Recent changes to the Blended Australian Equities Portfolio
Increasing Healius Ltd (HLS) Healthcare is becoming a central pillar of bipartisan support in the upcoming federal election. Both the Liberal/National Coalition and ALP have committed to increasing funding for diagnostic imaging (DI) and general practitioners (GPs). Each party is either matching the other party's policy commitments or providing additional funding measures in primary care. Undoubtedly, there is growing recognition that primary care remains a critical pathway in the early diagnosis and prevention of chronic disease. The primary healthcare providers Healius Ltd (HLS) and Sonic Healthcare (SHL) are well placed to be beneficiaries of this expanded opportunity. We added to our position in Healius as it is in the early stages of an operational turnaround in its general practice, diagnostic imaging and pathology businesses. HLS offers direct exposure to the growing theme of primary care at a time when its valuation remains undemanding, trading on an Enterprise Value/EBITDA multiple of less than 9 times in FY20. Reduced Nearmap Ltd (NEA) We have reduced the portfolio’s holding of Nearmap. Our investment thesis for the stock is unchanged and we remain positive on its North American expansion and the deployment of additional growth capital following the equity raising in late 2018. However, with a c120% share price rally since the start of the year, Nearmap is one of the market’s strongest performers and we consider it prudent to take some profits at this stage. We retain a healthy stake in the company as a key long term growth exposure while managing risk from a portfolio perspective.