sector note healthcare - overall · 2020. 2. 6. · healthcare│australia│equity...

Healthcare│Australia│Equity research│February 4, 2016

Sector Note

IMPORTANT DISCLOSURES REGARDING COMPANIES THAT ARE THE SUBJECT OF THIS REPORT AND AN EXPLANATION OF RECOMMENDATIONS CAN BE FOUND AT THE END OF THIS DOCUMENT. MORGANS FINANCIAL LIMITED (ABN 49 010 669 726) AFSL 235410 - A PARTICIPANT OF ASX GROUP

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Healthcare - Overall

Patient in the ER…but remains alive and well

The healthcare sector has been one of the most consistent performers over the ■past 10 years, underperforming the ASX200 only 2 times over the past decade.

However, increased regulatory scrutiny and soft industry data have taken some ■gloss off the domestic service providers (SHL, PRY, RHC, HSO, CAJ, IDX), with ongoing government reviews creating earnings uncertainty and representing a near-term overhang.

While we continue to view sector long-term prognosis as good and fundamentals ■as sound, we acknowledge sector sentiment is poor and investors should be positioned in subsectors with lower exposure (ie aged care, pharma).

We expect large/mid-cap names to be in-line this reporting season, but see risk ■skewed to the upside for BKL and to the downside for SHL, CAJ and SRX.

Healthcare services sub-sector hit by regulatory uncertainty While healthcare has been a solid outperformer over the past decade (+110% vs ASX200), the last few months have been considerably weak as domestic Medicare data has pointed to soft 1HFY16 growth (GP volumes 4.2%, -250pts yoy; Diagnostic Imaging (DI) 1.7%, -630pt yoy; Pathology 1.9%, flat yoy) and sovereign risk is intensifying as the government has proposed to remove A$650m in bulk-billing incentives for Pathology and DI over the next 4 years and is currently running 6 separate reviews across the space to weed out low-value care, improve services at the primary care level, and achieve the best patient outcomes at the lowest cost. While this primarily clouds the earnings outlook for domestic service providers (SHL, PRY, CAJ, IDX), hospital operators like RHC and HSO are not immune, especially as industry growth also looks to be moderating (September quarter +4.7% versus 12-month rolling growth of +7%) and as health funds (eg MPL, NHF, Bupa) push for more quality-based patient outcomes.

Mostly in-line results, but upside (BKL) and downside (SHL, CAJ, SRX) Outside ANN’s recent downgrade, which was not surprising given the general malaise if not a recession in the industrial and manufacturing economies, we do not expect any major surprises this reporting season and view outlook commentary to be the main crux of investors’ focus. However, we see the most potential for upside in BKL, on continued strength in Asian sales and operational efficiencies, whereas the likelihood for downside resides with SHL, on domestic weakness and 2H skew, CAJ, on integration issues and regulatory concerns and SRX, on difficult comps and dose sales below guidance, albeit FX should be a tailwind.

Relative valuation not that demanding, but a buffer is required While the ASX200 Healthcare index trades 13% above its long-term average on an absolute basis (23.2x versus 20.5x), the index trades c3% above the long-term mean (1.48x versus 1.44x) and 2% below 1SD. That said, with heightened regulatory risk, we believe a better buffer is required. Names that we believe offer the best relative value include aged care operators (JHC, REG) and HSO (over the medium/longer term).

Key picks CSL, REG…and HSO/RHC over the medium/longer term While we continue to view key drivers as intact and note industry data is historically volatile and tends not to correlate with company performance, regulatory unknowns and poor sector sentiment should tilt investment considerations to where exposure is lower. In pharmaceuticals, we like CSL as it reinvests for the future and remain confident in the future growth trajectory. In healthcare services, industry dynamics remain robust for aged care operators (REG and JHC) and despite current concerns, scalable quality portfolios of the hospital operators (HSO/RHC) are attractive on a medium/longer term view.

Overweight (no change) Highlighted companies

CSL ADD, TP A$103.75, A$105.35 close

A well-diversified product portfolio and reinvesting for future growth as the R&D pipeline evolves, with ongoing capital management remaining supportive.

Regis Healthcare ADD, TP A$6.00, A$6.00 close

Australian aged care operator with good earnings momentum, as government income and resident contributions are increasing, the brown/greenfield pipeline is solid and industry fundamentals are good.

Healthscope ADD, TP A$3.22, A$2.33 close

While increased regulatory risk and asset improvements create near-term earnings uncertainty, a defensible reputation for quality and service along with on time and on budget expansion programs, should reward investors on a medium/longer term view.

Dr Derek JELLINEK

T (61) 2 9043 7904 E [email protected]

Scott POWER T (61) 7 3334 4884 E [email protected]

http://www.efa.biz/


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KEY CHARTS

Stock picking rules the roost Despite ongoing lambasting of the healthcare sector in the press and increased regulatory risk, the ASX200 Healthcare index managed to consistently outperform the broader market over the year. As expected, however, there is a large discrepancy between names that have outperformed versus those that have not, highlighting sub-sector divergence - pharma and medtech winners; services, diagnostics - losers; biotech - mixed. We expect this trend to continue until we gain more clarity on the regulatory front.

Relative valuation…not that demanding The ASX 200 Healthcare Index, relative to the ASX 200, trades c2% above the long-term mean (1.48x vs 1.44x), but 2% below 1SD. Interestingly, despite the increased regulatory risk and weaker stock prices for some names across the space, the PE multiple has not contracted significantly since the start of FY15. We believe this may be due to the declining AUD/USD helping to expand earnings.

Where the value can be found Given the market correction since April last year on a myriad of concerns (eg falling commodity prices, China currency devaluation and slowing growth, US interest rate changes, and an uncertain domestic picture), along with sector specific news, certain valuations have become more attractive. Looking across our universe, large/mid-caps that offer the best relative value include aged care operators (JHC, REG), IVF players (VRT and MVF) and HSO over the medium/longer term.

Solid growth prospect Comparing three-year earnings CAGR to 12-month forward PEs across large/mid-cap healthcare, we see almost all exceed the broader market. BKL stands above its peers, but at 29x it is priced for growth, whereas CAJ looks cheap, but its growth prospects are questionable on integration issues and regulatory concerns, in our view. IVF players (VRT and MVF) look interesting, as the IVF industry improves from depressed levels last fiscal year. HSO and SHL look good value, but sovereign risk remains. While expensive based on this matrix, we continue to like CSL as it is reinvesting through FY16 to support its growth over the medium/longer term and RGS, on positive industry dynamics.

SOURCE: MORGANS, COMPANY REPORTS

Indices

Last

Price

Price -12

mnths 1 mnth 3 mnth 6 mnth 1 yr

ASX 200 4876.8 5777.3 -7.5% -7.0% -14.4% -15.6%

ASX 200 HC 19431.4 18049.3 -2.7% 3.6% -2.2% 7.7%

ASX 200 Telco 2014 2295.8 0.0% 4.1% -12.3% -12.3%

ASX 200 Consumer Staples 8689.2 9735.5 -0.5% 4.2% -4.6% -10.7%

ASX 200 Utilities 6946.7 6527.3 0.4% -0.0% 2.3% 6.4%

ASX200 covered Cos

ANN 18.65 22.66 -12.4% -5.7% -26.3% -17.7%

COH 94.80 85.15 -1.5% 7.5% 4.0% 11.3%

CSL 105.35 87.99 -1.1% 12.3% 4.5% 19.7%

HSO 2.33 2.72 -12.1% -13.7% -15.0% -12.4%

JHC 2.90 2.00 -9.1% -8.8% 4.3% 45.0%

PRY 2.42 4.77 0.0% -35.6% -47.2% -49.3%

REG 6.00 3.65 2.2% 2.2% 1.5% 164.4%

RHC 60.52 60.07 -11.0% -2.1% -9.9% 0.7%

RMD 8.16 8.05 10.0% 0.4% 6.0% 1.4%

SHL 18.30 19.09 1.9% -5.0% -12.3% -4.1%

SRX 36.43 27.88 -10.6% -5.4% 16.4% 30.7%

VRT 6.27 8.00 -3.5% -2.2% 17.6% -21.6%

0.5

0.7

0.9

1.1

1.3

1.5

1.7

Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016

HC relative to ASX200 Average +1 St dev -1 St dev

12 mnth f wd relativ e PE to ASX200

-1 St dev

+1 St dev

0.00

0.50

1.00

1.50

2.00

2.50

3.00

ANN BKL CAJ COH CSL HSO JHC MVF PRY REG RHC RMD SHL VRT

5 yr PER 5 yr av PER -1SD +1SD

0

5

10

15

20

25

30

35

0% 10% 20% 30% 40%

3 yr EPS CAGR

PE

SHL

PRY

RHC

ANN

COHCSL

RMDHSO

SRX

REG

MVF

VRT

JHC

ASX200

BKL

CAJ


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Figure 1: Global comps

SOURCE: MORGANS RESEARCH, COMPANY

Ticker Yr End Mkt Cap FY0 FY1 FY2 FY3 FY0 FY1 FY2 FY3 FY1 FY2 FY3 3Y CAGR

Pharma

CSL - Consensus CSL 06/2015 49,304 35,410 18.6 19.1 16.6 14.6 25.6 25.8 22.3 19.8 1.3% 15.9% 12.6% 9.8% 2.62

Johnson & Johnson JNJ 12/2015 288,150 288,150 11.6 10.6 9.8 9.2 16.9 16.0 15.1 14.3 4.8% 5.9% 6.1% 5.6% 3.01

Pfizer PFE 12/2015 183,153 183,153 10.3 9.8 8.9 8.6 13.6 12.8 11.6 10.4 5.5% 10.5% 11.1% 9.0% 1.51

Novartis NVS 12/2015 204,817 204,817 15.0 14.0 13.0 12.2 10.5 9.7 8.5 8.0 1.9% 9.3% 10.0% 6.5% 1.49

Merck MRK 12/2015 139,817 139,817 9.3 9.2 9.3 8.2 14.0 13.4 13.1 11.9 3.7% 2.7% 9.7% 5.3% 2.63

GlaxoSmithKline GSK 12/2015 102,394 102,394 11.5 10.7 10.0 9.7 18.9 17.0 16.0 14.9 NA 6.3% 5.8% NA NA

Average 183,666 183,666 11.6 10.9 10.2 9.6 15.8 14.8 13.9 12.9 3.5% 6.4% 8.2% 6.6% 2.2

Biotech

Amgen AMGN 12/2015 114,261 114,261 12.5 10.3 9.1 7.5 15.0 14.0 12.5 11.6 18.6% 12.3% 7.4% 12.7% 1.18

Gilead Sciences GILD 12/2015 124,504 124,504 5.0 5.0 4.8 4.9 7.1 7.1 6.9 6.4 2.6% 2.3% 7.8% 4.2% 1.67

Celgene Corporation CELG 12/2015 78,165 78,165 22.7 16.0 12.2 8.6 21.1 17.5 13.8 11.3 160.5% 27.1% 22.1% 59.3% 0.36

Baxter BAX 12/2015 20,929 20,929 15.2 12.5 11.1 10.1 30.4 25.5 21.6 18.9 8.8% 17.8% 14.4% 13.6% 2.24

Biogen Idec BIIB 12/2015 59,136 59,136 10.6 9.8 9.1 8.2 16.3 14.7 13.5 12.6 17.5% 8.2% 7.6% 11.0% 1.48

Average 79,399 79,399 13.2 10.7 9.3 7.9 18.0 15.8 13.7 12.2 41.6% 13.5% 11.8% 20.2% 1.4

Medical devices

Cochlear COH 06/2015 5,399 3,878 21.9 20.0 17.7 16.0 34.3 30.2 26.6 23.9 3.2% 13.5% 11.6% 9.3% 3.68

Resmed RMD 06/2015 8,064 8,064 15.0 14.5 13.0 11.5 22.7 21.3 19.1 16.7 5.3% 11.2% 14.3% 10.2% 2.23

Johnson & Johnson JNJ 12/2015 288,150 288,150 11.6 10.6 9.8 9.2 16.9 16.0 15.1 14.3 4.8% 5.9% 6.1% 5.6% 3.01

Medtronic MDT 04/2015 107,079 107,079 18.1 13.5 12.1 11.0 18.1 17.4 15.6 14.1 2.2% 11.2% 10.9% 8.0% 2.25

Sonova SOON 03/2015 8,048 8,007 13.5 15.4 13.7 12.4 21.0 21.9 19.0 17.0 NA 15.2% 11.4% 4.5% 4.69

St Jude STJ 12/2015 14,868 14,868 12.4 11.0 9.6 8.5 13.4 13.1 11.9 11.0 2.1% 9.5% 8.8% 6.8% 1.98

Stryker SYK 12/2015 37,210 37,210 13.9 12.3 11.0 10.1 19.4 17.7 16.1 14.8 9.5% 9.7% 9.2% 9.5% 2.05

Boston Scientific BSX 12/2014 23,850 23,850 16.4 14.7 12.2 10.5 21.5 19.4 16.8 14.8 8.9% 15.1% 13.6% 12.5% 1.72

Fisher & Paykel FPH 03/2015 4,870 3,250 23.8 20.7 17.8 15.2 43.4 34.6 28.0 23.2 NA 23.3% 20.4% 13.6% 3.20

Average 69,154 68,916 16 14.0 12.3 11.0 21.9 20.0 17.5 15.6 2.2% 12.8% 11.5% 8.6% 2.4

Pathology & Radiology

Sonic Healthcare SHL 06/2015 7,604 5,461 12.8 11.4 10.7 9.9 19.8 16.7 16.0 15.0 1.1% 4.2% 7.3% 4.2% 4.75

Primary Health Care PRY 06/2015 1,267 910 5.9 6.2 6.3 5.9 11.3 10.8 11.4 10.2 -8.6% -4.4% 11.2% -1.0% NA

Capital Health CAJ 06/2015 92 66 6.1 5.4 5.9 5.3 8.0 8.0 8.8 8.8 -4.4% -12.5% 0.0% -5.8% NA

Laboratory Corp LH 12/2014 11,005 11,005 11.3 10.0 8.7 7.9 16.0 13.8 12.5 11.3 16.0% 10.6% 10.8% 12.4% 1.29

Quest Diagnostics DGX 12/2015 9,177 9,177 8.4 8.0 7.7 7.4 13.4 12.6 11.9 11.3 6.9% 5.8% 4.7% 5.8% 2.32

Average 10,091 10,091 9.9 9.0 8.2 7.7 14.7 13.2 12.2 11.3 11.4% 8.2% 7.8% 9.1% 1.2

Hospitals

Ramsay Healthcare RHC 06/2015 12,175 8,744 13.7 12.0 10.8 10.0 30.2 26.2 23.0 21.0 -1.1% 14.0% 9.4% 7.2% 4.16

Healthscope HSO 06/2015 3,930 2,823 12.4 12.6 11.6 10.7 23.4 21.2 18.7 16.7 -2.3% 13.2% 11.6% 7.3% 3.22

Community Health SystemsCYH 12/2014 2,394 2,394 7.0 6.7 6.4 6.1 6.2 5.8 5.5 5.2 6.9% 5.0% 6.5% 6.1% 1.02

Kindred Healthcare. Inc KND 12/2014 783 783 6.8 3.8 3.6 3.5 9.1 7.7 8.8 8.3 18.2% -12.7% 5.4% 2.8% 3.20

Lifepoint Hospitals LPNT 12/2014 3,037 3,037 8.0 7.2 6.9 6.1 21.3 17.4 16.3 15.0 21.0% 6.3% 8.6% 11.8% 1.80

Universal Health Serv UHS 12/2014 10,980 10,980 9.8 8.9 7.9 7.1 19.3 16.2 15.1 13.7 19.1% 7.6% 9.6% 12.0% 1.61

Apollo Hospitals APHS 03/2015 206,538 3,046 26.8 25.8 21.5 17.8 57.4 52.4 42.1 32.6 NA 24.5% 28.7% 15.6% 3.69

Bangkok Chain Hospital BCH 12/2014 21,820 613 16.2 19.2 16.0 14.0 38.5 45.8 37.2 30.6 NA 40.0% 14.3% 7.3% 5.24

IHH Healthcare IHH 12/2014 18,092 12,793 26.6 25.9 22.1 19.0 68.6 56.1 45.4 37.3 NA 21.4% 20.6% NA NA

