The average target price of AHC.AX is 0.45 and suggests 61% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 0.5. This translates into 61% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 0.5. This suggests 61% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Austco Healthcare Limited, together with its subsidiaries, engages in the manufacture, distribution, marketing, supply, service, and sale of healthcare and electronic communications systems in Australia, New Zealand, Asia, Europe, and North America. It offers Tacera, an IP based nurse call solution for hospitals and aged care facilities. The company was formerly known as Azure Healthcare Limited and changed its name to Austco Healthcare Limited in November 2020. Austco Healthcare Limited was founded in 1986 and is headquartered in Port Melbourne, Australia.

Australia

Austco Healthcare Limited

Healthcare

The company pays dividends on rare occasions. There have only been a few years with dividend payments in the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. 

AHC.AX reported revenue of AUD 72mn in the last 12 months, up 63% from FY23. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS fell 0% from FY23 to AUD 0.02. Market expects EPS to reach AUD 0.02 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 18ppts over past six months and grown 4ppts faster in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported modest EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 14.7% in the last 12 months, up from 14.0% in FY24. 

Historically, AHC.AX has reported good net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 12.2%, a growth from 12.2% in FY24. 

In the last 12 months, the return on capital employed (RoCE) declined to 17.3%, above the peers. 

Austco Healthcare Limited reported a return on equity (RoE) of 18.0% in the last 12 months, down from 18.7% in FY24. 

Another important profitability metric, return on assets (RoA), amounted to 11.9% in the last 12 months, a decrease from 12.1% in FY24. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 2.4 in the past several years. This ratio implies a strong shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

AHC.AX has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity may be unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is minimal. We note resilient historical revenue growth, solid return on capital, strong debt servicing capacity, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors and we point to weak positions in its industry, poor working capital management.

In highly turbulent market conditions, AHC.AX is volatile. In other words, the stock will fall much more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be large. 

In normal market circumstances, AHC.AX is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from large to immense. 

From both historical and forecast perspectives, the stock is moderately underpriced compared to similar stocks. In particular, the stock is underpriced on P/E, 'cheap' on EV/EBITDA, trading at neutral levels on P/FCF. 

Austco Healthcare Limited

A$ 0.28

4

Austco Healthcare Limited

A$ 0.28

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

A$ 0.28

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