By Jenny Ruth
Tuesday 9th February 2010 |
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Abano Healthcare's first-half results show the company's underlying businesses have been hurt by the tough economic conditions but the results are still "surprisingly robust," given the vulnerablilty of many of the businesses to discretionary spending, says McDouall Stuart.
Excluding the $76.6 million net proceeds from the New Zealand Bay Audiology sale, the net profit was $3.4 million, down from $4.1 million last year, although the latest result includes only a five-month contribution from the sold business.
Operating profit fell slightly by 2%, implying that margins have tightened over the last six months and that breaks Abano's record of improving operating profit every year since 2006, the broker says.
The audiology sale has left the company with no New Zealand debt and a gearing ration of 15% relating to Australian dental debt after the company returned 52 cents per share to shareholders and an under-subscribed buyback. (The buyback was under-subscribed by $28.6 million with only $17.3 million taken up.)
Abano is in a strong position to continue its growth strategy through both greenfield investment and acquisition, McDouall Stuart says.
Its remaining businesses are less mature and lower margin but present better growth opportunities. "We continue to see Abano as a solidly managed company with excellent growth prospects."
BROKER CALL: McDouall Stuart rate Abano Healthcare as buy.
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