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16 September, 2019 (16:00:00 AEST)

CSL drops to one-month low on firm volume


CSL Limited (ASX:CSL), Australia's largest Pharmaceuticals & biotechnology company by market cap, traded at its 28-day low of $A227.34. CSL's stock price has decreased 31.0c (0.1%) from its previous trading session to close at $A230.38. Compared with the All Ordinaries Index which rose 4.9 points (0.07%) in the day, the relative price change was -0.2%. The fall was exacerbated by firm volume of 1.1 times the average daily volume of 771,054 shares. There were 884,777 shares worth $A203.8 million traded today.

CSL DIVIDENDS
The shares decreased 1.1% in the 4 trading sessions since the ex-dividend date of September 10. The company paid a dividend of $A1.48 per share. Based on dividends of $A2.68 per share for the trailing twelve months and the last price of $A230.38 the dividend yield is 1.2%.

Stock Summary
CurrencyAustralian Dollar (AUD) 1 AUD = 0.69 USD
Today's close (AUD)230.38
52-Week Range (AUD)170.9-240.6
SectorPharmaceuticals & Biotechnology sector
Shares Outstanding453,256,343
Market Cap$A104.4 billion ($US71.8 billion)


Highlights in today's Report:

SECTION 1 TODAY'S BEARISH SIGNALS

SECTION 2 TODAY'S BULLISH SIGNALS

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF $A230.38):

SECTION 3 THE PAST WEEK

SECTION 4 ONGOING BULLISH PARAMETERS

SECTION 5 ONGOING BEARISH PARAMETERS

SECTION 6 SUMMARY FINANCIALS

SECTION 7 CORPORATE PROFILE

SECTION 1 CSL BEARISH SIGNALS

1.1 Overvaluation [compared with sector average]:
Dividend Yield
+ To quote Benjamin Graham: "A dividend yield of at least two-thirds the triple-A bond yield"; the stock's dividend yield is 0.9 times the triple-A bond yield of 1.2%.
+ The relative yield of CSL, defined by its yield of 1.2%, divided by average yield of dividend yielding stocks in the All Ordinaries Index of 6.0% is 19.3%. This suggests CSL stock is overvalued in dividend yield terms.
MCap/Total Assets
+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 5.8. Compared with the rest of the market the stock is overvalued and ranks in the bottom 9% of stocks by value of Q Ratio.

1.2 Overvaluation Indicators and rank of CSL in the Australian market:
DescriptionValueRank In Market
Dividend Yield %1.2In Bottom 7%
Price/Earnings37.3In Bottom Quartile
Price/Earnings/Growth3.4In Bottom Quartile
Price to Sales8.4In Bottom Quartile

1.3 Downtrend:
Today's Volatility:
+ CSL drops on high volatility: Since the start of trading its volatility (highest price minus lowest price/lowest price) of 1.7% was 0.9 times the average daily volatility of 1.8%, up from 1.6% on Friday and 1.4% on Thursday.
Past Week:
+ CSL Limited is placed 1007/1315 in BuySellSignals' ranking of Australian performers in the past week, a percentile ranking of 24.
+ In the past week, volume was 1.1 times average and the shares were down 3.2%. Monday's close price is at a 0.5% discount to its 5-day Volume Weighted Average Price (VWAP) of $A231.57.
Past Month:
+ The price decreased 0.9% in the past month. The fall was on volume of 1.1 times average for month.
+ The present value of $US1,000 (PV1000) invested one month ago in CSL is $A997, comprising a capital loss of $A9 and dividend reinvested of $A6.

Slipping Relative Strength (1mo, 3 mo):
+ In the Australian market of 1,433 stocks and 26 units traded today, the stock has a 6-month relative strength of 68 which means it has outperformed 68% of the market.
+ Also, the relative strength percentile is slipping at 60 for 3 months and 39 for 1 month.

SECTION 2 CSL BULLISH SIGNALS

2.1 Undervaluation [compared with sector average]:
Earnings Yield
+ Earnings yield of 2.7% is 2.2 times the 10-year bond yield of 1.23%.