Bumrungard Hospital BH 12/2014 162,483 4,563 33.7 29.7 26.0 22.5 62.0 47.3 40.8 35.5 14.3% 15.9% 15.0% 15.1% 4.11

KPJ Healthcare KPJ 12/2014 4,521 1,090 16.7 15.8 14.4 13.1 35.4 30.4 27.7 25.0 NA 11.8% 10.5% 0.3% 103.69

Raffles Medical Group RFMD 12/2014 2,392 1,692 24.8 25.3 21.8 18.4 33.8 34.1 30.1 26.0 NA 14.1% 15.5% 5.5% 6.20

Average 43,304 4,099 17.6 16.8 14.7 12.8 35.2 31.3 26.9 22.9 2.7% 13.4% 13.5% 8.5% 13.1

Aged Care

Japara Healthcare JHC 06/2015 779 559 13.7 13.3 11.0 9.5 26.2 24.7 20.7 18.0 -7.6% 18.8% 14.9% 8.0% 3.27

Regis REG 06/2015 1,778 1,277 18.1 17.0 14.8 12.8 33.8 30.5 26.9 23.2 -22.8% 13.1% 16.8% 0.7% 49.86

Average 1,278 918 15.9 15.1 12.9 11.2 30.0 27.6 23.8 20.6 -15.2% 16.0% 15.8% 4.4% 1.6

IVF

Virtus Health VRT 06/2015 501 360 10.1 9.5 8.9 8.2 15.6 14.5 13.5 12.5 -13.1% 7.5% 7.9% 0.3% 59.45

Monash MVF 06/2015 360 259 11.3 9.7 9.0 8.3 15.5 13.4 12.6 12.0 2.6% 7.6% 5.9% 5.4% 2.89

Average 431 309 10.7 9.6 8.9 8.2 15.5 14.0 13.0 12.2 -5.2% 7.6% 6.9% 2.8% 20.8

Industrials, Household & Personal Products

Ansell ANN 06/2015 2,317 1,664 7.2 7.7 7.0 6.3 9.1 10.0 9.8 9.1 -3.1% 3.0% 7.1% 2.3% 4.01

Blackmores BKL 06/2015 3,055 2,194 41.8 21.6 17.3 13.5 70.8 32.6 26.0 20.3 69.9% 25.5% 27.8% 39.7% 1.78

Top Glove TOPG 08/2015 7,011 1,691 16.9 11.1 10.5 10.1 27.7 16.4 15.5 14.7 28.9% 6.1% 3.4% 12.3% 2.26

Honeywell HON 12/2015 78,734 78,734 10.3 9.9 8.9 7.7 16.7 15.5 14.2 13.0 7.9% 9.6% 8.9% 8.8% 1.90

3M MMM 12/2015 93,909 93,909 12.5 11.9 11.5 11.0 19.8 18.6 17.1 15.8 6.3% 8.5% 8.3% 7.7% 2.57

Kimberley-Clarke KMB 12/2015 47,324 47,324 13.7 13.3 12.6 12.0 22.6 21.3 19.7 18.4 6.2% 8.1% 7.3% 7.2% 3.13

Supermax SUCB 12/2014 2,027 489 13.3 11.2 9.0 8.5 18.3 15.0 15.0 13.1 6.1% 0.0% 10.4% 5.4% 3.38

Hartalega HART 03/2015 8,598 2,074 21.1 20.0 16.4 14.1 37.4 29.4 25.1 22.0 6.5% 16.3% 14.0% 12.2% 3.07

Reckitt RB 12/2014 44,265 64,560 17.8 19.0 17.6 16.1 27.8 25.9 24.0 22.4 -8.4% 7.9% 7.4% 2.0% 13.89

Church & Dwight CHD 12/2015 11,417 11,417 15.5 14.7 13.9 13.6 26.9 24.8 23.1 21.7 7.8% 7.6% 6.3% 7.2% 3.71

Fastenal FAST 12/2015 11,481 11,481 12.7 12.6 11.7 11.1 22.2 21.7 20.3 18.6 3.1% 6.9% 9.4% 6.4% 3.45

Grainger GWW 12/2015 12,410 12,410 9.1 9.7 9.5 8.8 17.0 17.0 15.6 14.1 -2.4% 8.9% 10.6% 5.5% 3.07

Average 31,717 32,409 14.3 13.4 12.2 11.3 23.7 20.6 19.0 17.4 6.2% 8.0% 8.6% 7.5% 3.7

Mkt Cap

(US$)

EPS growth PEG 3Y

CAGR

EV/EBITDA PE


4

Figure 2: Financial summary- BKL


Blackmores Year end June Closing price (A$) 174.99 151.77Income statement (A$m) 2014A 2015A 2016F 2017F 2018F Valuation metricsDivisional sales 347 472 705 776 811 Preferred methodology Valuation 151.77Total revenue 348 473 706 777 812 DCF valuation inputsEBITDA 46.0 78.7 138.8 162.1 171.9 Rf 5.25% 10-year rate 5.25%Associate income 0.0 0.0 0.0 0.0 0.0 Rm-Rf 6.00% Margin 2.0%Depreciation (5.8) (6.0) (6.4) (6.4) (6.4) Beta 0.98 Kd 7.25%EBITA 40.3 72.7 132.4 155.7 165.6 CAPM (Rf+Beta(Rm-Rf)) 11.1% Ke 11.1%Amortisation/impairment (0.5) (0.4) (0.4) (0.4) (0.4) E/EV*Ke+D/EV*Kd(1-t) NPV cash flow (A$m) 2749.4EBIT 39.7 72.3 132.0 155.3 165.2 Equity (E/EV) 65.0% Minority interest (A$m) 0.0EBIT(incl associate profit) 39.7 72.3 132.0 155.3 165.2 Debt (D/EV) 35.0% Net debt (A$m) 7.1Net interest expense (4.8) (3.4) (1.2) (1.0) 0.2 Interest rate 7.3% Investments (A$m) 2.2Pre-tax profit 34.9 68.9 130.8 154.3 165.4 Tax rate (t) 30.0% Equity market value (A$m) 2744.5Income tax expense (9.5) (22.3) (41.3) (48.8) (52.2) WACC 9.0% Diluted no. of shares (m) 16.8After-tax profit 25.4 46.6 89.5 105.6 113.1 DCF Valuation (A$) 163.54Minority interests 0.0 0.0 0.0 0.0 0.0NPAT (normalised) 25.4 46.6 89.5 105.6 113.1 Multiples 2015A 2016F 2017F 2018FSignificant items 0.0 0.0 0.0 0.0 0.0 Enterprise value (A$m) 3,068.6 3,021.3 3,016.6 2,987.3NPAT (reported) 25.4 46.6 89.5 105.6 113.1 EV/Sales (x) 6.5 4.3 3.9 3.7

EV/EBITDA (x) 39.0 21.8 18.6 17.4EV/EBIT (x) 42.4 22.9 19.4 18.1

Cash flow (A$m) 2014A 2015A 2016F 2017F 2018F PE (normalised) (x) 63.0 32.8 27.8 26.0EBITDA 46.0 78.7 138.8 162.1 171.9 PEG (normalised) (x) 0.8 0.4 1.5 3.6Change in working capital 5.8 18.1 (41.9) (11.1) (5.2) Price/Book (x) 22.09 16.44 13.44 11.43Net interest (pd)/rec (4.8) (3.4) (1.2) (1.0) 0.2Taxes paid (9.5) (22.3) (41.3) (48.8) (52.2) At target price 2015A 2016F 2017F 2018FOther oper cash items 0.0 0.0 0.0 0.0 0.0 EV/EBITDA (x) 39.0 21.8 18.6 17.4Cash flow from ops (1) 37.5 71.1 54.4 101.3 114.7 PE (normalised) (x) 388.1 202.2 171.3 159.9Capex (2) (4.7) (3.2) (6.0) (6.4) (6.4)Disposals/(acquisitions) 0.0 0.0 0.0 0.0 0.0 Comparable company data (x) 2016F 2017F 2018FOther investing cash flow 0.0 0.0 0.0 0.0 0.0 Ramsay Health Care EV/EBITDA 11.5 10.6 9.7Cash flow from invest (3) (4.7) (3.2) (6.0) (6.4) (6.4) Y/E June EV/EBIT 15.8 14.5 13.3Incr/(decr) in equity 0.0 0.0 0.0 0.0 0.0 PE 27.7 24.8 22.3Incr/(decr) in debt (14.0) (29.0) 0.0 0.0 0.0 PEG 2.8 2.1 2.0Ordinary dividend paid (18.1) (22.7) (43.8) (65.6) (74.7) Cochlear EV/EBITDA 20.3 18.5 16.9Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 Y/E June EV/EBIT 22.8 20.7 18.8Other financing cash flow 0.0 0.0 0.0 0.0 0.0 PE 31.0 28.1 25.5Cash flow from fin (5) (32.1) (51.7) (43.8) (65.6) (74.7) PEG 1.6 2.7 2.5Forex and disc ops (6) 0.0 0.0 0.0 0.0 0.0Inc/(decr) cash (1+3+5+6) 0.8 16.2 4.7 29.3 33.7 Per share data 2015A 2016F 2017F 2018FEquity FCF (1+2+4) 32.8 67.9 48.4 94.9 108.3 No. shares 16.8 16.8 16.8 16.8

EPS (normalised) (cps) 277.6 533.0 629.1 674.1

Balance sheet (A$m) 2014A 2015A 2016F 2017F 2018F EPS (dil. normalised) (cps) 277.6 533.0 629.1 674.1Cash & deposits 18.6 36.9 41.6 70.9 104.6 Dividend per share (cps) 203.0 368.0 434.0 465.0Trade debtors 70.6 107.1 144.9 159.4 166.7 Franking (%) 100% 100% 100% 100%Inventory 38.7 38.7 56.4 62.1 64.9 Dividend payout ratio (%) 73.1% 69.0% 69.0% 69.0%Investments 2.2 2.2 2.2 2.2 2.2 Dividend yield (%) 1.2% 2.1% 2.5% 2.7%Goodwill 0.0 0.0 0.0 0.0 0.0Other intangible assets 35.2 35.4 35.0 34.5 34.1 Growth ratios 2015A 2016F 2017F 2018FFixed assets 63.6 60.7 60.3 60.3 60.3 Sales growth 36.0% 49.5% 10.0% 4.6%Other assets 7.7 12.4 12.4 12.4 12.4 Operating cost growth 30.5% 44.0% 8.3% 4.2%Total assets 236.6 293.4 352.8 401.8 445.2 EBITDA growth 71.0% 76.3% 16.8% 6.1%Short-term borrowings 0.0 0.0 4.4 4.4 4.4 EBITA growth 80.7% 82.0% 17.6% 6.3%Trade payables 49.2 94.9 108.6 117.7 122.6 EBIT growth 81.9% 82.5% 17.7% 6.3%Long-term borrowings 73.0 44.0 39.6 39.6 39.6 Reported NPAT growth 83.5% 92.0% 18.0% 7.1%Provisions 0.0 12.9 12.9 12.9 12.9 Normalised NPAT growth 83.5% 92.0% 18.0% 7.1%Other liabilities 10.2 8.7 8.7 8.7 8.7 Reported EPS growth 83.5% 92.0% 18.0% 7.1%Total liabilities 132.4 160.5 174.2 183.3 188.2 Normalised EPS growth 83.5% 92.0% 18.0% 7.1%Preference shares 0.0 0.0 0.0 0.0 0.0Hybrid equity 0.0 0.0 0.0 0.0 0.0 Operating performance 2015A 2016F 2017F 2018FShare capital 34.5 37.8 37.8 37.8 37.8 Asset turnover 32.7% 36.5% 46.7% 45.8%Other reserves 3.2 8.1 8.1 8.1 8.1 EBITDA margin 16.7% 19.7% 20.9% 21.2%FCTR 0.0 0.0 0.0 0.0 0.0 EBIT margin 15.3% 18.7% 20.0% 20.4%Unrealised gains/losses 0.0 0.0 0.0 0.0 0.0 Net profit margin 9.9% 12.7% 13.6% 13.9%Retained earnings 66.5 87.1 132.8 172.7 211.2 Return on net assets 54.4% 73.9% 71.1% 64.3%Other equity 0.0 0.0 0.0 0.0 0.0 Net debt (A$m) 7.1 2.4 -26.9 -60.6Total equity 104.2 132.9 178.6 218.6 257.0 Net debt/equity 5.3% 1.3% -12.3% -23.6%Minority interest 0.0 0.0 0.0 0.0 0.0 Net interest/EBIT cover (x) 21.1 113.5 159.2 -841.4Total shareholders' equity 104.2 132.9 178.6 218.6 257.0 ROIC 46.2% 87.6% 81.0% 81.6%Total liabilities & SE 236.6 293.4 352.8 401.8 445.2

Internal liquidity 2015A 2016F 2017F 2018FCurrent ratio (x) 1.8 2.0 2.3 2.5Receivables turnover (x) 3.9 3.7 4.6 4.8Payables turnover (x) 4.2 3.9 5.0 5.1

Assumptions 2015A 2016F 2017F 2018FAUD/USD 0.836 0.730 0.740 0.740

Target price (A$)

Blended


5

Figure 3: Financial summary- CAJ


Capitol Health Year end June Closing price (A$) 0.18 0.37Income statement (A$m) 2014A 2015A 2016F 2017F 2018F Valuation metricsDivisional sales 89 110 151 169 181 Preferred methodology Valuation 0.37Total revenue 90 111 153 170 182 DCF valuation inputsEBITDA 14.3 13.7 20.7 21.7 24.2 Rf 5.00% 10-year rate 5.00%Associate income 0.0 0.0 0.0 0.0 0.0 Rm-Rf 4.50% Margin 2.0%Depreciation (3.5) (4.9) (5.5) (6.1) (7.9) Beta 1.56 Kd 7.00%EBITA 10.8 8.8 15.2 15.6 16.3 CAPM (Rf+Beta(Rm-Rf)) 12.0% Ke 12.0%Amortisation/impairment 0.0 0.0 0.0 0.0 0.0 E/EV*Ke+D/EV*Kd(1-t) NPV cash flow (A$m) #N/AEBIT 10.8 8.8 15.2 15.6 16.3 Equity (E/EV) 70.0% Minority interest (A$m) #N/AEBIT(incl associate profit) 10.8 8.8 15.2 15.6 16.3 Debt (D/EV) 30.0% Net debt (A$m) 38.3Net interest expense (0.7) (1.0) (1.0) (1.3) (1.3) Interest rate 7.0% Investments (A$m) 0.0Pre-tax profit 10.1 7.9 14.3 14.4 15.0 Tax rate (t) 30.0% Equity market value (A$m) 230.0Income tax expense (3.0) (3.9) (4.3) (4.4) (4.5) WACC 9.9% Diluted no. of shares (m) 463.1After-tax profit 7.2 3.9 10.0 10.0 10.5 DCF Valuation (A$) 0.50Minority interests 0.0 0.0 0.0 0.0 0.0NPAT (normalised) 7.2 3.9 10.0 10.0 10.5 Multiples 2015A 2016F 2017F 2018FSignificant items 0.0 0.0 0.0 0.0 0.0 Enterprise value (A$m) 93.9 129.9 131.2 129.2NPAT (reported) 7.2 3.9 10.0 10.0 10.5 EV/Sales (x) 0.9 0.9 0.8 0.7


