Positive Trading Update from Healius; Maintain AUD 3.50 Fair Value Estimate

No-moat Healius is currently in the investment phase of its turnaround and the positive fiscal 2020 trading update provided at today’s AGM, provides confirmation. The firm quantified expected underlying net profit after tax, or NPAT, of between AUD 94 million and AUD 102 million, equating to between 1% and 9% growth on the previous corresponding period, or pcp. Our unchanged estimate of AUD 96.5 million underlying NPAT is within this range. This excludes the spend on strategic projects to fuel the turnaround, which we forecast at AUD 40 million for fiscal 2020. We expect flat reported NPAT year on year. Shares screen as slightly undervalued at current levels versus our AUD 3.50 per share fair value estimate.