2.2 Uptrend:
Price/Moving Average Price and MACD:
+ The Price/MAP of 1.13 for CSL is higher than the Price/MAP for the All Ordinaries Index of 1.08.
+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 233.36 minus the 26-day EMA of 231.95 is positive suggesting a bullish signal.
+ The price to 50-day EMAP ratio is 1.0, a bullish indicator. In the past 50 days this ratio has exceeded 1.0, 45 times suggesting further upside. The 50-day EMAP has increased to $A227.60. An increase is another bullish indicator.
+ The price to 200-day MAP ratio is 1.13, a bullish indicator. In the past 200 days this ratio has exceeded 1.13 44 times suggesting further upside. The stock is trading above both its MAPs and the 50-day MAP of $A227.88 is higher than the 200-day MAP of $A203.29, a bullish indicator. The 200-day MAP has increased to $A203.29. An increase is another bullish indicator.

2.3 High Price Performance Indicators and rank of CSL in the Australian market:
DescriptionCSL ValueRank In Market
MCap$A104.4 billionIn Top 1%
Today's Trading Turnover$A203.8 millionIn Top 1%
Volatility %1.7In Top Quartile
Price/MAP2001.13In Top Quartile


RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF $A230.38):

SECTION 3 THE PAST WEEK

3.1 Snapshot: CSL stock was down $US7.69 or 3.2% in the past week. Volume in the week was 1.1 times average trading of 3.9 million shares. It underperformed the All Ordinaries index in 5 out of 5 days.
DayCSLClose price [AUD]Price change %Relative change %Comment
FridayIn its biggest weekly loss in 1 month230.69-0.4-0.6 
ThursdayIncreases strengthening above moving average price231.60.1-0.1Top Rise
WednesdayDrops to 22-day low on firm volume231.44-0.7-1.0VI*=1.2
TuesdayDown 3.7% in 2 days233.0-2.1-1.7Steepest Fall
MondayLoses $A1.1 billion in MCap238.07-1.0-1.2 
[Volume Index (VI); 1 is average]

3.2 Volatility:
+ CSL is at a discount of 4.2% to its 12-month high of $A240.61 on September 06. It is also at a premium of 34.8% to the 12-month low of $A170.89 on November 21, 2018.

SECTION 4 ONGOING BULLISH PARAMETERS

4.1 Performance:
+ Return on Equity 36.5% [19.0%].
+ Return on Assets 15.6% [9.2%].
+ Return on Capital Employed 23.1% [14.6%].
+ Net profit margin has averaged 21.8% in the last 3 years. This is considered superior and suggests a high margin of safety.

4.2 Growth:
+ Year-on-Year Earnings Growth of 11% [2.3%].

4.3 Low Debt Indicators:
+ Total Liabilities/EBITDA of 3 is comfortably below the Joseph Piotroski benchmark of 5.

4.4 High Performance Indicators and rank of CSL in the Australian market:
DescriptionValueRank In Market
Return on Equity [ROE] %36.5In Top 4%
Return on Assets [ROA] %15.6In Top Quartile


4.5 Past 5 years Annual EPS growth:
Annual ReportEPS ($US)Growth %
20194.2411.0
20183.8229.9
20172.949.3
20162.69-7.7
20152.918.3
Average Annual Compounded rate of growth in EPS for the 5 years was 9.5%. There have been four rises and one decline in the past 5 years.

4.6 Moving Annual Return (Past 5 years)
Based on a dynamic start date of 5 years ago, the real rate of return has averaged 30.8%. The Moving Annual Return has consistently exceeded 11%.
CSLClose (AUD)Dividends (AUD)Capital Gain %% YieldAnnual Return %
Sep 16230.382.6810.51.311.8
1 Yr ago208.412.2861.41.863.2
2 Yrs ago129.12.6434.22.736.9
3 Yrs ago96.211.714.3216.3
4 Yrs ago84.171.6423.52.425.9

Close 5 years ago $A68.18

4.7 Increased VWAP
Past five years, 12 months ended Sep 16 (AUD)
YearHigh PriceVWAPLow Price
2019240.61199.29170.89
2018228.47163.89127.26
2017140.53114.1688.2
2016115.6998.8982.99
201595.9882.066.03
In the past five years Volume Weighted Average Price (VWAP) has increased by 143.0% to $US199.29. Based on a dynamic start date of five years ago, there has been no decline in VWAP over the last 5 years.

