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  • Writer's pictureMarcus Bogdan

Portfolio Change - Buy Resmed (RMD)

Updated: Oct 6, 2023

Blackmore Capital Blended Australian Equities Portfolio

RMD is a manufacturer and distributor of Continuous Positive Airway Pressure (CPAP) machine for the management of respiratory disorders, primarily Sleep Apnea and Chronic Pulmonary Disease.

The share price has fallen sharply over the past quarter (~-25%) following a disappointing 4Q23 result and the concern that the pharmaceutical threat of the use GLP-1 drugs as an alternative form of treatment for obesity could disrupt the CPAP machine market.

RMD remains highly profitable with operating margins at ~30% and a Return on Equity (ROE) of ~25%.

RMD is trading at a >15% discount to its 5-year-average Price to Earnings Ratio whilst offering an attractive profile of earnings growth over the medium-term.

RMD’s balance sheet is conservatively positioned with interest cover >20x and a Net Debt to EBITDA ratio of ~1.6x.


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