Cash flow (A$m) 2014A 2015A 2016F 2017F 2018F PE (normalised) (x) 19.9 8.6 9.2 8.7EBITDA 14.3 13.7 20.7 21.7 24.2 PEG (normalised) (x) (0.4) 0.1 (1.6) 1.6Change in working capital (1.4) (6.8) 1.3 (2.7) (1.2) Price/Book (x) 0.86 0.95 0.94 0.92Net interest (pd)/rec (0.7) (1.0) (1.0) (1.3) (1.3)Taxes paid 0.0 0.0 0.0 0.0 0.0 At target price 2015A 2016F 2017F 2018FOther oper cash items 0.0 0.0 0.0 0.0 0.0 EV/EBITDA (x) 6.8 6.3 6.0 5.3Cash flow from ops (1) 8.7 1.1 15.6 11.7 13.8 PE (normalised) (x) 300.3 130.6 138.6 131.3Capex (2) (3.0) (94.8) (7.6) (8.4) (9.2)Disposals/(acquisitions) 0.0 0.0 0.0 0.0 0.0 Comparable company data (x) 2016F 2017F 2018FOther investing cash flow 0.0 0.0 0.0 0.0 0.0 Ramsay Health Care EV/EBITDA 11.5 10.6 9.7Cash flow from invest (3) (3.0) (94.8) (7.6) (8.4) (9.2) Y/E June EV/EBIT 15.8 14.5 13.3Incr/(decr) in equity (0.0) 55.9 0.0 (0.0) (0.0) PE 27.7 24.8 22.3Incr/(decr) in debt (3.4) 56.2 0.0 0.0 0.0 PEG 2.8 2.1 2.0Ordinary dividend paid (2.7) (5.6) (7.8) (8.4) (8.4) Cochlear EV/EBITDA 20.3 18.5 16.9Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 Y/E June EV/EBIT 22.8 20.7 18.8Other financing cash flow 0.0 0.0 0.0 0.0 0.0 PE 31.0 28.1 25.5Cash flow from fin (5) (6.1) 106.6 (7.8) (8.4) (8.4) PEG 1.6 2.7 2.5Forex and disc ops (6) 0.0 0.0 0.0 0.0 0.0Inc/(decr) cash (1+3+5+6) (0.3) 12.9 0.2 (5.0) (3.7) Per share data 2015A 2016F 2017F 2018FEquity FCF (1+2+4) 5.7 (93.7) 8.0 3.4 4.6 No. shares 463.1 522.0 522.0 522.0


Balance sheet (A$m) 2014A 2015A 2016F 2017F 2018F EPS (dil. normalised) (cps) 0.9 2.0 1.9 2.0Cash & deposits 9.1 36.7 35.4 37.4 39.5 Dividend per share (cps) 1.3 1.5 1.6 1.6Trade debtors 2.3 5.0 4.5 6.2 6.9 Franking (%) n.a. n.a. n.a. n.a.Inventory 0.0 0.0 0.0 0.0 0.0 Dividend payout ratio (%) 141.9% 74.0% 83.8% 79.4%Investments 0.0 0.0 0.0 0.0 0.0 Dividend yield (%) 7.1% 8.6% 9.1% 9.1%Goodwill 0.0 0.0 0.0 0.0 0.0Other intangible assets 33.2 112.5 112.5 112.5 112.5 Growth ratios 2015A 2016F 2017F 2018FFixed assets 17.6 37.4 39.5 41.8 43.1 Sales growth 24.2% 37.4% 11.6% 7.1%Other assets 0.0 0.0 0.0 0.0 0.0 Operating cost growth 27.7% 36.3% 12.5% 6.4%Total assets 62.2 191.5 191.9 197.9 202.0 EBITDA growth -4.0% 51.0% 4.7% 11.5%Short-term borrowings 1.1 7.5 7.5 7.5 7.5 EBITA growth -18.3% 72.5% 2.8% 4.4%Trade payables 4.4 10.7 8.9 13.3 15.2 EBIT growth -18.3% 72.5% 2.8% 4.4%Long-term borrowings 10.3 67.5 67.5 67.5 67.5 Reported NPAT growth -45.1% 153.5% -0.2% 5.6%Provisions 5.9 8.7 8.7 8.7 8.7 Normalised NPAT growth -45.1% 153.5% -0.2% 5.6%Other liabilities 1.7 3.3 3.3 3.3 3.3 Reported EPS growth -49.8% 130.0% -5.8% 5.6%Total liabilities 23.5 97.6 95.9 100.2 102.2 Normalised EPS growth -49.8% 130.0% -5.8% 5.6%Preference shares 0.0 0.0 0.0 0.0 0.0Hybrid equity 0.0 0.0 0.0 0.0 0.0 Operating performance 2015A 2016F 2017F 2018FShare capital 31.5 87.5 87.5 87.5 87.5 Asset turnover 17.5% 14.4% 19.4% 21.1%Other reserves 0.0 0.0 0.0 0.0 0.0 EBITDA margin 12.4% 13.7% 12.8% 13.4%FCTR 0.0 0.0 0.0 0.0 0.0 EBIT margin 8.0% 10.0% 9.3% 9.0%Unrealised gains/losses 0.0 0.0 0.0 0.0 0.0 Net profit margin 3.6% 6.6% 5.9% 5.8%Retained earnings 7.1 5.7 7.8 9.5 11.6 Return on net assets 9.4% 15.8% 16.0% 16.4%Other equity 0.0 0.6 0.6 0.6 0.6 Net debt (A$m) 38.3 39.6 37.7 35.6Total equity 38.7 93.9 96.0 97.6 99.8 Net debt/equity 40.8% 41.3% 38.6% 35.6%Minority interest 0.0 0.0 0.0 0.0 0.0 Net interest/EBIT cover (x) 9.2 15.9 12.4 12.7Total shareholders' equity 38.7 93.9 96.0 97.6 99.8 ROIC 18.8% 10.8% 10.8% 11.3%Total liabilities & SE 62.2 191.5 191.9 197.9 202.0



Target price (A$)

DCF/PE Compco


6

Figure 4: Financial summary- COH


Cochlear Year end June Closing price (A$) 94.80 82.00Income statement (A$m) 2014A 2015A 2016F 2017F 2018F Valuation metricsDivisional sales 821 942 1,106 1,158 1,227 Preferred methodology Valuation 82.00Total revenue 805 926 1,076 1,146 1,227 DCF valuation inputsEBITDA 176.5 236.7 272.2 296.8 322.4 Rf 4.25% 10-year rate 4.25%Associate income 0.0 0.0 0.0 0.0 0.0 Rm-Rf 6.00% Margin 2.0%Depreciation (26.9) (30.3) (30.6) (31.2) (31.8) Beta 0.92 Kd 6.25%EBITA 149.6 206.4 241.6 265.7 290.6 CAPM (Rf+Beta(Rm-Rf)) 9.8% Ke 9.8%Amortisation/impairment 0.0 0.0 0.0 0.0 0.0 E/EV*Ke+D/EV*Kd(1-t) NPV cash flow (A$m) 4743.1EBIT 149.6 206.4 241.6 265.7 290.6 Equity (E/EV) 65.0% Minority interest (A$m) 0.0EBIT(incl associate profit) 149.6 206.4 241.6 265.7 290.6 Debt (D/EV) 35.0% Net debt (A$m) 140.5Net interest expense (10.0) (10.1) (9.1) (8.8) (7.9) Interest rate 6.3% Investments (A$m) 1.9Pre-tax profit 139.6 196.3 232.6 256.9 282.7 Tax rate (t) 24.5% Equity market value (A$m) 4604.5Income tax expense (30.1) (50.5) (58.1) (64.2) (70.7) WACC 8.0% Diluted no. of shares (m) 56.8After-tax profit 109.5 145.8 174.4 192.7 212.1 DCF Valuation (A$) 81.10Minority interests 0.0 0.0 0.0 0.0 0.0NPAT (normalised) 109.5 145.8 174.4 192.7 212.1 Multiples 2015A 2016F 2017F 2018FSignificant items (15.8) 0.0 0.0 0.0 0.0 Enterprise value (A$m) 5,602.4 5,561.6 5,573.0 5,543.5NPAT (reported) 93.7 145.8 174.4 192.7 212.1 EV/Sales (x) 5.9 5.0 4.8 4.5


Cash flow (A$m) 2014A 2015A 2016F 2017F 2018F PE (normalised) (x) 37.2 31.0 28.1 25.5EBITDA 176.5 236.7 272.2 296.8 322.4 PEG (normalised) (x) 1.1 1.6 2.7 2.5Change in working capital (26.4) (34.7) (52.1) (16.5) (22.0) Price/Book (x) 15.22 13.25 11.59 10.19Net interest (pd)/rec (10.6) (7.6) (9.1) (8.8) (7.9)Taxes paid (24.6) (32.2) (58.1) (64.2) (70.7) At target price 2015A 2016F 2017F 2018FOther oper cash items (3.5) 26.6 0.0 0.0 0.0 EV/EBITDA (x) 23.7 20.4 18.8 17.2Cash flow from ops (1) 111.4 188.7 152.9 207.3 221.8 PE (normalised) (x) 228.5 190.4 172.5 156.7Capex (2) (30.5) (28.4) (42.8) (43.6) (44.5)Disposals/(acquisitions) (1.5) 0.0 0.0 0.0 0.0 Comparable company data (x) 2016F 2017F 2018FOther investing cash flow 0.0 0.0 0.0 0.0 0.0 Ramsay Health Care EV/EBITDA 11.5 10.6 9.7Cash flow from invest (3) (31.9) (28.4) (42.8) (43.6) (44.5) Y/E June EV/EBIT 15.8 14.5 13.3Incr/(decr) in equity 0.0 0.0 0.0 0.0 0.0 PE 27.7 24.8 22.3Incr/(decr) in debt 67.0 (25.0) 0.0 0.0 0.0 PEG 2.8 2.1 2.0Ordinary dividend paid (144.9) (123.8) (121.5) (134.2) (147.6) Sonic Healthcare EV/EBITDA 10.5 9.8 8.8Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 Y/E June EV/EBIT 13.5 12.7 11.1Other financing cash flow 0.0 0.0 0.0 0.0 0.0 PE 16.4 15.8 14.2Cash flow from fin (5) (77.9) (148.8) (121.5) (134.2) (147.6) PEG 0.7 4.2 1.3Forex and disc ops (6) 0.0 0.0 0.0 0.0 0.0Inc/(decr) cash (1+3+5+6) 1.6 11.4 (11.4) 29.5 29.7 Per share data 2015A 2016F 2017F 2018FEquity FCF (1+2+4) 80.9 160.3 110.1 163.7 177.3 No. shares 57.0 57.1 57.1 57.1


Balance sheet (A$m) 2014A 2015A 2016F 2017F 2018F EPS (dil. normalised) (cps) 254.8 305.7 337.6 371.5Cash & deposits 56.1 72.2 60.8 90.3 120.0 Dividend per share (cps) 190.0 214.0 236.0 260.0Trade debtors 215.0 253.6 297.7 311.7 330.3 Franking (%) 100% 100% 100% 100%Inventory 128.6 145.9 171.2 179.3 190.0 Dividend payout ratio (%) 74.6% 70.0% 69.9% 70.0%Investments 5.5 1.9 1.9 1.9 1.9 Dividend yield (%) 2.0% 2.3% 2.5% 2.7%Goodwill 0.0 0.0 0.0 0.0 0.0Other intangible assets 234.1 228.5 243.3 258.3 273.4 Growth ratios 2015A 2016F 2017F 2018FFixed assets 75.8 80.8 86.6 92.5 98.6 Sales growth 14.7% 17.4% 4.7% 6.0%Other assets 73.9 86.1 86.1 86.1 86.1 Operating cost growth 9.6% 16.6% 5.7% 6.5%Total assets 789.0 869.0 947.7 1,020.1 1,100.3 EBITDA growth 34.1% 15.0% 9.0% 8.6%Short-term borrowings 3.1 168.2 168.2 168.2 168.2 EBITA growth 38.0% 17.1% 9.9% 9.4%Trade payables 78.6 99.9 117.2 122.7 130.1 EBIT growth 38.0% 17.1% 9.9% 9.4%Long-term borrowings 234.3 44.6 44.6 44.6 44.6 Reported NPAT growth 55.6% 19.6% 10.4% 10.1%Provisions 0.0 0.0 0.0 0.0 0.0 Normalised NPAT growth 33.2% 19.6% 10.4% 10.1%Other liabilities 143.8 201.1 209.4 217.8 226.3 Reported EPS growth 55.2% 20.0% 10.4% 10.0%Total liabilities 459.8 513.7 539.3 553.3 569.1 Normalised EPS growth 32.8% 20.0% 10.4% 10.0%Preference shares 0.0 0.0 0.0 0.0 0.0Hybrid equity 0.0 0.0 0.0 0.0 0.0 Operating performance 2015A 2016F 2017F 2018FShare capital 144.1 144.1 144.1 144.1 144.1 Asset turnover 24.8% 25.9% 28.1% 27.3%Other reserves (32.2) (26.2) (26.2) (26.2) (26.2) EBITDA margin 25.1% 24.6% 25.6% 26.3%FCTR 0.0 0.0 0.0 0.0 0.0 EBIT margin 21.9% 21.9% 22.9% 23.7%Unrealised gains/losses 0.0 0.0 0.0 0.0 0.0 Net profit margin 15.5% 15.8% 16.6% 17.3%Retained earnings 217.3 237.5 290.4 348.9 413.3 Return on net assets 58.1% 59.2% 56.9% 54.7%Other equity 0.0 0.0 0.0 0.0 0.0 Net debt (A$m) 140.5 151.9 122.4 92.7Total equity 329.2 355.4 408.3 466.8 531.3 Net debt/equity 39.5% 37.2% 26.2% 17.5%Minority interest 0.0 0.0 0.0 0.0 0.0 Net interest/EBIT cover (x) 20.4 26.7 30.2 36.8Total shareholders' equity 329.2 355.4 408.3 466.8 531.3 ROIC 27.8% 32.6% 32.1% 33.6%Total liabilities & SE 789.0 869.1 947.7 1,020.1 1,100.3



Target price (A$)

DCF, EV/EBITDA, PE


7

Figure 5: Financial summary- CSL


CSL Ltd Year end June Closing price (A$) 105.35 103.75Income statement (US$m) 2014A 2015A 2016F 2017F 2018F Valuation metricsDivisional sales 5,335 5,459 5,845 6,434 7,027 Preferred methodology Valuation 103.75Total revenue 5,504 5,613 6,009 6,597 7,189 DCF valuation inputsEBITDA 1,832.1 1,939.3 2,051.7 2,262.7 2,491.0 Rf 4.25% 10-year rate 4.25%Associate income 0.0 0.0 0.0 0.0 0.0 Rm-Rf 6.00% Margin 1.0%Depreciation (165.5) (156.3) (167.4) (184.2) (201.2) Beta 1.33 Kd 5.25%EBITA 1,666.6 1,783.0 1,884.3 2,078.5 2,289.8 CAPM (Rf+Beta(Rm-Rf)) 12.2% Ke 12.2%Amortisation/impairment (29.4) (25.0) (26.8) (29.5) (32.2) E/EV*Ke+D/EV*Kd(1-t) NPV cash flow (US$m) 37504.0EBIT 1,637.2 1,758.0 1,857.5 2,049.0 2,257.7 Equity (E/EV) 64.0% Minority interest (US$m) 0.0EBIT(incl associate profit) 1,637.2 1,758.0 1,857.5 2,049.0 2,257.7 Debt (D/EV) 36.0% Net debt (US$m) 1724.1Net interest expense (32.9) (44.0) (56.0) (51.9) (31.9) Interest rate 5.3% Investments (US$m) 11.7Pre-tax profit 1,604.3 1,714.0 1,801.5 1,997.1 2,225.7 Tax rate (t) 30.0% Equity market value (US$m) 36292.0Income tax expense (297.3) (335.0) (356.1) (401.5) (450.1) WACC 9.1% Diluted no. of shares (m) 462.0After-tax profit 1,307.0 1,379.0 1,445.4 1,595.7 1,775.6 DCF Valuation (A$) 111.54Minority interests 0.0 0.0 0.0 0.0 0.0NPAT (normalised) 1,307.0 1,401.0 1,498.4 1,595.7 1,775.6 Multiples 2015A 2016F 2017F 2018FSignificant items 39.0 0.0 0.0 0.0 0.0 Enterprise value (US$m) 35,723.1 36,166.1 36,473.9 35,875.9NPAT (reported) 1,346.0 1,400.8 1,499.5 1,595.7 1,775.6 EV/Sales (x) 6.5 6.2 5.7 5.1


