Investment Thesis:
- Global leader in a significantly under-penetrated sleep apnea market
- High barriers to entry in establishing global distribution channels
- Strong R&D program ensuring RMD remains ahead of competitors
- Momentum in new masks releases
- Bolt-on acquisitions to supplement organic growth
- Leveraged to a falling Australian dollar
Key Risks:
- Disruptive technology leading to better patient compliance
- Product recall leading to reputational damage
- Competitive threats leading to market share loss
- Disappointing growth (company and industry specific)
- Adverse currency movements (AUD, EUR, USD)
- RMD needs to grow to maintain its high PE trading multiple. Therefore, any impact on growth may put pressure on RMD’s valuation
Key highlights:
- The net result was strong revenue growth of 10% for our ResMed business in the June quarter
- In 4Q21, Revenue in the U.S., Canada, and Latin America (excluding Software as a Service), grew +18%, over the pcp, on demand for sleep devices and masks, including recovery of core sleep patient flow that was previously impacted by Covid-19 and increased demand following a recent product recall by one of RMD’s competitors, partially offset by lower Covid-19 related demand for RMD’s ventilators
- Revenue in Europe, Asia, and other markets grew by 2% on a constant currency (CC) basis, on strong sales across RMD’s mask product portfolio, partially offset by weaker device sales due to the incremental Covid-19 respiratory care revenue in the pcp
- Excluding the impact of the incremental respiratory care revenue associated with Covid19, revenue increased by 35% on a constant currency basis
- Software as a Service revenue was +5% higher than the pcp, on continued growth in resupply service offerings and stabilising patient flow in out-of-hospital care settings
Company Description:
ResMed Inc (RMD) develops, manufactures, and markets medical equipment for the treatment of sleep disordered breathing. The company sells diagnostic and treatment devices in various countries through its subsidiaries and independent distributors. RMD reports two main segments – Americas and Rest of the World (RoW) – with US its largest market. The company is listed on the Australian Stock Exchange (ASX) via CDIs (10:1 ratio).
(Source: Banyantree)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
The IPO comprises a fresh issue of equity shares worth Rs 2,000 crore and an offer-for-sale (OFS) of up to 58,324,225 equity shares of Rs. 5,249 crore by promoters and existing shareholders. The Star Health IPO opened at Nov 30, 2021, and closed at Dec 2, 2021and will list on both NSE & BSE at Dec 10, 2021.The minimum lot size comprises 16 shares at a price band of Rs.870 -900 per equity share. A retail-individual investor can apply for up to 13 lots.
The objective of the issue is to to utilize the net proceed to augment the company’s capital base and insolvency level. The proceeds will also be used for general corporate purposes.
The Star Health IPO has got 75 per cent reserved for qualified institutional buyers (QIBs) and 15 per cent reserved for non-institutional investors (NIIs). The remaining 10 percent of the issue is available for retail investors.
Star Health IPO Subscription Status
Star Health IPO opened for subscription on Tuesday, November 30,2021 and concluded at 5 p.m Thursday , December 2,2021.
According to the data available on the BSE, Star Health was met with a muted response as it got subscribed 79 percent on the final day.
The shares which are to be allocated for the qualified institutional buyers (QIBs) was subscribed 1.03 times, while those of non institutional investors was subscribed 0.19 times and that of retail individual investors (RIIs) was subscribed 1.10 times. Separately, shares for the employees’ segment was subscribed 0.10 times, the data showed.
About the Company
Incorporated in 2006, Star Health and Allied Insurance Company Ltd is one of the largest private health insurers in India with a market share of 15.8% in Fiscal 2021. The company primarily focuses on the retail health and group health segments which accounted for 89.3% and 10.7% of the company’s total GWP in Fiscal 2021 respectively.
The company mainly distributes policies through individual agents and also includes corporate agent banks and other corporate agents. As of Sep 31, 2021, its network distribution includes 779 health insurance branches across 25 states and 5 union territories in India. Star Health has also built one of the largest health insurance hospital networks in India with more than 11,778 hospitals.
(Source:https://www.sebi.gov.in/filings/public-issues/jul-2021/star-health-and-allied-insurance-company-limited-drhp_51323.html)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.