How did 1300 Smiles (ASX:ONT) perform in 1H FY21?

Summary

  • 1300 Smiles reported a healthy growth of 35 per cent in NPAT to $5.9 million.
  • The board has also increased the interim dividend to a record 14.5 cps, showing its belief in the rebound in earnings.
  • In 1H FY21, the same store sales notched up by a decent 10%.

On 16 February 2021, 1300 Smiles Limited (ASX:ONT) released its earnings for the half-year ended 31 December 2020. The company reported strong growth of 35 per cent in net profit after tax (over the previous corresponding period) to $5.9 million. The earnings per share also shot up to a new high of 25 cents per share.

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There hasn’t been much growth seen on the revenue front which grew marginally from $23.49 billion in 1H FY20 to $23.7 billion in 1H FY21, up by just 1 per cent. The Dental revenue portion of the statutory revenue increased by around 8 per cent. The company booked profit on disposable assets of certain dental practices in the previous period that dragged down revenue in this period.

Other elements that affected the revenue stream were consulting revenue from the non-core business, which saw a decline. The company has been able to bring down its total expenses by over 10 per cent, from $17.41 billion to $15.65 billion in the same period.

The board has also increased the interim dividend to a record 14.5 cents per share, showing the management’s belief in the rebound in earnings. The management had also declared a steady dividend in 2020 despite challenging times.

Read More: 1300 Smiles Recorded Growth In 1H FY19 Despite Getting Hit By Townsville Floods

Same Store Sales

It is usual for the management to dispose of the practices which no longer meets the performance standards and therefore, revenue number can be significantly affected. This makes the same store sales a more useful and standardised parameter to gauge the performance consistently.

In 1H FY21, the same store sales notched up by a decent 10%. During the first half of the previous year, the company had not yet heard of COVID-19, so that 10% increase comes in comparison to a normal period which delivered, at that time, record-high revenue.

Stock Performance

1300 Smiles’ share price is trading flat at A$7.22 (as at 2:46 PM AEDT). In the last three months, the stock has risen from A$6.36 to A$7.22, delivering a decent return of 13.5 per cent. The one-year return stands at 13.7 per cent.

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