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Daily ShareChat: Abano Healthcare

By Jenny Ruth

Friday 7th August 2009

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The highlight of Abano Healthcare Group's latest annual result was the 240 basis point improvement in its dental division's profit margin to 10.8%, says ABN Amro Craigs analyst Michelle Perkins.

Abano's dental revenue jumped 150% to $68.1 million reflecting a mixture of new practices acquired and organic growth while earnings before interest, tax, depreciation and amortisation (EBITDA) climbed from $2.3 million to $7.4 million in the year ended May 31.

Perkins says the dental division is now the largest contributor to revenue and the second largest contributor to EBITDA behind the audiology division whose EBITDA was $15.7 million.

"Dental continues to be Abano's fastest-growing division. We expect this to continue as management beds down recent acquisitions and add practices to the portfolio over coming years."

Overall group margins fell as the company continued to lay the groundwork for future growth, she says.

The company's comment about Bay Audiology that after three years of double-digit growth it was reaching a position of maturity "signals growth from the New Zealand market has clearly peaked and is likely to track lower going forward."

Perkins is forecasting dental EBITDA will rise 29.7% to $9.6 million in the current year while audiology EBITDA will grow 25.5% to $19.7 million.

BROKER CALL: ABN Amro Craigs rate Abano Healthcare (NZX: ABA ) as hold (downgraded from buy because of the strong share price appreciation.)

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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