Pinned valuation:
Pretty stable, growth business. Has long term tailwinds for the need for increased testing for personalized medicine and potential for reduced costs due to AI. Further rollout global (organic and inorganic) plus some cost synergies to come through. Pretty recession proof earnings. Some earnings are regulated as the only detractor.
Going to use a dividend growth model as mature business, stable dividend growth in the past.
$1.04 in dividends (last interim and upcoming final).
Going to include the value of franking is $1.49 as i’m entitled to it.
Want at least a 10% return and think it can grow at 5%pa for the foreseeable future given the tailwinds.
1.49/(0.1-0.05) = $29.80
If I buy now I get the $0.62 dividend - plus franking gets $0.89 in a couple of weeks - gets me to $30.69 (29.80+0.89).
I'd like it cheaper (mid to high 20s) but for a defensive business think it's reasonably priced. Not going to make me rich overnight but good for the SMSF long term.
On market purchases recently by insiders also gives some comfort.
I've been thinking about SHL in much the same way. I have had chances to open my account over the years but never pulled the trigger (most recently before the 1H results when it dipped to $28 but I was greedily waiting it out for "just a little lower" - it popped hard after reporting subsequently).
It is kind of fully priced at these levels for a low growth defensive business, but it is a great one to have in the bedrock of a diversified portfolio. I think the AI tailwinds here are also generally underappreciated.