Business analyst report: Capitol Health Limited

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Capitol Health Ltd.

Business Analysis Report

Group Assignment

Acknowledgement

“The assignment has been carefully researched and created in a group. Putting together the team effort we summarized the best information available in the online journals, research papers, company annual reports & from other sources. Every team member has played its vital role in this assignment. All the related documents’ links have been provided either in citation or under separate reference heading”.


Table of Contents

Executive Summary

Introduction

Background Summary

Industry Environment Review

Competitors Review

Company Review

Share Price Data

Company Fundamentals

Historical Prices

Last 5 Days

High Dividend Record

Company Executives

Company Strategy

FY14 Success

Future Strategy

Future Strategy

Stock Price Target CAJ

Financial Statement (Balance Sheet)

Conclusion

References

Executive Summary

This report reflects all the working and research on “Capitol Health Ltd.”. Capitol Health Limited (ASX: CAJ), an Australian public company which provides medical diagnostic imaging services. The company is the only ASX listed company that holds diagnostic imaging services.

The assignment carries all the important required tasks which were given to be completed in the specifications document. All the team members were allocated some specific tasks which they performed really well. The members were given assorted tasks from the provided specifications. They did really nice on their specific tasks.

The assignment carries different headings under which everything has been provided briefly. As per the plagiarism requirements, all the quotations or anything that has been abstracted from the internet or any other source, were provided with the proper citations and references. The references were created using Harvard Style Referencing.

The report carries small introduction of the selected organization so that it becomes easier for the viewer/marker to understand what this assignment is all about.

Porters’ Five Forces were made base in the assignment for the further analysis and research. The report briefly describes the reviews about industry environment, its competitors, financial summaries, backgrounds, future strategies, and other financial information.

This report carries some other information that was considered as important which is not even required in the assignment specifications.

Introduction

This report has been carefully created after the brief overview of the assignment specifications. Thorough research and analysis were done in the formation of this report. All the information brought by the team members was properly placed in this report.

Background Summary

Capitol Health Limited (ASX: CAJ), an Australian public company providing medical diagnostic imaging services. This treatment works exclusively only ASX listed company. The primary goal of the company is a leading medical business for our shareholders and achieves sustainable growth and profitability of our supply centres is superior patient experiences. Since starting operations in 2006, Capital Health medical care has become Victoria's second largest provider of diagnostic imaging services. Capital Health imaging procedures in health care practitioners and their patients is dedicated to providing excellent care.

Industry Environment Review

This review has been created using Porter’s Five Forces analysis. Those five forces have been discussed below:

  1. Competition in the industry

Capitol Health Limited (Capital Health) healthcare business based in Australia for a community-based (non-hospital), the provider of medical diagnostic imaging (DI) services. The company owns nearly 52 clinics throughout the metropolitan and regional Victoria. Capital health services provided by medical clinicians to take on the administrative aspects of a practice putting them on time delivery, allowing you to focus on. The organization provides X-ray diagnostic imaging, magnetic resonance imaging (MRI), ultrasound, mammography; doppler, Orthopantomogram (OPG), Echocardiography, for computer tomography (CT), CT angiography, cone-beam CT, nuclear medicine, and fluoroscopy include bone Densitomety. The company also based in Victoria Community Services is a provider of diagnostic imaging in the radiology MDI, through the services it provides.

Having so many services to be offered, there’s always a chance of competition. The competitors are:

  • Primary Health Care Limited
  • Healthcare Imaging Services
  • Medical Solutions
  • Sonic Healthcare

All the above mentioned vendors provide similar services as Capitol Health Ltd provides. They may provide same services but in ASX index Capitol Health Ltd is performing better. It is still the only ASX listed company that provides Diagnostic Imaging Services.

  1. Potential of new entrants into industry

Once new thing comes up in the market its competition starts building up. For Capitol Health Limited, there was and there is still a lot of competition available in the market. But still Capitol Health Ltd has its own market reputation. However, to stay in better place they keep introducing new products and services. Such as, recently they introduced new MRI machines and 2 more radiology centres.

  1. Power of suppliers

Being a healthcare service provider, Capitol has its own suppliers. Mainly from the medical equipments providers. It also has service providers from other sectors such as medicines. A supplier is the life line of any business. Whether Non-Profit or profitable organization, it is essential to keep the supplies in suitable quantity in order to provide the best services.

  1. Power of customers

As an ASX listed service provider, Capitol Healthcare Ltd have two types of customers

  • Investors/Share holders
  • Patients

As investors who are also known as share holders keep investing their funds for the purchase of shares they are also considered as customers. While the normal patients are obviously are proper customers who pay money in exchange of service by the Capitol staff.

  1. Threat of substitute products

There is already a substitute product threat available in the market. Capitol Healthcare has always tried to be the market leader in all aspects. There are many other organizations providing similar services to the general public. But Capitol has its own standard for services and products. But Capitol should keep introducing new services in order to survive in the market.

Competitors Review

There are many organizations providing similar services. Some of them are given below with their respective capital[1] in the market.

