Vitura Health Limited engages in the sale and distribution of medicinal cannabis products in Australia and Asia. Its brands include CanView, Burleigh Heads Cannabis, CDA Clinics, Cannadoc, and Adaya. The company was formerly known as Cronos Australia Limited and changed its name to Vitura Health Limited in February 2023. The company was incorporated in 2018 and is based in South Yarra, Australia.

Australia

Vitura Health Limited

Healthcare

The company pays dividends irregularly. 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. At the same time, the average five-year yield has been significantly higher and exceeded nearly all its peers. 

VIT.AX reported revenue of AUD 127mn in the last 12 months, up 6% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 100% from FY23 to AUD 0.00. Market expects EPS to reach AUD 0.06 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). It has underperformed this peer group by 12ppts over six months and grown 0ppts slower 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 2.8% in the last 12 months, a decline from 5.7% in FY24. 

Historically, VIT.AX has reported modest net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 1.5%, down from 2.8% in FY24. 

Vitura Health Limited reported a return on equity (RoE) of 4.7% in the last 12 months, down from 8.8% in FY24. The market consensus projects an RoE of 10.3% in FY25, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to 2.7% in the last 12 months, a decrease from 4.9% in FY24. The market analysts predict that RoA will be 6.0% in FY25, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to 3.6%, below the peers. The consensus estimate for FY25 for RoCE is 12.2%, again behind the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 3.3 in the past several years. This ratio implies a excellent 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.

VIT.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. 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, low margin volatility, 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, bleak profitability.

In highly turbulent market conditions, VIT.AX is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

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

Based on key historical and expected multiples, the stock is undervalued relative to its peers. In particular, the stock is underpriced on P/E, 'expensive' on EV/EBITD. 

Vitura Health Limited

A$ 0.07

3

Vitura Health Limited

A$ 0.07

3

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Profitability factor

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Profitability factor

A$ 0.07

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