That is one of your better posts Jolly well done ,
Just to clear up a point
I always try not to ramp a stock ,
I do not think it is fair to members or newcomers to this forum What I try to do is put forward a post with my ideas hoping that people will add to that post then collectively we can build a cross sectional view of that stock,
Yes I was long on MAY a few times and thought at that time it would turn around , but as you can read below some of our analyst know as much as you do at times .
By the way young man it is a bit hard to ramp a stock on Hotcopper with: 0.8Billion shares on issue. _____________________________________________-
OLD RESEARCH
Mayne Group Limited (MAY) - Recommendations
04/04/2002
Key Information --------------------------------------------------------------------------------
Recommendation: BUY Valuation: $6.54
Company Overview --------------------------------------------------------------------------------
The Mayne Group Ltd (MAY) operates businesses in two core service industries – health care and logistics. Mayne Health comprises hospitals and medical, pathology, diagnostic imaging centres and, since the acquisition of FH Fauldings, pharmaceutical wholesale distribution. Mayne Logistics comprises contract and cash logistics, and time critical express. Analyst Comments --------------------------------------------------------------------------------
• Mayne Group (MAY) is the largest diversified healthcare service provider on the ASX and is well positioned to benefit from the improved industry outlook. Significant strategic acquisitions are increasing economies of scale, and scope, within the healthcare arena.
• MAY is well positioned geographically to extract synergistic cost savings through ongoing bolt-on healthcare acquisitions. The company is a key beneficiary of the current government support of the private health sector. That said, integration of strategic acquisitions will take time to emerge which adds some risk to near term earnings. We maintain our BUY recommendation at current levels.
Company Overview --------------------------------------------------------------------------------
The Mayne Group Ltd (MAY) operates businesses in two core service industries – health care and logistics. Mayne Health comprises hospitals and medical, pathology, diagnostic imaging centres and, since the acquisition of FH Fauldings, pharmaceutical wholesale distribution. Mayne Logistics comprises contract and cash logistics, and time critical express
Key Information --------------------------------------------------------------------------------
Current Issues --------------------------------------------------------------------------------
Earnings Outlook A much improved private health insurance industry outlook, courtesy of the government support initiatives, has buoyed the private hospital sector in general and has provided a relatively higher degree of earnings certainty overall. Our earnings forecasts are based on cost savings derived through the AHX takeover, increased asset utilisation through the FH Faulding acquisition and improved operational efficiencies stemming from the company’s restructured format.
Key Financial Issues The key issues going forward relate to margin expansion in the context of new asset integration. On the logistics front, the company remains vulnerable to fuel costs and intense competition which we believe will continue to suppress margin improvement over the medium-term. By contrast, margin expansion in the healthcare division will be driven by efficiency gains and cost savings derived via the successful integration of healthcare assets.
Vertical Integration The acquisitions of Australian Hospital Care and FH Faulding are consistent with a vertical integration strategy. We believe control of supply and increased economies of scale bode well for improved margins and higher earnings. We believe tangible evidence of accelerated margin improvement should provide a strong positive share price catalyst.
Productivity gains/lower corporate costs A key driver of profitability is the level of productivity across the integrated group. Management has introduced several initiatives aimed at improving internal efficiencies and lowering corporate costs. These include an organisational restructure, introduction of internet based procurement systems and centralisation of NSW pathology laboratory testing facilities and head office premises.
Strategic Direction Historically the company has expanded geographically and operationally on a product by product basis. The maturing of certain market segments (ie. low margin freight services), has in recent times focused the company`s efforts on extracting efficiencies through back office consolidation, overseas mergers and withdrawal from some operations. Recent activity points to an increased focus on vertical integration in the healthcare sector combined with a focused branding strategy.
Risks Lack of perceived synergies between the areas of logistics and healthcare has until recently been perceived as a major drawback to improving operating efficiencies. However, the company’s takeover of FH Fauldings aims to address the issue by increasing the utilisation of logistics in the provision of pharmaceuticals to pharmacists and Mayne’s own hospital network. Nonetheless our key concern is primarily one of execution risk.
Capital Structure The acquisition of both Australian Hospital Care and more recently FH Fauldings has increased the number of shares on issue to 808M.
Historical Price Trends After hitting a peak with the sale of the company`s Optus shareholding, the stock trended downwards until the appointment of Peter Smedley in 2000. Since then, sale of its UK Express parcel delivery business and local port operations, acquisition of Australian Hospital Care and the takeover of FH Faulding have reinvigorated investor interest and share price performance.
Management Current MD, Peter Smedley, was appointed in 2000 replacing former MD Mr R.Dalziel who had been at the helm since 1996. Under Mr Dalziel`s management MAY shifted its focus increasingly towards healthcare which prompted numerous acquisitions, withdrawal from the Australian road express transport market and divestment of a 25% stake in Cable & Wireless Optus. The change in direction culminated in the MAY’s move into the Health and Biotechnology sector of the All Ordinaries Index in November 1998.
COH Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
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