Cash flow (US$m) 2014A 2015A 2016F 2017F 2018F PE (normalised) (x) 25.1 22.8 21.1 19.0EBITDA 1,832.1 1,939.3 2,051.7 2,262.7 2,491.0 PEG (normalised) (x) 2.5 2.2 2.7 1.7Change in working capital (128.3) (111.4) 2.3 (252.2) (212.4) Price/Book (x) 12.56 11.75 8.79 6.86Net interest (pd)/rec (29.5) (39.0) (56.0) (51.9) (31.9)Taxes paid (349.1) (281.0) (356.1) (401.5) (450.1) At target price 2015A 2016F 2017F 2018FOther oper cash items 35.5 (144.3) 0.0 0.0 0.0 EV/EBITDA (x) 18.4 17.6 16.1 14.4Cash flow from ops (1) 1,360.7 1,363.6 1,641.9 1,557.2 1,796.6 PE (normalised) (x) 175.7 159.2 147.8 132.8Capex (2) (353.9) (347.8) (355.2) (362.9) (371.1)Disposals/(acquisitions) (48.0) (66.0) (218.0) 0.0 0.0 Comparable company data (x) 2016F 2017F 2018FOther investing cash flow 0.1 0.2 0.0 0.0 0.0 Ramsay Health Care EV/EBITDA 11.5 10.6 9.7Cash flow from invest (3) (401.5) (413.3) (573.2) (362.9) (371.1) Y/E June EV/EBIT 15.8 14.5 13.3Incr/(decr) in equity (812.1) (783.9) (805.5) 0.0 0.0 PE 27.7 24.8 22.3Incr/(decr) in debt 196.5 491.2 491.2 0.0 0.0 PEG 2.8 2.1 2.0Ordinary dividend paid (521.5) (535.4) (571.0) (596.2) (663.9) Sonic Healthcare EV/EBITDA 10.5 9.8 8.8Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 Y/E June EV/EBIT 13.5 12.7 11.1Other financing cash flow 0.0 0.0 0.0 0.0 0.0 PE 16.4 15.8 14.2Cash flow from fin (5) (1,137.1) (828.1) (885.3) (596.2) (663.9) PEG 0.7 4.2 1.3Forex and disc ops (6) 0.0 0.0 0.0 0.0 0.0Inc/(decr) cash (1+3+5+6) (177.9) 122.2 183.4 598.0 761.5 Per share data 2015A 2016F 2017F 2018FEquity FCF (1+2+4) 1,006.8 1,015.8 1,286.7 1,194.2 1,425.5 No. shares 463.5 453.2 453.2 453.2


Balance sheet (US$m) 2014A 2015A 2016F 2017F 2018F EPS (dil. normalised) (cps) 296.1 326.9 352.1 391.8Cash & deposits 608.7 556.8 740.2 1,338.2 2,099.7 Dividend per share (cps) 124.0 125.0 139.0 155.0Trade debtors 953.4 1,003.7 1,004.5 1,105.8 1,207.6 Franking (%) 0% 0% 0% 0%Inventory 1,644.5 1,755.6 1,802.1 2,028.7 2,215.4 Dividend payout ratio (%) 41.9% 38.2% 39.5% 39.6%Investments 9.2 11.7 11.7 11.7 11.7 Dividend yield (%) 0.8% 0.8% 0.9% 1.0%Goodwill 0.0 0.0 0.0 0.0 0.0Other intangible assets 924.1 926.9 896.4 921.4 944.9 Growth ratios 2015A 2016F 2017F 2018FFixed assets 1,831.0 1,841.3 2,319.3 2,787.6 2,901.8 Sales growth 2.3% 7.1% 10.1% 9.2%Other assets 306.8 305.0 580.0 580.0 580.0 Operating cost growth 0.0% 7.7% 9.5% 8.4%Total assets 6,277.7 6,401.0 7,354.3 8,773.4 9,961.1 EBITDA growth 5.9% 5.8% 10.3% 10.1%Short-term borrowings 5.6 3.2 101.4 101.4 101.4 EBITA growth 7.0% 5.7% 10.3% 10.2%Trade payables 650.8 700.8 750.4 826.1 902.1 EBIT growth 7.4% 5.7% 10.3% 10.2%Long-term borrowings 1,884.7 2,277.7 2,670.7 2,670.7 2,670.7 Reported NPAT growth 4.1% 7.0% 6.4% 11.3%Provisions 127.7 138.2 138.2 138.2 138.2 Normalised NPAT growth 7.2% 7.0% 6.5% 11.3%Other liabilities 446.9 534.2 822.7 1,198.8 1,233.9 Reported EPS growth 6.8% 10.5% 7.6% 11.3%Total liabilities 3,115.7 3,654.1 4,483.5 4,935.1 5,046.3 Normalised EPS growth 10.0% 10.4% 7.7% 11.3%Preference shares 0.0 0.0 0.0 0.0 0.0Hybrid equity 0.0 0.0 0.0 0.0 0.0 Operating performance 2015A 2016F 2017F 2018FShare capital 738.3 306.5 306.5 306.5 306.5 Asset turnover 21.0% 19.8% 18.1% 17.2%Other reserves 0.0 0.0 0.0 0.0 0.0 EBITDA margin 35.5% 35.1% 35.2% 35.5%FCTR 0.0 0.0 0.0 0.0 0.0 EBIT margin 32.2% 31.8% 31.8% 32.1%Unrealised gains/losses 0.0 0.0 0.0 0.0 0.0 Net profit margin 25.7% 25.6% 24.8% 25.3%Retained earnings 5,221.5 6,000.8 6,930.1 7,897.6 8,974.2 Return on net assets 64.0% 64.7% 53.4% 45.9%Other equity (2,797.8) (3,560.4) (4,365.9) (4,365.9) (4,365.9) Net debt (US$m) 1724.1 2031.9 1433.9 672.4Total equity 3,162.0 2,746.9 2,870.8 3,838.3 4,914.8 Net debt/equity 62.8% 70.8% 37.4% 13.7%Minority interest 0.0 0.0 0.0 0.0 0.0 Net interest/EBIT cover (x) 40.0 33.2 39.5 70.7Total shareholders' equity 3,162.0 2,746.9 2,870.8 3,838.3 4,914.8 ROIC 25.6% 26.5% 26.9% 27.7%Total liabilities & SE 6,277.7 6,401.0 7,354.3 8,773.4 9,961.1


Assumptions 2015A 2016F 2017F 2018FUSD/USD 0.836 0.730 0.740 0.740

Target price (A$)

DCF, EV/EBITDA, PE


8

Figure 6: Financial summary- HSO


Healthscope Year end June Closing price (A$) 2.33 3.22Income statement (A$m) 2014A 2015A 2016F 2017F 2018F Valuation metricsDivisional sales 2,326 2,438 2,291 2,598 2,835 Preferred methodology Valuation 3.22Total revenue 2,328 2,440 2,293 2,600 2,837 DCF valuation inputsEBITDA 357.3 388.3 416.2 492.1 540.9 Rf 4.30% 10-year rate 4.30%Associate income 0.0 0.0 0.0 0.0 0.0 Rm-Rf 6.00% Margin 3.0%Depreciation (84.4) (91.2) (85.6) (100.0) (114.4) Beta 1.32 Kd 7.30%EBITA 272.8 297.1 330.6 392.1 426.5 CAPM (Rf+Beta(Rm-Rf)) 12.2% Ke 12.2%Amortisation/impairment (10.6) (10.3) (10.3) (10.3) (10.3) E/EV*Ke+D/EV*Kd(1-t) NPV cash flow (A$m) 6770.6EBIT 262.3 286.9 320.3 381.8 416.2 Equity (E/EV) 65.4% Minority interest (A$m) 0.0EBIT(incl associate profit) 262.3 286.9 320.3 381.8 416.2 Debt (D/EV) 34.6% Net debt (A$m) 958.8Net interest expense (48.0) (46.0) (46.7) (45.5) (45.7) Interest rate 7.3% Investments (A$m) 3.6Pre-tax profit 214.3 240.9 273.7 336.3 370.5 Tax rate (t) 29.8% Equity market value (A$m) 5815.4Income tax expense (67.0) (67.8) (81.5) (100.2) (110.4) WACC 9.8% Diluted no. of shares (m) 1732.1After-tax profit 147.3 173.0 192.1 236.1 260.1 DCF Valuation (A$) 3.36Minority interests 0.0 0.0 0.0 0.0 0.0NPAT (normalised) 147.3 173.0 192.1 236.1 260.1 Multiples 2015A 2016F 2017F 2018FSignificant items (171.3) (19.9) 0.0 0.0 0.0 Enterprise value (A$m) 6,132.6 5,000.6 5,135.8 5,163.8NPAT (reported) (24.0) 153.1 192.1 236.1 260.1 EV/Sales (x) 2.5 2.2 2.0 1.8


Cash flow (A$m) 2014A 2015A 2016F 2017F 2018F PE (normalised) (x) 23.3 21.0 17.1 15.5EBITDA 357.3 388.3 416.2 492.1 540.9 PEG (normalised) (x) 2.0 1.9 0.7 1.5Change in working capital 8.3 (10.7) (4.9) 10.2 7.9 Price/Book (x) 1.75 1.71 1.66 1.61Net interest (pd)/rec (199.0) (65.1) (46.7) (45.5) (45.7)Taxes paid (8.7) (10.7) (12.9) (15.9) (55.2) At target price 2015A 2016F 2017F 2018FOther oper cash items 0.0 0.0 0.0 0.0 0.0 EV/EBITDA (x) 15.8 12.0 10.4 9.5Cash flow from ops (1) 157.9 301.8 351.8 440.9 447.8 PE (normalised) (x) 229.2 206.4 168.0 152.5Capex (2) (155.5) (362.8) (500.8) (503.4) (267.2)Disposals/(acquisitions) 0.0 0.0 0.0 0.0 0.0 Comparable company data (x) 2016F 2017F 2018FOther investing cash flow (2.8) 83.0 50.0 150.0 0.0 Ramsay Health Care EV/EBITDA 11.5 10.6 9.7Cash flow from invest (3) (158.3) (279.8) (354.5) (323.4) (252.2) Y/E June EV/EBIT 15.8 14.5 13.3Incr/(decr) in equity 0.0 1,624.7 0.0 0.0 0.0 PE 27.7 24.8 22.3Incr/(decr) in debt 49.4 (1,503.9) 150.0 50.0 0.0 PEG 2.8 2.1 2.0Ordinary dividend paid 0.0 (57.2) (132.5) (145.5) (170.6) Sonic Healthcare EV/EBITDA 10.5 9.8 8.8Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 Y/E June EV/EBIT 13.5 12.7 11.1Other financing cash flow 2.0 2.0 0.0 0.0 0.0 PE 16.4 15.8 14.2Cash flow from fin (5) 51.4 65.6 17.5 (95.5) (170.6) PEG 0.7 4.2 1.3Forex and disc ops (6) 0.0 0.0 0.0 0.0 0.0Inc/(decr) cash (1+3+5+6) 51.0 87.6 14.8 22.0 25.0 Per share data 2015A 2016F 2017F 2018FEquity FCF (1+2+4) 2.4 (61.0) (149.0) (62.5) 180.6 No. shares 1,732.1 1,732.1 1,732.1 1,732.1


Balance sheet (A$m) 2014A 2015A 2016F 2017F 2018F EPS (dil. normalised) (cps) 10.0 11.1 13.6 15.0Cash & deposits 138.2 217.7 232.5 254.5 279.5 Dividend per share (cps) 7.0 7.8 9.5 10.5Trade debtors 108.6 96.4 90.5 102.7 112.1 Franking (%) 0% 0% 0% 50%Inventory 50.6 52.9 49.7 56.3 61.5 Dividend payout ratio (%) 70.1% 69.9% 69.3% 69.9%Investments 3.4 3.6 3.6 3.6 3.6 Dividend yield (%) 3.0% 3.3% 4.1% 4.5%Goodwill 0.0 0.0 0.0 0.0 0.0Other intangible assets 1,852.2 1,846.9 1,911.7 1,976.9 2,006.7 Growth ratios 2015A 2016F 2017F 2018FFixed assets 1,238.3 1,414.7 1,658.5 1,956.3 2,054.0 Sales growth 4.8% -6.1% 13.4% 9.2%Other assets 285.2 349.0 349.0 349.0 349.0 Operating cost growth 4.1% -8.6% 12.3% 9.0%Total assets 3,676.6 3,981.1 4,295.4 4,699.3 4,866.4 EBITDA growth 8.7% 7.2% 18.2% 9.9%Short-term borrowings 2,217.8 8.6 8.6 8.6 8.6 EBITA growth 8.9% 11.3% 18.6% 8.8%Trade payables 215.2 229.9 216.0 244.9 267.3 EBIT growth 9.4% 11.7% 19.2% 9.0%Long-term borrowings 11.1 1,167.9 1,317.9 1,367.9 1,367.9 Reported NPAT growth -737.2% 25.5% 22.9% 10.2%Provisions 54.8 52.6 121.3 196.4 251.6 Normalised NPAT growth 17.5% 11.0% 22.9% 10.2%Other liabilities 727.0 216.3 268.0 436.2 447.5 Reported EPS growth -705.9% 25.5% 22.9% 10.2%Total liabilities 3,225.9 1,675.3 1,931.8 2,254.0 2,342.9 Normalised EPS growth 11.7% 11.0% 22.9% 10.2%Preference shares 0.0 0.0 0.0 0.0 0.0Hybrid equity 0.0 0.0 0.0 0.0 0.0 Operating performance 2015A 2016F 2017F 2018FShare capital 1,219.8 2,697.2 2,697.2 2,697.2 2,697.2 Asset turnover 15.2% 14.7% 12.7% 13.6%Other reserves (249.2) (259.6) (259.6) (259.6) (259.6) EBITDA margin 15.9% 18.2% 18.9% 19.1%FCTR 0.0 0.0 0.0 0.0 0.0 EBIT margin 11.8% 14.0% 14.7% 14.7%Unrealised gains/losses 0.0 0.0 0.0 0.0 0.0 Net profit margin 7.1% 8.4% 9.1% 9.2%Retained earnings (519.9) (131.9) (74.0) (1.6) 76.6 Return on net assets 12.4% 13.6% 15.7% 16.6%Other equity 0.0 0.0 0.0 0.0 0.0 Net debt (A$m) 958.8 1094.1 1122.0 1097.0Total equity 450.6 2,305.7 2,363.6 2,436.0 2,514.2 Net debt/equity 41.6% 46.3% 46.1% 43.6%Minority interest (0.0) (0.0) (0.0) (0.0) (0.0) Net interest/EBIT cover (x) 6.2 6.9 8.4 9.1Total shareholders' equity 450.6 2,305.7 2,363.6 2,436.0 2,514.2 ROIC 7.6% 6.7% 7.4% 7.7%Total liabilities & SE 3,676.6 3,981.0 4,295.4 4,690.0 4,857.1



Target price (A$)

DCF, EV/EBITDA, PE


9

Figure 7: Financial summary- JHC


Japara Healthcare Year end June Closing price (A$) 2.90 3.09Income statement (A$m) 2014A 2015A 2016F 2017F 2018F Valuation metricsDivisional sales 48 278 329 369 409 Preferred methodology Valuation 3.09Total revenue 49 281 329 369 409 DCF valuation inputsEBITDA (1.2) 50.6 59.5 69.4 78.1 Rf 5.25% 10-year rate 5.25%Associate income 0.0 0.0 0.0 0.0 0.0 Rm-Rf 6.00% Margin 2.0%Depreciation (0.8) (4.9) (5.6) (6.1) (6.7) Beta 1.41 Kd 7.25%EBITA (2.0) 45.8 53.9 63.3 71.4 CAPM (Rf+Beta(Rm-Rf)) 13.7% Ke 13.7%Amortisation/impairment (0.8) (4.9) (5.6) (6.1) (6.7) E/EV*Ke+D/EV*Kd(1-t) NPV cash flow (A$m) #N/AEBIT (2.8) 40.9 48.3 57.1 64.6 Equity (E/EV) 80.0% Minority interest (A$m) #N/AEBIT(incl associate profit) (2.8) 40.9 48.3 57.1 64.6 Debt (D/EV) 20.0% Net debt (A$m) -53.9Net interest expense (0.2) (1.6) (2.0) (2.0) (2.0) Interest rate 7.3% Investments (A$m) 0.0Pre-tax profit (3.0) 39.3 46.3 55.1 62.6 Tax rate (t) 30.0% Equity market value (A$m) 800.1Income tax expense 0.1 (10.5) (13.9) (16.5) (18.2) WACC 12.0% Diluted no. of shares (m) 262.5After-tax profit (2.9) 28.8 32.4 38.6 44.5 DCF Valuation (A$) 3.05Minority interests 0.0 0.0 0.0 0.0 0.0NPAT (normalised) (2.9) 28.8 32.4 38.6 44.5 Multiples 2015A 2016F 2017F 2018FSignificant items 0.0 0.0 0.0 0.0 0.0 Enterprise value (A$m) 750.5 709.0 799.4 775.9NPAT (reported) (2.9) 28.8 32.4 38.6 44.5 EV/Sales (x) 2.7 2.2 2.2 1.9


