Ansell Demonstrate Operational and Capital Management Excellence, Increase FVE to AUD 32

We increase our fair value estimate for narrow-moat Ansell to AUD 32.00 following a transfer of analyst, driven by continued positive impacts from business consolidation, and further impressive capital management. The fiscal 2019 result displayed the contrasting nature of the business’s two segments. The highly defensive healthcare segment grew the top line at a solid 2.7% in USD (4.8% in constant currency), which is much better than the cyclical industrial segment, which saw revenue down 1.6% in USD (up 1.5% in constant currency) on the back of a sharp second-half downturn in both Europe and North America. We expect similar top line dynamics in fiscal 2020 with healthcare segment growing 4% and outperforming the industrial business resulting in overall revenue growth of 3.1% at the bottom end of the 3% to 5% long-term range.