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Daily ShareChat: Abano Healthcare

By Jenny Ruth

Friday 9th April 2010

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 Jenny Ruth

Abano Healthcare's guidance for earnings before interest, tax, depreciation and amortisation (EBITDA) between $18 million and $20 million for the year ending May and a net profit between $4 million and $4.5 million is down on the previous year but mainly reflects the $157.8 million sale of its Bay Audiology business, says Michelle Perkins at Craigs Investment Partners.

The company made a $9.7 million net profit in the year ended May 2009.

"Management has confirmed that the dental, radiology and audiology businesses are continuing to perform well, although stricter ACC funding criteria is having a negative impact on the brain rehab division," Perkins says.

She has cut her EBITDA forecast from $23.8 million to $21.9 million as a result of the latter.

Abano's share price has been relatively weak over recent weeks and Perkins says she regards the stock as attractive at current levels and that the share price will be supported by a planned share buyback, details of which will be released shortly.

"We continue to see upside potential from Abano's expansion into Asia and the group's increasing focus on growth the audiology and dental businesses in Australia," she says.

"However, we maintain our view that the sale of the New Zealand audiology business and the increasing move into the offshore market raises the overall risk profile of Abano, making it more suitable for investors with a longer-term investment horizon."

 

BROKER CALL:  buy.

 



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