4.8 Increased Average Daily Turnover
Past five years, 12 months ended Sep 16 (AUD million)
YearAverage Daily Turnover
2019153.7
2018115.1
2017108.6
2016100.0
201585.3
In the past five years, average daily share turnover has increased 80.1% to $US153.7 million. This suggests increased liquidity.

4.9 Increase in Insider Buying
In the past 4 years a total of 87,528 CSL shares worth $US11.1 million were bought by insiders. Based on a dynamic start date of 4 years ago, insider buying has averaged 21,882 shares per year. In the past year, insiders bought 31,005 shares, an increase of 470.6% from the previous year.

4.10 Turnover Rate & Turnover Period:
+ The turnover rate in the 12 months to date was 37.1% (or a turnover period of 2 years 8 months). The average length of ownership of the stock is 1.6 times the average holding period of 1 year 8 months for stocks in the All Ordinaries Index suggests a larger number of core investors, making a long-term investment safer.

SECTION 5 ONGOING BEARISH PARAMETERS

5.1 High Debt Indicators:
+ The debt to equity ratio of 88.8% is above a safe benchmark figure of 70%. However, it has improved in the past two years.
DescriptionValueRank In Market
Debt to Equity0.9In Bottom Quartile


5.2 Declining ADVT past five years
Avg. Daily Volume Traded 12 months ended Sep 16, thousand shares
YearADVT
2019771.1
2018696.6
2017943.3
2016995.0
20151023.9
In the past five years, Average Daily Volume of Trading (ADVT) has decreased 24.7% to 771,054 shares.

SECTION 6 CSL SUMMARY FINANCIALS

6.1 Dividend History
Trailing 12 months dividend for the 12 months ended September 16 has improved from $US1.64 in 2015 to $US2.68 in 2019; there were 1 decline in the past 5 years. Dividends were up 17.4% for the 12 months ended September 16 from $US2.28 in 2018 to $US2.68 in 2019.

6.2 Financials Summary
Year endedJun 2019Jun 2018Jun 2017
Sales (USD B)8.57.96.9
Pretax (USD B)2.32.31.7
Net (USD B)1.81.71.5
EPS (USD)4.243.822.94
+ Net profit was up 9.3% from US$1.7 billion in 2018 to US$1.8 billion in 2019.
+ Earnings Per Share (EPS) was up 11% from $US3.82 to $US4.24.

6.3 Annual Report: Key Parameters
FY2019 Annual Report: CSL EPS Growth slows to 11%

CSL (ASX:CSL), announced EPS of $US4.24 for the year-ended 30 June 2019, up 11% from $US3.82 in the previous year-ended 30 June 2018. EPS growth from the year-ended 30 June 2017 to the year-ended 30 June 2018 was 29.9%.

