What gave ASX200 CSL Ltd (ASX:CSL) confidence to raise the lower-end of its guidance?

  • October 15, 2020 06:24 PM AEDT
  • Team Kalkine
What gave ASX200 CSL Ltd (ASX:CSL) confidence to raise the lower-end of its guidance?

Summary

  • Biotech major CSL Limited upgrades its guidance for FY21, anticipates revenue growth in the range of 6-10% over FY20.
  • The Company has narrowed its NPAT growth range from 0%-8% to 3%-8%. CSL now anticipates NPAT in the range US$2.170-US$2.265 billion at constant currency.
  • In FY21, CSL anticipates resilient demand for its plasma and recombinant therapies to continue.

Australian biotechnology giant CSL Limited (ASX:CSL) narrowed its FY21 guidance with NPAT growth rate expected in the range 3%-8% compared to 0%-8% earlier. Following the guidance update on 14 October, CSL share price moved up 1.361%.

On 15 October 2020, CSL stock closed at A$300.990, down 0.431%. The market capitalisation of the Company stood at A$137.53 billion.

Moreover, CSL anticipates considerable demand for its recombinant and plasma treatments to continue growing in the future. The Company also disclosed that sales of Albumin are expected to return to normal after a successful transition to the new business model across China.

Let us zoom the lens and discuss in detail CSL Limited-

About CSL Limited

ASX 200 global biotech leader CSL Limited is engaged in the development and marketing of human pharmaceuticals as well as diagnostic products that are derived from human plasma. The Company’s products include adult and pediatric vaccines, remedies for skin disorders, antivenoms, and pain medicines, among  others. CSL has its operations in over 35 countries across the world.

The Company continues to develop its plasma collection network. In FY20, CSL opened 40 new centres in the US. Moreover,  it is planning to open 20-30 new centres in FY21.

FY21 Guidance Update

On 14 October 2020, CSL Limited updated the market with its 2020 Annual General Meeting (AGM) speeches. The Company disclosed in the Chairman's Address that it is upgrading its guidance for the financial year 2021, the highlights are-

  • CSL Limited anticipates revenue growth in the range 6-10%, compared to FY20.
  • NPAT is anticipated in the range US$2.170-US$2.265 billion at constant currency.
  • The revised NPAT guidance implies a growth of 3-8%, which is a slight narrowing of the range 0-8% as disclosed earlier in August 2020.

Besides, on 8 October 2020, the Company disclosed that its subsidiary, Seqirus had signed an agreement with the Commonwealth of Australia to supply nearly 51 million doses of UQ-CSL’s experimental COVID-19 vaccine.

FY20: An excellent year for CSL with 17% growth in profit

During the financial year 2020, CSL Limited performed well despite the impact of COVID-19 pandemic. The quick highlights from FY20 are-

  • CSL delivered impressive FY20 results with revenue increasing by 9% and NPAT growing 17% at constant currency.
  • Immunoglobulins, CSL Limited’s biggest franchise, has outperformed with PRIVIGEN® up 20% and HIZENTRA® up 34%. This indicates CSL’s ability to deliver its therapies to meet the increasing demand.
  • The successful advancement of haemophilia portfolio remained on track. Sales of AFSTYLA® were up by 21% while sales of IDELVION® were by almost 25%.
  • Seqirus delivered robust profit growth, propelled by influenza sales (+21%).
  • The vaccine division’s EBIT increased over 70% during FY20, supported by sales of FLUAD® and FLUCELVAX®.
  • During the period, CSL Behring recorded sales growth of 8% at constant currency.
  • During the COVID-19, demand remained solid right across CSL’s portfolio, especially for immunoglobulins and influenza.
  • The Company disclosed that its leverage ratios, liquidity levels, and credit ratings remained strong. With a robust balance sheet, CSL bolstered its capital position with a US$750 million private placement.

Moreover, CSL disclosed that the sales during pandemic continue to perform well with reservation fees up by 11%. This was mainly attributed to new contracts in Canada and the EU.

GOOD READ: ASX-Listed CSL & Cohlear: Deploying money is not enough, Strategic policies are equally important

DID YOU KNOW: CSL Limited (ASX:CSL) to Supply 51Mn Doses of UQ’s COVID-19 Vaccine

Way Ahead FY21

In the Chairman’s address, CSL also discussed its outlook for the financial year 2021. The critical points include:

  • Regarding plasma, the Company stated that COVID-19 restrictions are anticipated to restrain its ability of plasma collection and add to the overall cost of collection.
  • However, CSL Limited stated that the Company has several initiatives underway to mitigate the COVID-19 impact on its plasma collections.
  • The Company also discussed the R&D response to COVID-19, along with new R&D initiatives, shall put upward pressure on the expense in R&D. Though, there is still within the 10-11% of revenue envelope as previously guided.

Bottomline

CSL is garnering attention from market participants and anticipates strong demand for its therapies in the future. The Company continues to grow its underlying business and is actively involved in the race to develop and provide COVID-19 vaccine to prevent the ongoing life-threatening pandemic. Its agreement with the Australian government to provide COVID-19 vaccine to Aussies is a critical component of its strategy.

 

With the pandemic continuing to affect the globe, healthcare companies are evaluating their lead compounds for COVID-19 treatment. Future revenue for these stocks depends on the probability of launching an approved treatment in the market.

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