One could almost be excused for thinking we are in the middle of a roaring bull market in the context of the two positive presentations on Monday from CSL and Endeavour Group.
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It was a very upbeat CSL Ltd (ASX: CSL) that updated the market on Monday on what it sees as the very positive impact its expensive Vifor acquisition will have in future years.
CSL boss Paul Perreault told investors there could be decades of growth on offer as the biotech giant growing its focus from its concentration on blood and plasma products and therapies, to treating patients with iron deficiency, heart failure and kidney disease through the$16 billion plus purchase of Swiss-based Vifor.
Monday saw Perreault and CSL management finally reveal the financial implications from the purchase of the business, now called CSL Vifor.
Investors and analysts had been waiting for further details about how CSL Vifor, which specialises in dialysis, iron deficiency and kidney disease treatments, would fit into the broader CSL business and the impact on CSL’s already strong financial position.
The purchase was a significant departure from CSL’s focus on plasma products and vaccines.
CSL said it expects Vifor to contribute a net profit after tax of between $US300 million and $330 million for 2023 (that will be an 11-month period first up).
As a result, CSL now expects 2022-23 net profit after tax before amortisation (NPATA) to come in at between $US2.7 billion to $US2.8 billion (a rise of between 13% and 18% on 2021-22 on a constant currency basis).
CSL had provided guidance back in August that the parts of its business excluding Vifor would generate between $US2.4 billion and $2.5 billion in profits this financial year and that was reaffirmed a week ago at the 2022 annual meeting in Melbourne.
In presentations about CSL Vifor’s products, CSL confirmed it was looking to grow revenues by 10% across the nephrology, iron and dialysis segments over the medium term.
Perreault told analysts in a briefing after the ASX filing that the appeal of the transaction had always been the durability of the Vifor business and the growth opportunities on offer now that it had joined the CSL stable.
He said the ‘long tail’ of the iron franchise will deliver years of long-term growth for the company.
“This goes out many decades – there is a lot to do here and people who are suffering from diseases of anaemia and fatigue. We are very, very bullish on this market.
CSL highlighted that iron deficiency (ID) is a massive market. In fact, it estimates that there are over 3 billion people suffering from ID and around 1.2 billion people suffering from iron deficiency anaemia (IDA). This gives its Ferinject therapy a major market opportunity.
CSL said it sees the renal disease market almost doubling from $US13 billion in 2020 to $US25 billion in 2026.
Furthermore, CSL also highlighted that Chronic Kidney Disease (CKD) is a leading cause of mortality and morbidity around the world.
In the United States, approximately 15% of adults suffer from CKD. Despite this, there is a “significant lack of access to therapies to support CKD patients,” CSL said in its briefing
Overall, CSL thinks the Vifor business will be a major growth opportunity over the long term, which will be supported by its strong product portfolio and ongoing investment in research and development.
CSL shares fell 1.3% in the Monday ASX trading session..
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The easing of Covid lockdowns and other restrictions has seen a dramatic change in where Australians drink alcohol – consumption at home via sales from bottle shops or takeaway services that boomed during the lockdowns has fallen sharply, to be replaced by a surge in consumption in hotels, clubs etc.
The first quarter trading update from Endeavour Group (ASX: EDV) – owners of Dan Murphy’s and BWS, the country’s biggest bottle shop owner as well as the country’s biggest publican – reveals the turnaround in grog consumption patterns
Endeavour reported a 3.1% rise in group sales to just over $3 billion in sales for the first quarter of the 2022-23 financial year, with sales from its 347 hotels up 90.8% to $538 million compared to the COVID-hit first quarter of 2022 as customers spend up on food and accommodation (and no doubt punted more of their hard-earned cash through poker machines).
Retail sales for the September quarter fell 6.2% to $2.49 Billion, from the same quarter of 202-22 when the main markets of NSW and Victoria were in lockdowns.
Endeavour CEO Steve Donohue said the company was looking forward to its first restriction-free trading period in three years this Christmas.
“Function bookings are already strong in our hotels, and we have a good supply of a great range of products to meet all tastes, trends and price points in our retail offers over the holiday season,” he said on Monday.
“We continue to expand and enhance our network through the renewal program. During the quarter, we renewed five Dan Murphy’s stores and 27 BWS stores. We also added one new Dan Murphy’s store and seven (net) new BWS stores, of which six were associated with the acquisition of three hotels. Our customer ratings remain very positive, with both BWS and Dan Murphy’s recording strong VOC scores, in-line with last year,” the company said in Monday’s update.
“The rebound in Bars and Food sales has been particularly strong, with Food becoming the fastest growing category in recent months compared to F20. With all consumers feeling the impact of inflation, we remain focused on ensuring we are a destination of choice for locals seeking a welcoming and affordable place to socialise with family and friends.
“Investment in the Hotels network continued in the quarter, with 14 renewals completed and three hotels acquired, The Leichhardt Hotel in Cloncurry QLD, The Emu Hotel in Morphett Vale SA and The Tandara Hotel in Sarina QLD. This brings our total hotels to 347 (including five managed clubs in Victoria) at the end of the quarter.”
Endeavour shares rose 1.5% to $6.97 in yesterday’s general selloff.
