Keep Ramsay On The Radar

Posted on | by Todd | Leave a Comment on Keep Ramsay On The Radar

Shares of RHC remain under pressure and have posted a 6-month low of $62.50 in early trade.

This is on top of yesterday’s 5.75% drop after a weaker profit report.

RHC, Australia’s largest private hospital operator, reported a 3.7% fall in H1 profit to $246 million; most of the weakness is from hospital operations in the UK.

From a technical perspective, the daily price chart shows solid support in the $61.50 to $61.20 area dating back to June 2016.

We’ll  update our signals on RHC and look for a reasonable level to enter the stock.

Ramsay Health

 

Will The US Tax Reform Destabilize Global Banks?

Posted on | by Todd | Leave a Comment on Will The US Tax Reform Destabilize Global Banks?

A key part of the US Tax Reform passed last week includes giving US companies a tax break on profits earned and kept in banks overseas.

As per the legislation, US firms can now repatriate offshore earnings at a tax rate of 15.5%, compared with the previous rate of 35%.

In 2005, the Bush administration had a similar “tax amnesty” when over 50 US firms sent back about $350 billion in profits earned overseas.   

In an interview last week, Mr Trump estimated that the total amount of US corporate profits on deposit offshore is between $3 and $5 trillion. 

This is a pretty wide spread. But considering that just 5 tech firms (Apple, Microsoft, Google, Cisco and Oracle) are estimated to be holding over $650 billion offshore, it’s clear that the repatriation numbers will be much higher than in 2005. 

In fact, Apple CEO, Tim Cook, announced that they intend to repatriate over $250 billion during 2018, which is over 70% of the 2005 total spread across 50 firms. 

The most obvious impact of this massive transfer of funds will be the boost in demand for US Dollars. The amnesty plan in 2005 triggered a 12% rally in the USD Index from 81.00 to over 90.00 from March to July.

However, with some EU and Japanese banks already teetering from bad debts and non-performing loans, the short-term implications could be devastating to the banks that have been holding the cash that Mr Trump wants back.

We believe that with just one company like Apple draining $20 billion a month from the European banking system, there will be a negative impact on the health of many EU banks.

At this point we don’t have any clear numbers reflecting the amount of money being held in Australian banks, but we would expect the general strengthening of the USD, on a global basis, will see the AUD/USD retreat back into the lower .7000 handle.

ASX listed stocks which will benefit from the lower Aussie dollar include RHC, QAN, TWE, RIO and NCM.

Aussie Dollar

 

  

 

 

 

 

 

 

 

 

 

 

AUD Boosted By Last Week’s M&A Activity

Posted on | by Todd | Leave a Comment on AUD Boosted By Last Week’s M&A Activity

Last week’s Merger and Acquisition activity was a key driver in the Aussie dollar’s move from .7510 to .7690.

Tuesday’s Westfield deal for AUD 32 billion combined with Zurich’s announcement that it will buy ANZ’s life insurance business for AUD 2.85 gave the local currency a bid tone for the week.

All together, the flow was about $9 billion of AUD/USD that needed to be bought to cover the hedging aspect of the M&A transactions. This was enough to push the AUD/USD to .7690 before offers capped the move.

With this buying support absorbed into the market, the technical picture in the AUD/USD looks to be weakening with the longer-term down trend the path of least resistance.

We see the next area of support in the .7565 area. A break of the December 11th low at .7510 could trigger a quick move back to the .7300 handle.

Some of the ASX stocks that would benefit from a lower AUD include: RHC, NCM, QAN and TWE.

Ramsay Health

Newcrest Mining

QANTAS

Treasury Wine Estates

 

Aussie Dollar Drops On Weaker Trade Balance Report

Posted on | by Todd | Leave a Comment on Aussie Dollar Drops On Weaker Trade Balance Report

The Aussie Dollar dropped close to 1% overnight as yesterday’s domestic trade balance numbers showed a steep contraction for the month.

