Healthscope positioned for continued momentum

TPG and The Carlyle Group have sold A$810m, or 53% of their A$1.8bn stake in HSO (will retain a 17.8% holding). Our Investment view is the company has a solid track record of strong earnings growth of 13% over the last 4 years, along with stable, high CF generation and high cash conversion (98.5% over the last 4 years) on effective working capital management. We view the company as a core holding and well positioned for continued momentum, targeting mid double-digit earnings growth through FY18, operating margin uplift of 200bp on efficiency gains, continued strong cash conversion and a dividend payout ratio c70% (equating to a 2.5-3% yield). Healthscope (HSO, Add, Price Target A$3.22)


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Scott Power
Senior Analyst
Morgans

Senior Analyst at Morgans covering healthcare, life science, telecommunications, technology and media. I've spent the last twenty years investing in and researching emerging companies and have developed a wide network of contacts across these...

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