Cash flow (A$m) 2014A 2015A 2016F 2017F 2018F PE (normalised) (x) 26.4 23.5 19.7 17.1EBITDA (1.2) 50.6 59.5 69.4 78.1 PEG (normalised) (x) (0.0) 1.9 1.0 1.1Change in working capital 2.8 1.7 10.5 1.9 2.0 Price/Book (x) 1.44 1.43 1.42 1.39Net interest (pd)/rec (0.4) 0.0 0.0 0.0 0.0Taxes paid 0.1 (10.5) (13.9) (16.5) (18.2) At target price 2015A 2016F 2017F 2018FOther oper cash items 0.0 0.0 0.0 0.0 0.0 EV/EBITDA (x) 14.8 11.9 11.5 9.9Cash flow from ops (1) 1.3 41.8 56.1 54.8 62.0 PE (normalised) (x) 200.0 177.7 149.3 129.5Capex (2) (4.7) (62.0) (173.0) (46.5) (55.8)Disposals/(acquisitions) 0.0 0.0 0.0 0.0 0.0 Comparable company data (x) 2016F 2017F 2018FOther investing cash flow 0.0 0.0 0.0 0.0 0.0 Regis Healthcare EV/EBITDA 15.4 14.0 12.8Cash flow from invest (3) (4.7) (62.0) (173.0) (46.5) (55.8) Y/E June EV/EBIT 19.1 17.1 15.6Incr/(decr) in equity 2.9 0.0 0.0 0.0 0.0 PE 30.3 27.0 24.4Incr/(decr) in debt 28.4 91.3 60.0 50.0 50.0 PEG 9.2 2.2 2.3Ordinary dividend paid (0.0) (15.7) (31.5) (32.8) (34.1) Sonic Healthcare EV/EBITDA 10.5 9.8 8.8Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 Y/E June EV/EBIT 13.5 12.7 11.1Other financing cash flow 0.0 0.0 0.0 0.0 0.0 PE 16.4 15.8 14.2Cash flow from fin (5) 31.4 75.6 28.5 17.2 15.9 PEG 0.7 4.2 1.3Forex and disc ops (6) 0.0 0.0 0.0 0.0 0.0Inc/(decr) cash (1+3+5+6) 28.0 55.4 (88.4) 25.5 22.1 Per share data 2015A 2016F 2017F 2018FEquity FCF (1+2+4) (3.4) (20.2) (116.9) 8.3 6.2 No. shares 262.5 262.5 262.5 262.5


Balance sheet (A$m) 2014A 2015A 2016F 2017F 2018F EPS (dil. normalised) (cps) 11.0 12.3 14.7 16.9Cash & deposits 28.1 53.9 3.5 27.0 47.0 Dividend per share (cps) 10.6 12.0 12.5 13.0Trade debtors 7.1 10.2 13.5 15.2 16.8 Franking (%) n.a. n.a. n.a. n.a.Inventory 0.0 0.0 0.0 0.0 0.0 Dividend payout ratio (%) 96.6% 97.2% 85.0% 76.7%Investments 0.0 0.0 0.0 0.0 0.0 Dividend yield (%) 3.7% 4.1% 4.3% 4.5%Goodwill 0.0 0.0 0.0 0.0 0.0Other intangible assets 424.0 468.0 468.0 468.0 468.0 Growth ratios 2015A 2016F 2017F 2018FFixed assets 340.8 383.8 545.6 579.9 622.2 Sales growth 475.6% 18.2% 12.3% 10.7%Other assets 0.0 0.0 0.0 0.0 0.0 Operating cost growth 358.6% 17.0% 11.3% 10.3%Total assets 800.0 915.8 1,030.6 1,090.0 1,154.0 EBITDA growth -4160.1% 17.4% 16.7% 12.6%Short-term borrowings 15.8 0.0 40.0 40.0 40.0 EBITA growth -2346.3% 17.7% 17.4% 12.8%Trade payables 15.4 16.7 30.5 34.1 37.8 EBIT growth -1546.8% 18.0% 18.3% 13.1%Long-term borrowings 0.0 0.0 0.0 0.0 0.0 Reported NPAT growth -1093.4% 12.5% 19.1% 15.2%Provisions 33.9 43.9 43.9 43.9 43.9 Normalised NPAT growth -1093.4% 12.5% 19.1% 15.2%Other liabilities 220.9 325.3 385.3 435.3 485.3 Reported EPS growth -1093.4% 12.5% 19.1% 15.2%Total liabilities 286.0 385.8 499.6 553.2 606.9 Normalised EPS growth -1093.4% 12.5% 19.1% 15.2%Preference shares 0.0 0.0 0.0 0.0 0.0Hybrid equity 0.0 0.0 0.0 0.0 0.0 Operating performance 2015A 2016F 2017F 2018FShare capital 516.8 517.8 517.8 517.8 517.8 Asset turnover 1.4% 7.1% 7.8% 8.2%Other reserves 0.0 0.0 0.0 0.0 0.0 EBITDA margin 18.2% 18.1% 18.8% 19.1%FCTR 0.0 0.0 0.0 0.0 0.0 EBIT margin 14.7% 14.7% 15.5% 15.8%Unrealised gains/losses 0.0 0.0 0.0 0.0 0.0 Net profit margin 10.4% 9.9% 10.5% 10.9%Retained earnings (2.8) 12.2 13.1 18.9 29.2 Return on net assets 7.7% 9.1% 10.6% 11.8%Other equity 0.0 0.0 0.0 0.0 0.0 Net debt (A$m) -53.9 36.5 13.0 -7.0Total equity 514.0 530.0 530.9 536.7 547.0 Net debt/equity -10.2% 6.9% 2.4% -1.3%Minority interest 0.0 0.0 0.0 0.0 0.0 Net interest/EBIT cover (x) 25.1 24.2 28.6 32.3Total shareholders' equity 514.0 530.0 530.9 536.7 547.0 ROIC 5.3% 6.5% 6.5% 7.6%Total liabilities & SE 800.0 915.8 1,030.5 1,089.9 1,153.9



Target price (A$)

DCF


10

Figure 8: Financial summary- MVF


Monash IVF Year end June Closing price (A$) 1.53 1.79Income statement (A$m) 2014A 2015A 2016F 2017F 2018F Valuation metricsDivisional sales 114 125 157 172 189 Preferred methodology Valuation 1.79Total revenue 114 125 157 172 189 DCF valuation inputsEBITDA 39.8 38.9 45.8 51.5 57.8 Rf 5.25% 10-year rate 5.25%Associate income 0.0 0.0 0.0 0.0 0.0 Rm-Rf 5.80% Margin 2.0%Depreciation (2.4) (3.1) (3.7) (4.1) (4.5) Beta 1.60 Kd 7.25%EBITA 37.4 35.8 42.1 47.4 53.3 CAPM (Rf+Beta(Rm-Rf)) 14.5% Ke 14.5%Amortisation/impairment (0.5) (0.3) (0.4) (0.5) (0.5) E/EV*Ke+D/EV*Kd(1-t) NPV cash flow (A$m) #N/AEBIT 36.9 35.5 41.7 47.0 52.8 Equity (E/EV) 60.0% Minority interest (A$m) #N/AEBIT(incl associate profit) 36.9 35.5 41.7 47.0 52.8 Debt (D/EV) 40.0% Net debt (A$m) 97.0Net interest expense (5.1) (4.7) (5.3) (5.3) (5.3) Interest rate 7.3% Investments (A$m) 0.0Pre-tax profit 31.8 30.8 36.4 41.6 47.4 Tax rate (t) 30.0% Equity market value (A$m) 407.7Income tax expense (9.7) (9.3) (10.9) (12.5) (14.2) WACC 10.7% Diluted no. of shares (m) 231.1After-tax profit 22.1 21.4 25.5 29.1 33.2 DCF Valuation (A$) 1.76Minority interests 0.0 0.0 0.0 0.0 0.0NPAT (normalised) 22.1 21.4 25.5 29.1 33.2 Multiples 2015A 2016F 2017F 2018FSignificant items 0.0 0.0 0.0 0.0 0.0 Enterprise value (A$m) 445.7 456.0 457.5 448.9NPAT (reported) 22.1 21.4 25.5 29.1 33.2 EV/Sales (x) 3.6 2.9 2.7 2.4


Cash flow (A$m) 2014A 2015A 2016F 2017F 2018F PE (normalised) (x) 16.5 13.9 12.3 10.8EBITDA 39.8 38.9 45.8 51.5 57.8 PEG (normalised) (x) (5.4) 0.8 0.9 0.8Change in working capital 12.2 11.1 (8.6) 0.5 0.5 Price/Book (x) 2.45 2.33 2.21 2.06Net interest (pd)/rec (5.1) (4.7) (5.3) (5.3) (5.3)Taxes paid (9.7) (9.3) (10.9) (12.5) (14.2) At target price 2015A 2016F 2017F 2018FOther oper cash items 0.0 0.0 0.0 0.0 0.0 EV/EBITDA (x) 11.5 9.9 8.9 7.8Cash flow from ops (1) 37.2 36.0 21.0 34.1 38.7 PE (normalised) (x) 137.3 116.0 102.3 90.1Capex (2) (216.3) (29.3) (5.3) (6.4) (7.6)Disposals/(acquisitions) 0.0 0.0 0.0 0.0 0.0 Comparable company data (x) 2016F 2017F 2018FOther investing cash flow 0.0 0.0 0.0 0.0 0.0 Virtus Health EV/EBITDA 8.7 7.6 6.9Cash flow from invest (3) (216.3) (29.3) (5.3) (6.4) (7.6) Y/E June EV/EBIT 10.3 9.0 8.1Incr/(decr) in equity 148.3 5.3 0.0 0.0 0.0 PE 13.7 11.9 11.2Incr/(decr) in debt 0.0 0.0 0.0 0.0 0.0 PEG 0.6 0.8 1.6Ordinary dividend paid 0.0 (10.8) (17.2) (19.1) (21.1) Sonic Healthcare EV/EBITDA 10.5 9.8 8.8Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 Y/E June EV/EBIT 13.5 12.7 11.1Other financing cash flow 0.0 0.0 0.0 0.0 0.0 PE 16.4 15.8 14.2Cash flow from fin (5) 148.3 (5.5) (17.2) (19.1) (21.1) PEG 0.7 4.2 1.3Forex and disc ops (6) 0.0 0.0 0.0 0.0 0.0Inc/(decr) cash (1+3+5+6) (30.8) 1.2 (1.6) 8.6 10.0 Per share data 2015A 2016F 2017F 2018FEquity FCF (1+2+4) (179.1) 6.7 15.7 27.7 31.0 No. shares 231.1 233.1 235.1 235.1


Balance sheet (A$m) 2014A 2015A 2016F 2017F 2018F EPS (dil. normalised) (cps) 9.3 11.0 12.4 14.1Cash & deposits 8.8 10.0 8.4 17.0 27.0 Dividend per share (cps) 7.0 7.4 8.1 9.0Trade debtors 3.0 3.1 6.4 7.1 7.8 Franking (%) n.a. n.a. n.a. n.a.Inventory 0.0 0.0 0.0 0.0 0.0 Dividend payout ratio (%) 75.0% 67.4% 65.4% 63.4%Investments 0.0 0.0 0.0 0.0 0.0 Dividend yield (%) 4.6% 4.9% 5.3% 5.9%Goodwill 0.0 0.0 0.0 0.0 0.0Other intangible assets 219.7 250.6 250.6 250.6 250.6 Growth ratios 2015A 2016F 2017F 2018FFixed assets 9.1 14.5 15.7 17.5 20.2 Sales growth 9.6% 25.2% 10.0% 10.0%Other assets 5.8 5.6 0.0 0.0 0.0 Operating cost growth 15.9% 28.5% 9.0% 9.1%Total assets 246.4 283.8 281.2 292.3 305.6 EBITDA growth -2.3% 17.8% 12.3% 12.2%Short-term borrowings 9.6 10.7 10.7 10.7 10.7 EBITA growth -4.3% 17.6% 12.5% 12.4%Trade payables 17.9 21.9 11.0 12.1 13.3 EBIT growth -3.8% 17.6% 12.6% 12.4%Long-term borrowings 86.0 96.3 96.3 96.3 96.3 Reported NPAT growth -3.0% 18.9% 14.4% 14.0%Provisions 0.0 0.0 0.0 0.0 0.0 Normalised NPAT growth -3.0% 18.9% 14.4% 14.0%Other liabilities 8.1 10.9 10.9 10.9 10.9 Reported EPS growth -3.0% 18.4% 13.4% 13.5%Total liabilities 121.5 139.8 128.9 130.0 131.2 Normalised EPS growth -3.0% 18.4% 13.4% 13.5%Preference shares 0.0 0.0 0.0 0.0 0.0Hybrid equity 0.0 0.0 0.0 0.0 0.0 Operating performance 2015A 2016F 2017F 2018FShare capital 422.6 428.3 428.3 428.3 428.3 Asset turnover 10.8% 11.1% 13.6% 14.4%Other reserves (136.9) (137.3) (137.3) (137.3) (137.3) EBITDA margin 31.1% 29.3% 29.9% 30.5%FCTR 0.0 0.0 0.0 0.0 0.0 EBIT margin 28.4% 26.7% 27.3% 27.9%Unrealised gains/losses 0.0 0.0 0.0 0.0 0.0 Net profit margin 17.1% 16.3% 16.9% 17.5%Retained earnings (160.9) (147.0) (138.8) (128.8) (116.7) Return on net assets 24.6% 27.4% 29.0% 30.3%Other equity 0.0 0.0 0.0 0.0 0.0 Net debt (A$m) 97.0 98.6 90.0 80.0Total equity 124.8 144.0 152.2 162.2 174.4 Net debt/equity 67.3% 64.7% 55.4% 45.8%Minority interest 0.0 0.0 0.0 0.0 0.0 Net interest/EBIT cover (x) 7.5 7.8 8.8 9.9Total shareholders' equity 124.8 144.0 152.2 162.2 174.4 ROIC 16.8% 17.3% 18.7% 20.9%Total liabilities & SE 246.4 283.8 281.2 292.3 305.6



Target price (A$)

Blended DCF: PE


11

Figure 9: Financial summary- PRY


Primary Health Care Year end June Closing price (A$) 2.42 2.68Income statement (A$m) 2014A 2015A 2016F 2017F 2018F Valuation metricsDivisional sales 1,524 1,618 1,566 1,603 1,689 Preferred methodology Valuation 2.68Total revenue 1,524 1,618 1,566 1,603 1,689 DCF valuation inputsEBITDA 399.1 400.5 378.9 372.9 396.4 Rf 4.25% 10-year rate 4.25%Associate income 0.0 0.0 0.0 0.0 0.0 Rm-Rf 6.00% Margin 2.8%Depreciation (62.9) (69.0) (67.1) (69.5) (72.8) Beta 1.41 Kd 7.00%EBITA 336.2 331.5 311.8 303.4 323.6 CAPM (Rf+Beta(Rm-Rf)) 12.7% Ke 12.7%Amortisation/impairment (80.7) (83.4) (81.2) (84.1) (88.0) E/EV*Ke+D/EV*Kd(1-t) NPV cash flow (A$m) 2987.6EBIT 255.5 248.1 230.7 219.3 235.6 Equity (E/EV) 65.0% Minority interest (A$m) 1.8EBIT(incl associate profit) 255.5 248.1 230.7 219.3 235.6 Debt (D/EV) 35.0% Net debt (A$m) 1155.5Net interest expense (71.7) (66.5) (67.5) (60.3) (60.2) Interest rate 7.0% Investments (A$m) 4.1Pre-tax profit 183.8 181.6 163.2 159.0 175.4 Tax rate (t) 30.0% Equity market value (A$m) 1834.5Income tax expense (69.2) (62.5) (49.9) (47.7) (52.6) WACC 10.0% Diluted no. of shares (m) 511.5After-tax profit 114.6 119.1 113.2 111.3 122.8 DCF Valuation (A$) 3.59Minority interests (0.0) 0.0 0.0 0.0 0.0NPAT (normalised) 114.6 119.1 113.2 111.3 122.8 Multiples 2015A 2016F 2017F 2018FSignificant items 0.0 17.4 0.0 0.0 0.0 Enterprise value (A$m) 2,333.8 2,419.2 2,449.8 2,461.0NPAT (reported) 114.6 136.5 113.2 111.3 122.8 EV/Sales (x) 1.4 1.5 1.5 1.5