The AUD/USD hit a six-month low at .7500 as the trade surplus fell to $105 million from $1.6 billion the month before. The street had expected a surplus of $1.4 billion……10 times higher than the actual print.

The sharp drop was driven by a 3% fall in exports and a 2% increase in imports. Details of the report showed much lower levels of exports of Iron ore and coking coal.

There are several names on the ASX that earning revenue overseas and will benefit from the falling Aussie Dollar.

These include QAN, RHC, TWE and NCM.

QANTAS

Ramsay Health Care

Newcrest Mining

Treasury Wine Estates

Healthcare – Preferred Holdings

Posted on | by Leon Hinde | Leave a Comment on Healthcare – Preferred Holdings

CSL, SHL, RMD & RHC remain our preferred healthcare names.

Resmed is looking a little expensive and we’d like to repurchase on the next retracement.

Sonic Healthcare:  we expect 5 – 8% EPS growth and consider this a good buy/write addition to portfolios.

Ramsey Healthcare – Accumulate with $74 price target

CSL:  15 – 20% EPS growth remains attractive and adding a covered call option enhances the yield.

CSL

 

 

Ramsay Healthcare – Long Term Value

Posted on | by Leon Hinde | Leave a Comment on Ramsay Healthcare – Long Term Value

Ramsay Healthcare has been making a “lower high” pattern since selling off from the $75 high in August.

We’re reluctant to look at counter trend trades, however, with the broad thematic of the healthcare space being one of our preferred sectors, we now look to re-enter long positions in RHC.

Over the next 12 months we look for RHC to trade back towards $72 – $75 level on the back of the recent comments from the CEO, where he confirmed the company should deliver 8 – 10% EPS growth.

Ramsay Healthcare

 

 

 

 

Ramsay Rallies After AGM Statement

Posted on | by Todd | Leave a Comment on Ramsay Rallies After AGM Statement

Shares of Ramsay Health Care have jumped over 3.5% to $67.25 in early trade after the release of its AGM statement.

According to the release, management reaffirmed that it expects its core earnings per share to grow between 8% and 10% for FY 2018.

Based on the market reaction, investors may have been expecting the company to downgrade its guidance considering that private hospital cover has dropped to it lowest level in five years.

For a high capitalization stock, RHC trades on high volatility and wide trading ranges.

The “lower high” pattern is still in place with key resistance in the $68.30 area and support near the September lows of $61.20.

 

Concensus EPS for FY18 $2.84 v $2.35 for FY17

 

 

ALGO Update: Sell Ramsay Healthcare

Posted on | by Todd | Leave a Comment on ALGO Update: Sell Ramsay Healthcare

Our ALGO engine triggered a sell signal on RHC at the ASX close yesterday at $67.20.

On August 22nd, RHC posted an intraday high of $76.20 before falling close to 20% to $61.05 on September 21st.

While the price rebound over the last few weeks has given investors the chance to make some short-term profits, the medium-term outlook suggests more range-bound price action going forward.

RHC is currently trading at 23X FY18 earnings and a yield of 2.3%.

Ramsay Health Care

Are Ramsay Shares Ready To Rally?

Posted on | by Todd | Leave a Comment on Are Ramsay Shares Ready To Rally?

After posting a 6-month low of $61.05, shares of RHC rebounded Friday afternoon to close the week at $61.85.

RHC shares traded as high $76.15 on August 22nd and have dropped almost 20% over the last month.

While  there’s no guarantee that the $61.00 level is the medium-term turning point, we believe that value investors will do very well to start scaling into long positions at the current share price.

Core earnings per share are expected to grow by 8% to 10% in FY 2018, and the company’s global footprint now extends to 25,000 hospital beds and 1,150 operating theatres across its 221 hospitals and 13 health care and treatment facilities.

Further, as the company generates over 40% of its revenue outside of Australia, when the AUD/USD resumes its down trend, RHC is well placed to benefit from favorable currency movements.

Ramsay Health Care