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  • Writer's pictureMarcus Bogdan

Portfolio Change - Add Goodman Group & Ramsay Health Care

Blackmore Capital Blended Australian Equities Portfolio



Increase Goodman Group (GMG.AX)


We have added to the existing holding in Goodman Group. Like many growth companies, the stock has de-rated during 2022, however unlike many its earnings expectations have increased over the same period. GMG recently updated the market on its 1Q23 results, reporting that its core markets of logistics properties in major urban centres continue to experience rental growth and consistent demand for new development space, with net property income growth of 4.0%, occupancy of 99% and assets under management of $77.8b up 6.2% year on year.


Company guidance for FY23 operating earnings per share growth of 11% to $0.93 was reiterated and market consensus is consistent with this. We note that the market’s FY23 eps forecast is now 6.5% higher than it was at the start of 2022, yet the stock price is 33% lower year to date and the current FY23 price earnings ratio of ~19 times compares to its peak of more than 30 times. GMG’s balance sheet retains considerable capacity with look-through gearing of 19.6% and an interest coverage ratio of 15.3 times on the same basis. With lead indicators of inflation in the US rolling over and bond yields easing, those companies that have de-rated yet continue to deliver earnings growth should be well positioned compared to the broader market as earnings moderate into FY24.


Increase Ramsay Health Care (RHC.AX)


We have added to our position in Ramsay Health Care (RHC) post its 1Q FY23 release, which saw activity levels improve across all regions over the quarter. RHC September quarter surgical activity was ahead of market estimates, with Australian surgical admissions in September up 8.3% on the previous corresponding period. Positive momentum has continued into October, where RHC’s surgical run rate in Australia accelerated to be 14.2% higher than in July 2022. We expect activity levels to remain elevated supported by lengthy waitlists in public hospital waitlists, notably more than 15 months for Category 3 surgery.

RHC’s FY24e EPS consensus of $2.67 exhibits higher growth (+44%) versus ASX200 EPS growth of 2% for the same period.

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