSH: ABA: SSH Notice - (Healthcare Industry Limited)
27 Jan 2012	DRP: ABA: Notice of Issue of Securities
20 Jan 2012	DRP: ABA: ABA ANNOUNCES STRIKE PRICE FOR DIVIDEND REINVESTMENT PLAN