Cash flow (A$m) 2014A 2015A 2016F 2017F 2018F PE (normalised) (x) 10.4 10.9 11.1 10.1EBITDA 399.1 400.5 378.9 372.9 396.4 PEG (normalised) (x) 3.9 (2.2) (6.7) 1.0Change in working capital 27.4 28.3 (0.2) 0.1 0.3 Price/Book (x) 0.51 0.50 0.49 0.48Net interest (pd)/rec (60.7) (66.2) (67.5) (60.3) (60.2)Taxes paid (57.6) (62.4) (27.5) (26.2) (28.9) At target price 2015A 2016F 2017F 2018FOther oper cash items 0.0 0.0 0.0 0.0 0.0 EV/EBITDA (x) 5.8 6.4 6.6 6.2Cash flow from ops (1) 308.1 300.2 283.8 286.5 307.5 PE (normalised) (x) 81.7 86.0 87.4 79.3Capex (2) (85.1) (134.9) (67.1) (69.5) (72.8)Disposals/(acquisitions) (108.0) (136.3) (162.3) (163.8) (165.3) Comparable company data (x) 2016F 2017F 2018FOther investing cash flow 0.0 0.0 0.0 0.0 0.0 Ramsay Health Care EV/EBITDA 11.5 10.6 9.7Cash flow from invest (3) (189.0) (276.5) (227.4) (231.3) (236.1) Y/E June EV/EBIT 15.8 14.5 13.3Incr/(decr) in equity 0.0 0.0 0.0 0.0 0.0 PE 27.7 24.8 22.3Incr/(decr) in debt 22.5 112.2 0.0 0.0 (2.5) PEG 2.8 2.1 2.0Ordinary dividend paid (92.6) (53.7) (87.0) (66.5) (66.5) Sonic Healthcare EV/EBITDA 10.5 9.8 8.8Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 Y/E June EV/EBIT 13.5 12.7 11.1Other financing cash flow (8.8) (7.6) 0.0 0.0 0.0 PE 16.4 15.8 14.2Cash flow from fin (5) (78.9) 50.9 (87.0) (66.5) (69.0) PEG 0.7 4.2 1.3Forex and disc ops (6) 0.0 0.0 0.0 0.0 0.0Inc/(decr) cash (1+3+5+6) 40.2 74.5 (30.6) (11.3) 2.5 Per share data 2015A 2016F 2017F 2018FEquity FCF (1+2+4) 223.0 165.3 216.7 217.0 234.8 No. shares 511.5 511.5 511.5 511.5


Balance sheet (A$m) 2014A 2015A 2016F 2017F 2018F EPS (dil. normalised) (cps) 23.3 22.1 21.8 24.0Cash & deposits 27.5 50.0 19.4 8.1 10.6 Dividend per share (cps) 20.0 13.0 13.0 14.0Trade debtors 149.9 147.3 142.5 145.9 153.7 Franking (%) 100% 100% 100% 100%Inventory 27.3 28.2 27.3 27.9 29.5 Dividend payout ratio (%) 85.9% 58.7% 59.7% 58.3%Investments 4.1 4.1 16.3 34.3 54.3 Dividend yield (%) 8.3% 5.4% 5.4% 5.8%Goodwill 0.0 0.0 0.0 0.0 0.0Other intangible assets 3,070.6 3,122.1 3,223.3 3,323.9 3,423.0 Growth ratios 2015A 2016F 2017F 2018FFixed assets 427.9 468.9 446.8 423.9 400.1 Sales growth 6.2% -3.2% 2.3% 5.4%Other assets 35.0 125.0 125.0 125.0 125.0 Operating cost growth 8.3% -2.5% 3.6% 5.1%Total assets 3,742.3 3,945.5 4,000.5 4,088.9 4,196.1 EBITDA growth 0.4% -5.4% -1.6% 6.3%Short-term borrowings 3.1 155.5 155.5 155.5 155.0 EBITA growth -1.4% -5.9% -2.7% 6.7%Trade payables 154.0 180.7 174.9 179.0 188.6 EBIT growth -2.9% -7.0% -4.9% 7.4%Long-term borrowings 1,094.6 1,049.9 1,049.9 1,049.9 1,048.0 Reported NPAT growth 19.1% -17.1% -1.7% 10.3%Provisions 0.0 0.0 0.0 0.0 0.0 Normalised NPAT growth 4.0% -5.0% -1.7% 10.3%Other liabilities 119.5 111.9 130.7 171.5 221.5 Reported EPS growth 17.6% -17.1% -1.7% 10.3%Total liabilities 1,371.2 1,498.1 1,511.1 1,555.9 1,613.1 Normalised EPS growth 2.6% -5.0% -1.7% 10.3%Preference shares 0.0 0.0 0.0 0.0 0.0Hybrid equity 0.0 0.0 0.0 0.0 0.0 Operating performance 2015A 2016F 2017F 2018FShare capital 2,366.3 2,407.3 2,407.3 2,407.3 2,407.3 Asset turnover 9.9% 10.2% 9.7% 9.7%Other reserves 8.0 (5.9) (5.9) (5.9) (5.9) EBITDA margin 24.7% 24.2% 23.3% 23.5%FCTR 0.0 0.0 0.0 0.0 0.0 EBIT margin 15.3% 14.7% 13.7% 13.9%Unrealised gains/losses 0.0 0.0 0.0 0.0 0.0 Net profit margin 7.4% 7.2% 6.9% 7.3%Retained earnings (4.9) 44.2 89.5 134.0 183.1 Return on net assets 10.1% 9.3% 8.6% 9.1%Other equity 0.0 0.0 0.0 0.0 0.0 Net debt (A$m) 1155.5 1186.1 1197.4 1192.4Total equity 2,369.3 2,445.6 2,490.9 2,535.4 2,584.5 Net debt/equity 47.2% 47.6% 47.2% 46.1%Minority interest 1.8 1.8 1.8 1.8 1.8 Net interest/EBIT cover (x) 3.7 3.4 3.6 3.9Total shareholders' equity 2,371.1 2,447.4 2,492.7 2,537.2 2,586.3 ROIC 5.0% 4.5% 4.1% 4.3%Total liabilities & SE 3,742.3 3,945.5 4,003.8 4,093.1 4,199.5



Target price (A$)

DCF, EV/EBITDA, PE


12

Figure 10: Financial summary- REG


Regis Healthcare Year end June Closing price (A$) 6.00 6.00Income statement (A$m) 2014A 2015A 2016F 2017F 2018F Valuation metricsDivisional sales 405 440 474 519 563 Preferred methodology Valuation 5.46Total revenue 405 440 474 519 563 DCF valuation inputsEBITDA 83.7 95.4 104.0 116.0 127.9 Rf #N/A 10-year rate #N/AAssociate income 0.0 0.0 0.0 0.0 0.0 Rm-Rf #N/A Margin #N/ADepreciation (17.3) (18.9) (20.3) (21.3) (22.5) Beta #N/A Kd #N/AEBITA 66.4 76.5 83.7 94.7 105.4 CAPM (Rf+Beta(Rm-Rf)) #N/A Ke #N/AAmortisation/impairment 0.0 0.0 0.0 0.0 0.0 E/EV*Ke+D/EV*Kd(1-t) NPV cash flow (A$m) #N/AEBIT 66.4 76.5 83.7 94.7 105.4 Equity (E/EV) #N/A Minority interest (A$m) #N/AEBIT(incl associate profit) 66.4 76.5 83.7 94.7 105.4 Debt (D/EV) #N/A Net debt (A$m) -60.9Net interest expense (21.6) 1.6 1.2 0.6 (0.1) Interest rate #N/A Investments (A$m) 0.0Pre-tax profit 44.8 78.1 84.9 95.2 105.3 Tax rate (t) #N/A Equity market value (A$m) #N/AIncome tax expense (13.4) (20.6) (25.5) (28.6) (31.6) WACC #N/A Diluted no. of shares (m) 300.3After-tax profit 31.4 57.5 59.4 66.7 73.7 DCF Valuation (A$) #N/AMinority interests 0.0 0.0 0.0 0.0 0.0NPAT (normalised) 31.4 57.5 59.4 66.7 73.7 Multiples 2015A 2016F 2017F 2018FSignificant items 0.0 0.0 0.0 0.0 0.0 Enterprise value (A$m) 1,761.8 1,741.2 1,771.5 1,791.9NPAT (reported) 31.4 57.5 59.4 66.7 73.7 EV/Sales (x) 4.0 3.7 3.4 3.2


Cash flow (A$m) 2014A 2015A 2016F 2017F 2018F PE (normalised) (x) 31.3 30.3 27.0 24.4EBITDA 83.7 95.4 104.0 116.0 127.9 PEG (normalised) (x) 0.4 9.2 2.2 2.3Change in working capital 110.9 43.6 41.5 51.5 48.9 Price/Book (x) 8.61 9.70 9.52 9.36Net interest (pd)/rec (21.6) 1.6 1.2 0.6 (0.1)Taxes paid (13.4) (20.6) (25.5) (28.6) (31.6) At target price 2015A 2016F 2017F 2018FOther oper cash items 0.0 0.0 0.0 0.0 0.0 EV/EBITDA (x) 18.5 16.7 15.3 14.0Cash flow from ops (1) 159.6 120.1 121.3 139.5 145.1 PE (normalised) (x) 222.5 215.4 192.1 173.6Capex (2) (28.2) (58.1) (43.8) (58.6) (57.9)Disposals/(acquisitions) 0.0 (45.6) (24.9) (38.3) (36.6) Comparable company data (x) 2016F 2017F 2018FOther investing cash flow 0.0 0.0 0.0 0.0 0.0 Japara Healthcare EV/EBITDA 13.4 11.2 9.7Cash flow from invest (3) (28.2) (103.7) (68.7) (96.9) (94.6) Y/E June EV/EBIT 16.5 13.6 11.7Incr/(decr) in equity 0.0 0.0 0.0 0.0 0.0 PE 23.5 19.7 17.1Incr/(decr) in debt 0.0 0.0 0.0 6.0 26.0 PEG 1.9 1.0 1.1Ordinary dividend paid 0.0 0.0 (82.9) (63.1) (70.6) Sonic Healthcare EV/EBITDA 10.5 9.8 8.8Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 Y/E June EV/EBIT 13.5 12.7 11.1Other financing cash flow 0.0 0.0 0.0 0.0 0.0 PE 16.4 15.8 14.2Cash flow from fin (5) 0.0 0.0 (82.9) (57.1) (44.6) PEG 0.7 4.2 1.3Forex and disc ops (6) 0.0 0.0 0.0 0.0 0.0Inc/(decr) cash (1+3+5+6) 131.4 16.4 (30.3) (14.5) 5.9 Per share data 2015A 2016F 2017F 2018FEquity FCF (1+2+4) 131.4 62.0 77.5 80.9 87.1 No. shares 300.3 300.3 300.3 300.3


Balance sheet (A$m) 2014A 2015A 2016F 2017F 2018F EPS (dil. normalised) (cps) 19.2 19.8 22.2 24.5Cash & deposits 40.3 60.9 30.6 16.1 22.1 Dividend per share (cps) 17.6 20.0 22.0 25.0Trade debtors 3.8 20.9 13.0 14.2 15.4 Franking (%) n.a. n.a. n.a. n.a.Inventory 0.0 0.0 0.0 0.0 0.0 Dividend payout ratio (%) 91.9% 101.1% 99.1% 101.8%Investments 0.0 0.0 0.0 0.0 0.0 Dividend yield (%) 2.9% 3.3% 3.7% 4.2%Goodwill 0.0 0.0 0.0 0.0 0.0Other intangible assets 237.3 247.7 272.6 310.9 347.5 Growth ratios 2015A 2016F 2017F 2018FFixed assets 579.1 624.1 647.6 684.9 720.3 Sales growth 8.7% 7.7% 9.5% 8.5%Other assets 26.9 39.2 39.2 39.2 39.2 Operating cost growth 7.4% 7.3% 8.9% 8.0%Total assets 887.4 992.8 1,002.9 1,065.3 1,144.5 EBITDA growth 14.0% 9.0% 11.5% 10.2%Short-term borrowings 0.0 0.0 0.0 0.6 3.2 EBITA growth 15.2% 9.4% 13.1% 11.3%Trade payables 32.6 29.7 30.4 33.1 35.8 EBIT growth 15.2% 9.4% 13.1% 11.3%Long-term borrowings 0.0 0.0 0.0 5.4 28.8 Reported NPAT growth 83.4% 3.3% 12.2% 10.6%Provisions 0.0 0.0 0.0 0.0 0.0 Normalised NPAT growth 83.4% 3.3% 12.2% 10.6%Other liabilities 687.0 753.9 786.8 836.8 884.2 Reported EPS growth 83.4% 3.3% 12.2% 10.6%Total liabilities 719.6 783.6 817.2 875.9 952.0 Normalised EPS growth 83.4% 3.3% 12.2% 10.6%Preference shares 0.0 0.0 0.0 0.0 0.0Hybrid equity 0.0 0.0 0.0 0.0 0.0 Operating performance 2015A 2016F 2017F 2018FShare capital 268.0 272.2 248.7 252.3 255.4 Asset turnover 10.8% 11.0% 11.5% 11.7%Other reserves (67.9) (97.8) (97.8) (97.8) (97.8) EBITDA margin 21.7% 22.0% 22.4% 22.7%FCTR 0.0 0.0 0.0 0.0 0.0 EBIT margin 17.4% 17.7% 18.2% 18.7%Unrealised gains/losses 0.0 0.0 0.0 0.0 0.0 Net profit margin 13.1% 12.5% 12.8% 13.1%Retained earnings (32.3) 34.8 34.8 34.8 34.8 Return on net assets 36.6% 45.0% 50.0% 54.7%Other equity 0.0 0.0 0.0 0.0 0.0 Net debt (A$m) -60.9 -30.6 -10.1 9.9Total equity 167.8 209.2 185.8 189.3 192.5 Net debt/equity -29.1% -16.5% -5.4% 5.2%Minority interest 0.0 0.0 0.0 0.0 0.0 Net interest/EBIT cover (x) -47.8 -68.7 -171.6 1840.4Total shareholders' equity 167.8 209.2 185.8 189.3 192.5 ROIC 55.2% 53.3% 57.8% 56.1%Total liabilities & SE 887.4 992.8 1,002.9 1,065.3 1,144.5


Assumptions 2015A 2016F 2017F 2018F

Target price (A$)