Virtus Health Ltd

AUD 581.13M

Monash IVF Group Ltd

AUD 342.00M

Japara Healthcare Ltd

AUD 707.60M

Vision Eye Institute Ltd

AUD 126.58M

Primary Health Care Ltd

AUD 2.58B

Healthscope Ltd

AUD 4.82B

Sonic Healthcare Ltd

AUD 7.74B

Company Review

Capitol Health Limited (ASX:CAJ) medical diagnostic imaging (DI) services of an Australian public company. The biggest community based within Victoria and DI provided exclusively working on is only ASX listed company. Victoria's metropolitan and rural areas are all under company’s currently operating facilities which are about 52 facilities and it employs over 500 employees and contractors. The company aims to deliver a superior experience for the patient's underlying medical condition known to generate business for shareholders is to build sustainable growth and profitability.

Share Price Data[2]

Open

High

Low

Change

% Change

0.935

0.945

0.930

0.005

0.53

Company Fundamentals

Market Capital

AUD 480.76M

EPS Recent Fiscal year

AUD 0.02

Dividend Yield

1.176%

Profit Margin

9.313%

Return on Investment (ROI)

15.483%

Normalised P/E Ratio

54.762

Historical Prices[3]

Last 5 Days

Date

Open

High

Low

Close

Volume

05/13/15

0.92

0.94

0.92

0.94

980,076

05/12/15

0.90

0.92

0.87

0.92

1.50 M

05/11/15

0.92

0.93

0.91

0.91

577,746

05/08/15

0.92

0.94

0.91

0.91

507,991

05/07/15

0.93

0.93

0.91

0.92

769,196

High Dividend Record

Capitol Health Limited a high dividend, which released a record first-half result. The market had already been marked as, AU $ 43.3 million in December 2012, half of the half-yearly revenues increased 52% relative. This is a 110 percent increase year-on-year to $3.0 million half-year NPAT (Net Profit After Tax) as a result. The company is performing really outstanding. The easiest way to show you the listing of the Capital's revenue and net profit is by the growth chart[4].

asi20140214a-lgr.jpg

Company Executives[5]

The below listed directors are currently working.

Mr Andrew Demetriou

Chairman and Non-Executive Director –Appointed 17 November 2014

Mr John Conidi, (BBus, FCPA)

Managing DirectorAppointed 30 August 2007

Mr Dominik Kucera, (BBus [Acc], CPA)

Executive Director and Chief Financial OfficerAppointed 31 July 2008

Mr Andrew Harrison, (BCom [Hons], MAICD)

Non-Executive DirectorAppointed 1 December 2005

Company Secretary

Mr Kim Hogg, (BCom) Company SecretaryAppointed 1 December 2005

Company Strategy

FY14 Success

$10.2m (+ 92%) for FY14 $90.3m (+ 44%) of the revenue and PBT, $3.3m for 4Q14 PBT indicates in FY15e $13.6m PBT and sets a base line. The last number was published 9 percent equates to earnings upgrades. Capitol’s MRI volumes reported by health continue to outperform the industry average. MRI scans 28 per machine per day (+ 100% increase over June '13) who works as an average during June '14, 12 per cent of group revenue. As reported by Medicare, medical MRI volumes VIC/TAS in, FY14 by over +47% which is almost double by +28%. Development rose almost doubled. Importantly, we are clear market share gains of + 5% vs. Industry Development business (X-ray / CT / ultrasound) of the central component within the MRI volume growth of 9% (all organic) estimates.

Future Strategy

Capital / MDI capacity continued to outperform industry growth and implementation of internal ICT investment, the new call center and Radiologists advantage of the delegated management autonomy, clearly branded clinics. During FY15 non MRI scan volume is expected to rise +5%. Our forecast is realized that a small amount of cannibalization delay CT and ultrasound scans, MRI between GP referral bases to accelerate adoption could be as a result.

Future Strategy

We reverse the risk by 32 percent in FY15 with EPS, predicted. Assuming the budget is passed as is, the management of our FY16 EPS growth forecasts which are increasingly vocal +11%, is the potential acquisition. Evaluation of $0.54 (from $ 0.52). Next catalyst: accretive acquisitions, the federal government proposed GAP accused the news flow.