Period-endedEPS in $USEPS growth %
30 June 20194.2411
30 June 20183.8229.9


Major changes compared with previous year:
Favourable Changes:
- Net profit up 9.3% from $US1.7b to $US1.8b
- Total revenue up 7.9% from $US7.9b to $US8.5b
- EPS up 11% from $US3.82 to $US4.24
- Debt to Equity down 17.6% from 1.1 to 0.9
- Total non-current assets to Total Assets up from 53.7% to 55%
- Fixed Assets to Total Assets up from 33% to 36.4%
- Total Liabilities to EBITDA of 3.0 compares favourably with the Joseph Piotroski benchmark of <5. However, it has deteriorated by 3.1% from the previous year's ratio of 2.9.
- Total Liabilities to Operating Cash Flow of 4.3 compares favourably with the Joseph Piotroski benchmark of <4. However, it has deteriorated by 22.2% from the previous year's ratio of 3.5.
Unfavourable Changes:
- EBIT Margin down from 30.1% to 28.5%
- EBIT to total assets down from 21.2% to 19.0%
- Profit before tax to Sales down from 30.1% to 28.5%
- Sales and marketing expenses to Sales up from 10.4% to 10.6%
- Administration expenses to Sales up from 6.8% to 7%
- Current ratio down 3.1% from 2.6 to 2.5
- Working capital to total assets down from 28.6% to 27.2%
- Total current assets to Total Assets down from 46.3% to 45%
Note:
- Total revenue to total assets steady at 0.7
- Cost of Goods Sold to Sales down from 46.5% to 45.8%
- Total liabilities to Total assets steady at 0.6
- Retained earnings to total assets steady at 78.1%
- Current Inventory to Total Assets down from 25% to 24.7%
- Intangibles to Total Assets down from 16.7% to 15.3%

Annual Report [Year-on-year comparison: 2019 vs 2018]
Company Name : CSL Limited (CSL)   
June 3020192018Change
Description$US m$US m(%)
Sales Revenue8,205.47,587.9Up 8.1
Total Revenue8,538.67,915.3Up 7.9
EBITDA2,341.12,281.2Up 2.6
EBIT2,341.12,281.2Up 2.6
Pre-Tax Profit/(Loss)2,341.12,281.2Up 2.6
Profit/(Loss) after Tax1,816.81,661.6Up 9.3
Working Capital3,351.93,079Up 8.9
Current Assets5,540.14,993.7Up 10.9
Current Liabilities2,188.21,914.7Up 14.3
Shareholders' Funds5,251.34,079.9Up 28.7
Total Liabilities7,063.16,694.6Up 5.5
Total Assets12,314.410,774.5Up 14.3
Current Debt420.6225.7Up 86.4
Non-Current Debt4,242.24,160.6Up 2
Total Debt4,662.84,386.3Up 6.3
Operating Cash Flow1,644.41,902.1Down 13.5
Net Assets5,251.34,079.9Up 28.7
Net Tangible Assets3,3732,277.4Up 48.1
AuditorEY  

Year-on-year comparison of Per Share figures
June 3020192018Change (%)
Description$US $US  
EPS Final4.23.8Up 11
    EPS Growth Factor*1.18  
* EPS Growth Factor = EPS growth / Net Profit growth

Year-on-year comparison of Performance Ratios
June 3020192018Change (%)
Return on Equity (%)36.542.4Down 13.9
Return on Assets (%)15.616Down 2.5
Total debt to net tangible assets (%)138.2192.6Down 28.2
Total Liabilities to Operating Cash Flow4.33.5Up 22.2
Debt/Equity0.91.1Down 17.6
Total Liabilities/Total Assets (Down 8.1% from 0.62 to 0.57)0.60.6Down 8.1
Current Ratio2.52.6Down 3.1
Common Size Ratios by Assets %   
Total non-current assets to Total Assets 55.0 53.7 Up 2.5
Total current assets to Total Assets 45.0 46.3 Down 2.9
Fixed Assets to Total Assets 36.4 33.0 Up 10.4
Current Inventory to Total Assets 24.7 25.0 Down 1.2
Intangibles to Total Assets 15.3 16.7 Down 8.5
Common Size Ratios by Sales %   
Cost of Goods Sold to Sales 45.8 46.5 Down 1.6
Profit before tax to Sales 28.5 30.1 Down 5.2
Sales and marketing expenses to Sales 10.6 10.4 Up 2.3
Administration expenses to Sales 7.0 6.8 Up 3.2
Tax expenses to Sales (5.1) (7.3) Up 29.9


Three-year record of growth and performance:
In the last 3 years Total Revenue averaged $US7.8B, EBITDA averaged $US2.1B and Net Profit averaged $US1.7B. Compound Annual Growth Rate (CAGR) averaged 10.3% for Total Revenue, 13.5% for Net Profit and 12.9% for EBITDA.
DescriptionAnnual ($US B)3-year Avg ($US B)3-year CAGR %
Total Revenue8.57.810.3
EBITDA2.32.112.9
Operating Profit2.32.112.9
Net Profit1.81.713.5