DCF/EV/EBITDA multiple


13

Figure 11: Financial summary- RHC


Ramsay Health Care Year end June Closing price (A$) 60.52 73.11Income statement (A$m) 2014A 2015A 2016F 2017F 2018F Valuation metricsDivisional sales 4,909 7,355 8,559 9,124 9,718 Preferred methodology Valuation 73.11Total revenue 4,930 7,361 8,564 9,129 9,723 DCF valuation inputsEBITDA 751.5 1,106.4 1,305.0 1,404.2 1,509.6 Rf 4.25% 10-year rate 4.25%Associate income 0.0 0.0 0.0 0.0 0.0 Rm-Rf 6.00% Margin 3.0%Depreciation (160.8) (289.5) (346.1) (365.2) (392.0) Beta 0.68 Kd 7.25%EBITA 590.7 816.9 958.8 1,038.9 1,117.7 CAPM (Rf+Beta(Rm-Rf)) 8.3% Ke 8.3%Amortisation/impairment (8.9) (13.5) (13.5) (13.5) (13.5) E/EV*Ke+D/EV*Kd(1-t) NPV cash flow (A$m) 18248.1EBIT 581.8 803.3 945.3 1,025.4 1,104.1 Equity (E/EV) 60.0% Minority interest (A$m) -26.7EBIT(incl associate profit) 581.8 803.3 945.3 1,025.4 1,104.1 Debt (D/EV) 40.0% Net debt (A$m) 2833.4Net interest expense (73.0) (115.6) (134.0) (133.4) (128.3) Interest rate 7.3% Investments (A$m) 238.2Pre-tax profit 508.8 687.7 811.3 892.0 975.8 Tax rate (t) 32.5% Equity market value (A$m) 15679.6Income tax expense (155.4) (232.7) (263.7) (289.9) (317.1) WACC 7.0% Diluted no. of shares (m) 202.2After-tax profit 353.4 455.1 547.6 602.1 658.7 DCF Valuation (A$) 77.56Minority interests (6.3) (38.3) (76.5) (78.8) (81.2)NPAT (normalised) 333.2 403.1 443.1 495.3 549.5 Multiples 2015A 2016F 2017F 2018FSignificant items (42.4) (26.5) (26.3) (25.1) (23.5) Enterprise value (A$m) 13,278.9 14,825.0 14,973.8 14,813.8NPAT (reported) 304.7 390.3 444.8 498.2 554.0 EV/Sales (x) 1.8 1.7 1.6 1.5


Cash flow (A$m) 2014A 2015A 2016F 2017F 2018F PE (normalised) (x) 30.4 27.7 24.8 22.3EBITDA 751.5 1,106.4 1,305.0 1,404.2 1,509.6 PEG (normalised) (x) 1.4 2.8 2.1 2.0Change in working capital 119.2 256.1 69.1 32.5 34.1 Price/Book (x) 6.60 5.93 5.33 4.78Net interest (pd)/rec (71.4) (170.6) (134.0) (133.4) (128.3)Taxes paid (164.2) (204.0) (263.7) (289.9) (317.1) At target price 2015A 2016F 2017F 2018FOther oper cash items (42.4) (26.5) (26.3) (25.1) (23.5) EV/EBITDA (x) 12.0 11.4 10.7 9.8Cash flow from ops (1) 592.8 961.2 950.1 988.2 1,074.7 PE (normalised) (x) 260.9 237.5 212.5 191.5Capex (2) (245.7) (486.2) (557.3) (474.8) (509.5)Disposals/(acquisitions) (227.3) (661.3) 0.0 0.0 0.0 Comparable company data (x) 2016F 2017F 2018FOther investing cash flow (72.4) 0.0 0.0 0.0 0.0 Healthscope EV/EBITDA 12.3 10.5 9.5Cash flow from invest (3) (544.0) (1,169.0) (557.3) (474.8) (509.5) Y/E June EV/EBIT 16.0 13.5 12.3Incr/(decr) in equity (30.6) (53.3) 0.0 0.0 0.0 PE 21.0 17.1 15.5Incr/(decr) in debt (17.1) 891.6 0.0 0.0 0.0 PEG 1.9 0.7 1.5Ordinary dividend paid (166.2) (303.9) (225.4) (246.6) (272.9) Sonic Healthcare EV/EBITDA 10.5 9.8 8.8Preferred dividends (4) (13.9) (13.7) (28.0) (28.0) (28.0) Y/E June EV/EBIT 13.5 12.7 11.1Other financing cash flow 4.2 0.0 0.0 0.0 0.0 PE 16.4 15.8 14.2Cash flow from fin (5) (223.6) 520.7 (253.4) (274.6) (300.9) PEG 0.7 4.2 1.3Forex and disc ops (6) 0.0 0.0 0.0 0.0 0.0Inc/(decr) cash (1+3+5+6) (174.8) 312.9 139.4 238.8 264.3 Per share data 2015A 2016F 2017F 2018FEquity FCF (1+2+4) 347.1 475.0 392.8 513.4 565.2 No. shares 202.8 202.8 202.8 202.8


Balance sheet (A$m) 2014A 2015A 2016F 2017F 2018F EPS (dil. normalised) (cps) 198.9 218.5 244.3 271.0Cash & deposits 167.2 315.9 455.3 694.1 958.3 Dividend per share (cps) 101.0 116.0 129.0 143.0Trade debtors 543.1 996.2 1,159.2 1,235.8 1,316.2 Franking (%) 100% 100% 100% 100%Inventory 124.0 191.7 223.1 237.9 253.3 Dividend payout ratio (%) 50.8% 53.1% 52.8% 52.8%Investments 195.1 238.2 26.6 26.6 26.6 Dividend yield (%) 1.7% 1.9% 2.1% 2.4%Goodwill 0.0 0.0 0.0 0.0 0.0Other intangible assets 1,175.0 1,878.3 1,948.4 2,006.1 2,069.0 Growth ratios 2015A 2016F 2017F 2018FFixed assets 2,144.8 3,591.8 3,719.4 3,757.7 3,798.9 Sales growth 49.8% 16.4% 6.6% 6.5%Other assets 201.5 404.8 642.7 667.9 691.4 Operating cost growth 49.7% 16.1% 6.4% 6.3%Total assets 4,550.8 7,617.0 8,174.7 8,626.0 9,113.6 EBITDA growth 47.2% 18.0% 7.6% 7.5%Short-term borrowings 34.2 425.2 425.2 425.2 425.2 EBITA growth 38.3% 17.4% 8.4% 7.6%Trade payables 833.5 1,610.4 1,873.9 1,997.7 2,127.6 EBIT growth 38.1% 17.7% 8.5% 7.7%Long-term borrowings 1,333.7 2,724.1 2,724.1 2,724.1 2,724.1 Reported NPAT growth 28.1% 14.0% 12.0% 11.2%Provisions 32.9 310.2 310.2 310.2 310.2 Normalised NPAT growth 21.0% 9.9% 11.8% 10.9%Other liabilities 572.9 714.0 722.4 736.4 751.8 Reported EPS growth 28.1% 13.9% 12.0% 11.2%Total liabilities 2,807.2 5,783.9 6,055.8 6,193.6 6,338.9 Normalised EPS growth 21.0% 9.8% 11.8% 10.9%Preference shares 0.0 0.0 0.0 0.0 0.0Hybrid equity 252.2 252.2 252.2 252.2 252.2 Operating performance 2015A 2016F 2017F 2018FShare capital 663.2 633.3 633.3 633.3 633.3 Asset turnover 20.2% 23.3% 25.5% 25.7%Other reserves 20.5 19.2 19.2 19.2 19.2 EBITDA margin 15.0% 15.2% 15.4% 15.5%FCTR 0.0 0.0 0.0 0.0 0.0 EBIT margin 10.9% 11.0% 11.2% 11.4%Unrealised gains/losses 0.0 0.0 0.0 0.0 0.0 Net profit margin 5.5% 5.2% 5.4% 5.7%Retained earnings 766.7 955.1 1,164.4 1,399.1 1,660.2 Return on net assets 43.8% 44.6% 42.2% 39.8%Other equity 0.0 0.0 0.0 0.0 0.0 Net debt (A$m) 2833.4 2694.0 2455.2 2190.9Total equity 1,702.6 1,859.8 2,069.1 2,303.8 2,564.9 Net debt/equity 154.6% 127.1% 100.9% 79.0%Minority interest 41.1 (26.7) 49.8 128.6 209.8 Net interest/EBIT cover (x) 7.0 7.1 7.7 8.6Total shareholders' equity 1,743.6 1,833.1 2,118.9 2,432.4 2,774.8 ROIC 16.4% 12.0% 12.2% 13.0%Total liabilities & SE 4,550.8 7,617.0 8,174.7 8,626.0 9,113.6



Target price (A$)

DCF, EV/EBITDA, PE


14

Figure 12: Financial summary- SHL


Sonic Healthcare Year end June Closing price (A$) 18.30 19.92Income statement (A$m) 2014A 2015A 2016F 2017F 2018F Valuation metricsDivisional sales 3,910 4,197 4,891 5,067 5,348 Preferred methodology Valuation 19.92Total revenue 3,910 4,197 4,891 5,067 5,348 DCF valuation inputsEBITDA 733.0 716.9 865.0 902.6 970.5 Rf 4.25% 10-year rate 4.25%Associate income 0.0 0.0 0.0 0.0 0.0 Rm-Rf 6.00% Margin 1.5%Depreciation (124.2) (136.0) (149.7) (160.1) (158.3) Beta 1.43 Kd 5.75%EBITA 608.9 580.9 715.3 742.6 812.2 CAPM (Rf+Beta(Rm-Rf)) 12.8% Ke 12.8%Amortisation/impairment (36.4) (43.2) (43.2) (43.2) (43.2) E/EV*Ke+D/EV*Kd(1-t) NPV cash flow (A$m) 11248.4EBIT 572.4 537.7 672.0 699.3 769.0 Equity (E/EV) 40.0% Minority interest (A$m) 51.9EBIT(incl associate profit) 572.4 537.7 672.0 699.3 769.0 Debt (D/EV) 60.0% Net debt (A$m) 1976.0Net interest expense (57.5) (52.1) (56.7) (56.3) (53.0) Interest rate 5.8% Investments (A$m) 62.4Pre-tax profit 515.0 485.6 615.3 643.0 716.0 Tax rate (t) 24.8% Equity market value (A$m) 9282.9Income tax expense (126.1) (115.9) (153.6) (160.5) (178.6) WACC 7.7% Diluted no. of shares (m) 401.0After-tax profit 388.9 369.6 461.7 482.5 537.4 DCF Valuation (A$) 23.15Minority interests (3.9) (6.3) (8.6) (8.9) (9.1)NPAT (normalised) 385.0 363.3 453.1 473.6 528.3 Multiples 2015A 2016F 2017F 2018FSignificant items 3.6 10.4 0.0 0.0 0.0 Enterprise value (A$m) 9,329.6 9,592.3 9,398.9 9,177.7NPAT (reported) 388.6 373.7 453.1 473.6 528.3 EV/Sales (x) 2.2 2.0 1.9 1.7


Cash flow (A$m) 2014A 2015A 2016F 2017F 2018F PE (normalised) (x) 20.4 16.4 15.8 14.2EBITDA 733.0 716.9 865.0 902.6 970.5 PEG (normalised) (x) (3.4) 0.7 4.2 1.3Change in working capital (2.6) (53.6) (57.0) (14.5) (23.1) Price/Book (x) 2.23 2.16 2.01 1.90Net interest (pd)/rec (54.2) (45.1) (56.7) (56.3) (53.0)Taxes paid (108.0) (125.4) (122.9) (128.4) (142.8) At target price 2015A 2016F 2017F 2018FOther oper cash items (11.9) 19.4 0.0 0.0 0.0 EV/EBITDA (x) 13.0 11.1 10.4 9.5Cash flow from ops (1) 556.4 512.1 628.4 703.4 751.6 PE (normalised) (x) 157.5 127.1 122.4 110.0Capex (2) (154.5) (197.5) (187.2) (179.3) (174.1)Disposals/(acquisitions) (206.3) (115.6) 0.0 0.0 0.0 Comparable company data (x) 2016F 2017F 2018FOther investing cash flow (3.3) 1.4 0.0 0.0 0.0 Healthscope EV/EBITDA 12.3 10.5 9.5Cash flow from invest (3) (339.4) (289.0) (187.2) (179.3) (174.1) Y/E June EV/EBIT 16.0 13.5 12.3Incr/(decr) in equity 36.9 12.9 38.7 26.5 87.0 PE 21.0 17.1 15.5Incr/(decr) in debt 9.8 41.2 385.0 50.0 50.0 PEG 1.9 0.7 1.5Ordinary dividend paid (256.3) (277.0) (277.9) (320.6) (341.1) Ramsay Health Care EV/EBITDA 11.5 10.6 9.7Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 Y/E June EV/EBIT 15.8 14.5 13.3Other financing cash flow 5.7 13.5 0.0 0.0 0.0 PE 27.7 24.8 22.3Cash flow from fin (5) (203.9) (209.4) 145.8 (244.0) (204.2) PEG 2.8 2.1 2.0Forex and disc ops (6) 0.0 0.0 0.0 0.0 0.0Inc/(decr) cash (1+3+5+6) 13.1 13.7 587.0 280.1 373.3 Per share data 2015A 2016F 2017F 2018FEquity FCF (1+2+4) 401.9 314.6 441.2 524.2 577.5 No. shares 401.0 413.0 407.0 415.0


Balance sheet (A$m) 2014A 2015A 2016F 2017F 2018F EPS (dil. normalised) (cps) 89.8 111.3 115.5 128.5Cash & deposits 232.1 249.4 836.4 1,116.5 1,489.9 Dividend per share (cps) 70.0 77.0 80.0 89.0Trade debtors 576.0 671.1 782.0 810.2 855.1 Franking (%) 33% 33% 33% 33%Inventory 65.2 76.1 88.6 91.8 96.9 Dividend payout ratio (%) 77.9% 69.2% 69.2% 69.2%Investments 67.9 62.4 62.4 62.4 62.4 Dividend yield (%) 3.8% 4.2% 4.4% 4.9%Goodwill 0.0 0.0 0.0 0.0 0.0Other intangible assets 4,085.0 4,427.4 4,412.2 4,395.9 4,378.8 Growth ratios 2015A 2016F 2017F 2018FFixed assets 691.9 791.1 800.5 792.8 782.5 Sales growth 7.3% 16.5% 3.6% 5.5%Other assets 79.6 93.6 93.6 93.6 93.6 Operating cost growth 9.5% 15.7% 3.4% 5.1%Total assets 5,797.6 6,371.0 7,075.8 7,363.2 7,759.1 EBITDA growth -2.2% 20.7% 4.4% 7.5%Short-term borrowings 450.4 1.4 78.4 88.4 98.4 EBITA growth -4.6% 23.1% 3.8% 9.4%Trade payables 350.1 402.5 469.0 485.9 512.8 EBIT growth -6.1% 25.0% 4.1% 10.0%Long-term borrowings 1,520.5 2,224.0 2,532.0 2,572.0 2,612.0 Reported NPAT growth -3.8% 21.3% 4.5% 11.5%Provisions 0.0 0.0 0.0 0.0 0.0 Normalised NPAT growth -5.6% 24.7% 4.5% 11.5%Other liabilities 367.6 401.6 433.1 436.0 459.4 Reported EPS growth -4.1% 20.5% 3.8% 11.3%Total liabilities 2,688.6 3,029.4 3,512.4 3,582.2 3,682.6 Normalised EPS growth -5.9% 23.9% 3.8% 11.3%Preference shares 0.0 0.0 0.0 0.0 0.0Hybrid equity 0.0 0.0 0.0 0.0 0.0 Operating performance 2015A 2016F 2017F 2018FShare capital 2,538.5 2,561.8 2,631.2 2,689.8 2,812.5 Asset turnover 16.1% 15.6% 16.9% 16.8%Other reserves (119.9) (13.5) (13.5) (13.5) (13.5) EBITDA margin 17.1% 17.7% 17.8% 18.1%FCTR 0.0 0.0 0.0 0.0 0.0 EBIT margin 12.8% 13.7% 13.8% 14.4%Unrealised gains/losses 0.0 0.0 0.0 0.0 0.0 Net profit margin 8.7% 9.3% 9.3% 9.9%Retained earnings 664.1 741.5 885.2 1,035.4 1,199.1 Return on net assets 16.1% 18.9% 18.5% 18.9%Other equity 0.0 0.0 0.0 0.0 0.0 Net debt (A$m) 1976.0 1774.0 1543.8 1220.5Total equity 3,082.6 3,289.8 3,502.8 3,711.6 3,998.1 Net debt/equity 59.1% 49.8% 40.8% 29.9%Minority interest 26.4 51.9 60.5 69.4 78.5 Net interest/EBIT cover (x) 10.3 11.8 12.4 14.5Total shareholders' equity 3,109.0 3,341.7 3,563.3 3,781.0 4,076.6 ROIC 7.6% 8.6% 8.9% 9.8%Total liabilities & SE 5,797.6 6,371.1 7,075.8 7,363.2 7,759.1



Target price (A$)

