Ann: Monash IVF Group 1H18 Results Presentation, page-34

Bought back in yesterday. I was hoping we might get down here but thought it might take the next set of results.

Havoc? Obviously the share price has taken a big hit which I think is namely due to two factors. Firstly the push for bulk billing services, and also from losing their top billing doctor. But why do you say havoc?
I’m not sure about the internal culture and whether this played a significant role in LB leaving but obviously there are some questions about that side of things, but that probably came from the top and I expect the new ceo, to address these issues. Personally I wasn’t a fan of JT anyway so hopefully the new md is an improvement. Given the need for advertising and the power of scale in this field, I think it’s very hard for ivf doctors (particularly young ones) to go it alone unlike surgeons and most physicians.
I don’t think mvf have anything to worry about with respect to their debt. 94mil with ebitda this year probably coming in at 40-43mil. Low capital costs. So I don’t see how the share price can drop much further below the intrinsic value of the business despite the expectation of average results over the next 6-12months. Having said that, I’d be more than happy if it did as I’ll add to my holding.

Currently trading a tad over 8x ev/ebitda. I expect the dividend to be another 3-3.3c at the end of the year despite significant one offs (ceo recruitment and LB legal costs) making a dividend yield of about 6.6cents (12.6c eps last year - 25% x payout ratio of 65-70%) giving a fully franked dividend yield of >6% despite a modest payout ratio. Fcf yield is even higher.

The market may be expecting further profit loss in fy19, but I think we’ll revert to growth in fy19. I think cycles should at least stabilise, and both diagnostics and Malaysia should keep improving.

Takeover is my only ‘worry’