Stock Price Target CAJ

High

$1.15

Median

$1.05

Low

$1.04

Average

$1.08

Current Price

$0.94

Financial Statement (Balance Sheet)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

PREVIOUS 3 YEARS CLOSED 30 JUNE 2014

2014

2013

2012

$

$

$

CURRENT ASSETS

Cash and cash equivalents

9,119,541

6,126,610

1,702,104

Trade and other receivables

2,264,082

2,196,480

1,300,823

Financial asset-held to maturity

136,103

487,860

476,876

Other assets

612,624

493,270

362,272

Total Current Assets

12,132,350

9,304,220

3,842,075

NON-CURRENT ASSETS

Other financial assets

276,833

-

-

Plant & equipment

17,578,663

15,385,769

8,749,302

Intangible assets

30,223,473

30,828,529

23,431,630

Deferred tax assets

1,956,831

1,701,149

990,821

Total Non - Current Assets

50,035,800

47,915,447

33,171,753

TOTAL ASSETS

62,168,150

57,219,667

37,013,828

CURRENT LIABILITIES

Loans and borrowings

3,094,899

2,722,369

2,127,356

Trade and other payables

4,399,863

6,654,807

4,596,953

Employee benefits

4,927,326

1,769,498

926,534

Income tax liability

1,002,952

1,112,325

844,722

Total Current Liabilities

13,425,040

12,258,999

8,495,565

NON-CURRENT LIABILITIES

Loans and borrowings

8,399,027

9,523,618

3,512,606

Employee benefits

941,584

644,509

291,760

Deferred tax liabilities

737,728

687,255

248,924

Total Non-Current Liabilities

10,078,339

10,855,382

4,053,290

TOTAL LIABILITIES

23,503,379

23,114,381

12,548,855

NET ASSETS

38,664,771

34,105,286

24,464,973

EQUITY

Issued capital

31,541,850

31,200,739

23,369,779

Retained earnings

7,122,921

2,904,547

1,095,194

Equity attributable to owners of the parent

38,664,771

34,105,286

24,464,973

TOTAL EQUITY

38,664,771

34,105,286

24,464,973

Conclusion

Improve operational efficiency, and achieve high margin last year MDI radiology clinic a solid business partnership: Capital of the factors behind the sharp rise in profits. Management, just as we expected they decided to increase the interim dividend per share of 0.4 cents that capital is so confident about the outlook. That's 0.25 cents per share, compared with last year's interim dividend is 60% higher. Rising profits and increased profits Capitol Health is a true 'Turbo cap' make stock. That said, we continue to buy up to 53 cents buying instructions. Capitol Health is trading at 53 cents to buy.

References

Financial Reports | Capitol Health Limited. 2015. Financial Reports | Capitol Health Limited. [ONLINE] Available at: http://capitolhealth.com.au/financial-reports/.

CAJ.AU Analyst Estimates & Rating – Capitol Health Ltd. - Wall Street Journal. 2015. CAJ.AU Analyst Estimates & Rating – Capitol Health Ltd. - Wall Street Journal. [ONLINE] Available at: http://quotes.wsj.com/AU/XASX/CAJ/research-ratings.

Dividend boost for ‘Turbo Cap’ Capitol Health | Port Phillip Publishing. 2015. Dividend boost for ‘Turbo Cap’ Capitol Health | Port Phillip Publishing. [ONLINE] Available at: http://www.portphillippublishing.com.au/2014/02/dividend-boost-turbo-cap-capitol-health/.

Capitol Health Limited | Morgans . 2015. Capitol Health Limited | Morgans . [ONLINE] Available at: http://www.morgans.com.au/Blog/2014/June/Capitol-Health-Limited.aspx.

Capitol Health Ltd posts record profit: Should you jump in? | Motley Fool Australia. 2015. Capitol Health Ltd posts record profit: Should you jump in? | Motley Fool Australia. [ONLINE] Available at: http://www.fool.com.au/2015/02/12/capitol-health-ltd-posts-record-profit-should-you-jump-in/.

Is Primary Health Care a buy? | Motley Fool Australia. 2015. Is Primary Health Care a buy? | Motley Fool Australia. [ONLINE] Available at: http://www.fool.com.au/2013/05/10/is-primary-health-care-a-buy/.

Primary Health Care - Services : Diagnostic Imaging : Services. 2015. Primary Health Care - Services : Diagnostic Imaging : Services. [ONLINE] Available at: http://www.primaryhealthcare.com.au/IRM/content/services_diagnosticimaging.html.


[1] Capital amount is given in AUD

[2] Trade Capitol Health Ltd Shares | Live Capitol Health Ltd Share Price | IG Australia. 2015. Trade Capitol Health Ltd Shares | Live Capitol Health Ltd Share Price | IG Australia. [ONLINE] Available at: http://www.ig.com/au/ig-shares/capitol-health-ltd-CAJ-AU.

[3] CAJ.AU Analyst Estimates & Rating – Capitol Health Ltd. - Wall Street Journal. 2015. CAJ.AU Analyst Estimates & Rating – Capitol Health Ltd. - Wall Street Journal. [ONLINE] Available at: http://quotes.wsj.com/AU/XASX/CAJ/research-ratings.

[4] Dividend boost for ‘Turbo Cap’ Capitol Health | Port Phillip Publishing. 2015. Dividend boost for ‘Turbo Cap’ Capitol Health | Port Phillip Publishing. [ONLINE] Available at: http://www.portphillippublishing.com.au/2014/02/dividend-boost-turbo-cap-capitol-health/

[5] Board of Directors | Capitol Health Limited. 2015. Board of Directors | Capitol Health Limited. [ONLINE] Available at: http://capitolhealth.com.au/board-of-directors/.

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