DCF, EV/EBITDA, PE


15

Figure 13: Financial summary- SRX


Sirtex Medical Year end June Closing price (A$) 36.43 17.56Income statement (A$m) 2014A 2015A 2016F 2017F 2018F Valuation metricsDivisional sales 129 176 227 279 317 Preferred methodology Valuation 17.56Total revenue 129 178 229 281 319 DCF valuation inputsEBITDA 30.8 53.3 69.4 83.2 96.9 Rf 5.25% 10-year rate 5.25%Associate income 0.0 0.0 0.0 0.0 0.0 Rm-Rf 6.00% Margin 1.5%Depreciation (1.4) (1.9) (2.1) (2.1) (2.1) Beta 1.84 Kd 6.75%EBITA 29.4 51.3 67.2 81.1 94.8 CAPM (Rf+Beta(Rm-Rf)) 16.3% Ke 16.3%Amortisation/impairment (2.1) (0.5) (3.5) (3.5) (3.5) E/EV*Ke+D/EV*Kd(1-t) NPV cash flow (A$m) 930.2EBIT 27.3 50.9 63.8 77.6 91.3 Equity (E/EV) 40.0% Minority interest (A$m) 0.0EBIT(incl associate profit) 27.3 50.9 63.8 77.6 91.3 Debt (D/EV) 60.0% Net debt (A$m) -73.9Net interest expense 1.9 1.9 3.5 5.2 7.4 Interest rate 6.8% Investments (A$m) 0.0Pre-tax profit 29.2 52.8 67.2 82.8 98.7 Tax rate (t) 25.0% Equity market value (A$m) 1004.1Income tax expense (7.2) (12.4) (15.8) (19.5) (23.2) WACC 9.6% Diluted no. of shares (m) 56.6After-tax profit 22.0 40.3 51.4 63.4 75.5 DCF Valuation (A$) 17.74Minority interests 0.0 0.0 0.0 0.0 0.0NPAT (normalised) 23.9 40.3 51.4 63.4 75.5 Multiples 2015A 2016F 2017F 2018FSignificant items 0.0 0.0 0.0 0.0 0.0 Enterprise value (A$m) 2,034.0 2,012.5 1,975.4 1,929.4NPAT (reported) 22.0 40.3 51.4 63.4 75.5 EV/Sales (x) 11.6 8.9 7.1 6.1


Cash flow (A$m) 2014A 2015A 2016F 2017F 2018F PE (normalised) (x) 52.2 41.0 33.3 28.0EBITDA 30.8 53.3 69.4 83.2 96.9 PEG (normalised) (x) 0.8 1.5 1.4 1.5Change in working capital (1.5) 0.2 (3.7) (3.7) (2.7) Price/Book (x) 14.60 11.76 9.49 7.55Net interest (pd)/rec 1.9 1.9 3.5 5.2 7.4Taxes paid (4.2) (2.4) (15.8) (19.5) (23.2) At target price 2015A 2016F 2017F 2018FOther oper cash items 3.3 (2.8) 0.0 0.0 0.0 EV/EBITDA (x) 38.2 29.0 23.7 19.9Cash flow from ops (1) 30.3 50.1 53.4 65.3 78.4 PE (normalised) (x) 178.8 140.4 114.0 95.7Capex (2) (6.2) (1.7) (4.9) (2.9) (2.9)Disposals/(acquisitions) (16.8) (43.1) 0.0 0.0 0.0 Comparable company data (x) 2016F 2017F 2018FOther investing cash flow 0.0 0.0 0.0 0.0 0.0 Healthscope EV/EBITDA 12.3 10.5 9.5Cash flow from invest (3) (23.0) (44.8) (4.9) (2.9) (2.9) Y/E June EV/EBIT 16.0 13.5 12.3Incr/(decr) in equity 3.4 0.0 0.0 0.0 0.0 PE 21.0 17.1 15.5Incr/(decr) in debt 0.0 0.0 0.0 0.0 0.0 PEG 1.9 0.7 1.5Ordinary dividend paid (6.7) (7.9) (11.3) (16.4) (20.4) Ramsay Health Care EV/EBITDA 11.5 10.6 9.7Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 Y/E June EV/EBIT 15.8 14.5 13.3Other financing cash flow 0.0 0.0 0.0 0.0 0.0 PE 27.7 24.8 22.3Cash flow from fin (5) (3.4) (7.9) (11.3) (16.4) (20.4) PEG 2.8 2.1 2.0Forex and disc ops (6) 0.0 0.0 0.0 0.0 0.0Inc/(decr) cash (1+3+5+6) 3.9 (2.6) 37.2 46.0 55.1 Per share data 2015A 2016F 2017F 2018FEquity FCF (1+2+4) 24.1 48.4 48.5 62.4 75.5 No. shares 57.9 57.9 57.9 57.9


Balance sheet (A$m) 2014A 2015A 2016F 2017F 2018F EPS (dil. normalised) (cps) 69.7 88.8 109.4 130.3Cash & deposits 52.5 73.9 111.1 157.1 212.2 Dividend per share (cps) 20.0 29.0 36.0 33.0Trade debtors 25.7 35.0 45.2 55.5 63.1 Franking (%) 0% 0% n.a. n.a.Inventory 1.7 1.8 2.4 2.9 3.3 Dividend payout ratio (%) 28.7% 32.7% 32.9% 25.3%Investments 0.0 0.0 0.0 0.0 0.0 Dividend yield (%) 0.5% 0.8% 1.0% 0.9%Goodwill 0.0 0.0 0.0 0.0 0.0Other intangible assets 47.4 68.0 65.3 62.3 59.2 Growth ratios 2015A 2016F 2017F 2018FFixed assets 13.6 13.2 15.2 15.5 15.8 Sales growth 36.1% 29.1% 22.8% 13.7%Other assets 7.9 9.5 9.5 9.5 9.5 Operating cost growth 26.7% 28.1% 23.7% 12.4%Total assets 148.7 201.5 248.7 302.8 363.2 EBITDA growth 72.8% 30.2% 20.0% 16.5%Short-term borrowings 0.0 0.0 0.0 0.0 0.0 EBITA growth 74.5% 31.0% 20.6% 16.9%Trade payables 14.7 24.3 31.4 38.5 43.8 EBIT growth 86.1% 25.4% 21.7% 17.6%Long-term borrowings 0.0 0.0 0.0 0.0 0.0 Reported NPAT growth 83.7% 27.5% 23.2% 19.1%Provisions 0.0 0.0 0.0 0.0 0.0 Normalised NPAT growth 69.0% 27.5% 23.2% 19.1%Other liabilities 26.5 32.6 37.8 41.8 39.9 Reported EPS growth 83.3% 27.3% 23.2% 19.1%Total liabilities 41.1 56.8 69.2 80.3 83.6 Normalised EPS growth 68.7% 27.3% 23.2% 19.1%Preference shares 0.0 0.0 0.0 0.0 0.0Hybrid equity 0.0 0.0 0.0 0.0 0.0 Operating performance 2015A 2016F 2017F 2018FShare capital 28.0 32.6 32.6 32.6 32.6 Asset turnover 18.5% 19.6% 20.6% 21.0%Other reserves 0.0 0.0 0.0 0.0 0.0 EBITDA margin 30.2% 30.5% 29.8% 30.5%FCTR 0.0 0.0 0.0 0.0 0.0 EBIT margin 28.9% 28.1% 27.8% 28.8%Unrealised gains/losses 0.0 0.0 0.0 0.0 0.0 Net profit margin 22.9% 22.6% 22.7% 23.8%Retained earnings 79.6 112.0 146.9 189.8 246.9 Return on net assets 35.2% 35.5% 34.9% 32.7%Other equity 0.0 0.0 0.0 0.0 0.0 Net debt (A$m) -73.9 -111.1 -157.1 -212.2Total equity 107.6 144.6 179.5 222.4 279.5 Net debt/equity -51.1% -61.9% -70.6% -75.9%Minority interest 0.0 0.0 0.0 0.0 0.0 Net interest/EBIT cover (x) -26.9 -18.4 -14.9 -12.4Total shareholders' equity 107.6 144.6 179.5 222.4 279.5 ROIC 49.8% 48.6% 86.7% 105.6%Total liabilities & SE 148.7 201.5 248.7 302.8 363.2



Target price (A$)

DCF, SOTP


16

Figure 14: Financial summary- VRT


Virtus Health Year end June Closing price (A$) 6.27 6.67Income statement (A$m) 2014A 2015A 2016F 2017F 2018F Valuation metricsDivisional sales 201 234 248 263 279 Preferred methodology Valuation 6.67Total revenue 201 234 248 263 279 DCF valuation inputsEBITDA 59.4 59.5 71.9 78.9 83.7 Rf 5.30% 10-year rate 5.30%Associate income 0.0 0.0 0.0 0.0 0.0 Rm-Rf 5.75% Margin 2.0%Depreciation (6.4) (8.0) (9.4) (9.3) (9.3) Beta 1.19 Kd 7.30%EBITA 53.0 51.5 62.5 69.6 74.3 CAPM (Rf+Beta(Rm-Rf)) 12.2% Ke 12.2%Amortisation/impairment (1.8) (2.0) (2.2) (2.2) (2.2) E/EV*Ke+D/EV*Kd(1-t) NPV cash flow (A$m) #N/AEBIT 51.2 49.5 60.3 67.3 72.1 Equity (E/EV) 60.0% Minority interest (A$m) #N/AEBIT(incl associate profit) 51.2 49.5 60.3 67.3 72.1 Debt (D/EV) 40.0% Net debt (A$m) 133.9Net interest expense (7.4) (7.6) (8.8) (8.2) (7.5) Interest rate 7.3% Investments (A$m) 0.0Pre-tax profit 43.8 41.8 51.5 59.2 64.6 Tax rate (t) 30.0% Equity market value (A$m) 536.2Income tax expense (12.9) (12.0) (15.0) (17.3) (20.0) WACC 9.3% Diluted no. of shares (m) 79.5After-tax profit 31.0 29.8 36.5 41.8 44.7 DCF Valuation (A$) 6.74Minority interests 0.0 (0.5) 0.0 0.0 0.0NPAT (normalised) 31.0 29.3 36.5 41.8 44.7 Multiples 2015A 2016F 2017F 2018FSignificant items 0.0 0.0 0.0 0.0 0.0 Enterprise value (A$m) 619.2 635.1 626.4 605.9NPAT (reported) 31.0 29.3 36.5 41.8 44.7 EV/Sales (x) 2.6 2.6 2.4 2.2


Cash flow (A$m) 2014A 2015A 2016F 2017F 2018F PE (normalised) (x) 17.0 13.7 11.9 11.2EBITDA 59.4 59.5 71.9 78.9 83.7 PEG (normalised) (x) (3.2) 0.6 0.8 1.6Change in working capital 4.9 0.2 (8.6) (0.1) 0.0 Price/Book (x) 2.19 2.06 1.91 1.78Net interest (pd)/rec (6.7) (7.0) (9.2) (8.5) (7.8)Taxes paid (5.1) (12.0) (15.0) (17.3) (20.0) At target price 2015A 2016F 2017F 2018FOther oper cash items 0.0 0.0 0.0 0.0 0.0 EV/EBITDA (x) 10.4 8.8 7.9 7.2Cash flow from ops (1) 52.5 40.6 39.1 52.9 55.9 PE (normalised) (x) 128.4 103.1 89.9 84.2Capex (2) (8.0) (11.8) (8.8) (9.3) (9.3)Disposals/(acquisitions) 0.0 0.0 0.0 0.0 0.0 Comparable company data (x) 2016F 2017F 2018FOther investing cash flow (22.0) (25.2) 0.0 0.0 0.0 Healthscope EV/EBITDA 12.3 10.5 9.5Cash flow from invest (3) (30.0) (37.0) (8.8) (9.3) (9.3) Y/E June EV/EBIT 16.0 13.5 12.3Incr/(decr) in equity 1.1 0.0 0.0 0.0 0.0 PE 21.0 17.1 15.5Incr/(decr) in debt (5.0) 0.0 13.0 0.0 0.0 PEG 1.9 0.7 1.5Ordinary dividend paid (9.4) (21.8) (21.6) (23.1) (24.9) Ramsay Health Care EV/EBITDA 11.5 10.6 9.7Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 Y/E June EV/EBIT 15.8 14.5 13.3Other financing cash flow 0.0 0.0 0.0 0.0 0.0 PE 27.7 24.8 22.3Cash flow from fin (5) (13.4) (21.8) (8.6) (23.1) (24.9) PEG 2.8 2.1 2.0Forex and disc ops (6) 0.0 0.0 0.0 0.0 0.0Inc/(decr) cash (1+3+5+6) 9.2 (18.2) 21.7 20.5 21.7 Per share data 2015A 2016F 2017F 2018FEquity FCF (1+2+4) 44.5 28.8 30.3 43.6 46.6 No. shares 79.5 79.5 79.5 79.5


Balance sheet (A$m) 2014A 2015A 2016F 2017F 2018F EPS (dil. normalised) (cps) 36.9 45.9 52.6 56.2Cash & deposits 21.5 18.4 41.6 62.1 83.8 Dividend per share (cps) 27.0 27.7 30.3 32.4Trade debtors 12.5 13.6 10.2 10.8 11.5 Franking (%) n.a. n.a. n.a. n.a.Inventory 0.0 0.0 0.0 0.0 0.0 Dividend payout ratio (%) 73.2% 60.4% 57.5% 57.5%Investments 0.0 0.0 0.0 0.0 0.0 Dividend yield (%) 4.3% 4.4% 4.8% 5.2%Goodwill 0.0 0.0 0.0 0.0 0.0Other intangible assets 356.1 390.8 388.6 386.3 384.1 Growth ratios 2015A 2016F 2017F 2018FFixed assets 28.2 30.9 30.3 30.3 30.3 Sales growth 16.3% 6.1% 6.1% 6.1%Other assets 11.5 11.6 11.4 11.4 11.4 Operating cost growth 23.1% 1.0% 4.6% 6.1%Total assets 429.8 465.3 482.0 501.0 521.1 EBITDA growth 0.1% 20.9% 9.7% 6.1%Short-term borrowings 0.1 0.1 16.7 16.7 16.7 EBITA growth -2.9% 21.4% 11.3% 6.9%Trade payables 23.5 23.2 10.8 11.3 12.0 EBIT growth -3.4% 21.9% 11.7% 7.1%Long-term borrowings 139.4 152.2 150.1 150.1 150.1 Reported NPAT growth -5.3% 24.5% 14.7% 6.8%Provisions 0.0 0.0 0.0 0.0 0.0 Normalised NPAT growth -5.3% 24.5% 14.7% 6.8%Other liabilities 27.2 62.4 62.4 62.4 62.4 Reported EPS growth -5.3% 24.5% 14.7% 6.8%Total liabilities 190.2 237.9 240.1 240.6 241.3 Normalised EPS growth -5.3% 24.5% 14.7% 6.8%Preference shares 0.0 0.0 0.0 0.0 0.0Hybrid equity 0.0 0.0 0.0 0.0 0.0 Operating performance 2015A 2016F 2017F 2018FShare capital 0.0 0.0 0.0 0.0 0.0 Asset turnover 11.2% 12.3% 12.6% 12.9%Other reserves 10.2 (13.0) (13.0) (13.0) (13.0) EBITDA margin 25.5% 29.0% 30.0% 30.0%FCTR 0.0 0.0 0.0 0.0 0.0 EBIT margin 21.2% 24.3% 25.6% 25.9%Unrealised gains/losses 0.0 0.0 0.0 0.0 0.0 Net profit margin 12.5% 14.7% 15.9% 16.0%Retained earnings (7.7) 2.0 2.0 2.0 2.0 Return on net assets 21.8% 24.9% 25.9% 25.8%Other equity 237.1 238.4 252.9 271.4 290.8 Net debt (A$m) 133.9 125.2 104.7 83.0Total equity 239.6 227.4 242.0 260.4 279.8 Net debt/equity 58.9% 51.8% 40.2% 29.7%Minority interest 0.0 0.0 0.0 0.0 0.0 Net interest/EBIT cover (x) 6.5 6.8 8.2 9.6Total shareholders' equity 239.6 227.4 242.0 260.4 279.8 ROIC 9.3% 10.4% 11.5% 12.3%Total liabilities & SE 429.8 465.3 482.0 501.0 521.1



Target price (A$)

Blended DCF: PE


17

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sector note healthcare - overall · 2020. 2. 6. · healthcare│australia│equity...

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