Three-year record of EBITDA, Operating Profit, Net Profit, ROE, ROA and ROCE
In 2019 Net Profit Margin of 23.4% was above its 3-year Avg of 21.8% (All Figures in %)
Description20193-year Avg
EBITDA Margin28.527.6
Operating Profit Margin28.527.6
Net Profit Margin23.421.8
Return on Equity36.540.4
Return on Assets15.615.4
Return on Capital Employed23.123.8


6.4 Half-Yearly Report: Key Parameters
Interim Report (Half Year) Analysis H2 2018: CSL EPS Growth slows to 6.7%

CSL (ASX:CSL), announced EPS of $US2.56 for the half year-ended 31 December 2018, up 6.7% from $US2.4 in the previous half year-ended 31 December 2017. EPS growth from the half year-ended 31 December 2016 to the half year-ended 31 December 2017 was 35.6%.

Compared with the previous corresponding period [PCP; H/31 Dec 2017], year-over-year [y.o.y.] Revenue was up 8.6% and Net Profit was down 2.9%.
Half year-ended31 Dec 201831 Dec 2017
EPS, $US2.562.4
PCP growth in EPS %6.6735.59
Revenue$US4.5b$US4.1b
PCP growth in Revenue %8.6412.79
Net Profit$US1.1b$US1.1b
PCP growth in Net Profit %-2.9436.67

Major changes compared with previous corresponding period [Year-on-Year]:
Favourable Changes:
- Total revenue up 8.6% from $US4.1b to $US4.5b
Unfavourable Changes:
- Net profit down 2.9% from $US1.1b to $US1.1b
- EBIT to Sales down from 35.6% to 33.6%
- Profit before tax to Sales down from 35.6% to 33.6%
- Profit after tax to Sales down from 27.5% to 24.6%

SECTION 7 CORPORATE PROFILE

7.1 Activities
CSL Limited (CSL) is a global biotechnology company that develops and delivers innovative medicines that save lives, protectpublic health and help people with life-threatening medical conditions live full lives. The operational businesses include CSL Behring and Seqirus provides life saving products to more than 60 countries and employs 22,000 people. The Group operates predominantly in Australia, the USA, Germany, the United Kingdom and Switzerland.

7.2 Top Management
The chief executive officer is Paul Perreault and the chief financial officer is David Lamont.

7.3 Issued Capital and MCap
Based on 453,256,343 issued shares the market capitalisation is $A104.4 billion.

7.4 Vanguard Total World Stock ETF 7636:
The stock was one of 7636 global stocks selected by Vanguard Total World Stock ETF (VT) who bought 386 shares in the period Jun 30, 2019 to Jul 31, 2019 worth $US86,301 at an estimated Volume Weighted Average Price (VWAP) of $US223.5787. As at Jul 31, 2019, the Vanguard Total World Stock ETF held 149,786 shares worth $US23,096,130 or 0.13% by value of the ETF's portfolio [Ranked 113 out of 7636 by value and 3 out of 243 for Australia].

COMPANY IDENTIFIERS
Contact: (03) 9389 1911
Physical Address: 45 Poplar Road, PARKVILLE, VIC, AUSTRALIA, 3052
State/Province/Country: Australia
Exchange: Australian Securities Exchange

Business Sector: Pharmaceuticals & Medical Research
Industry Group: Pharmaceuticals
Industry: Pharmaceuticals
Economic Sector: Healthcare

ISIN: AU000000CSL8
AU:CSL; ASX:CSL; AX:CSL; CSL.AX
PermID: 4295856855
RIC: CSL.AX

Csl Limited, Csl Ltd

For comprehensive research on CSL Limited, including details from the latest Annual Report and extensive financial data, please search by Company Name on source name "News Bites Stock Review" on Lexis-Nexis platforms.

Source: www.BuySellSignals.com