Austco Healthcare Limited

ASX:AHC

Austco Healthcare Limited

ASX:AHC
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$0.240 (-1%)
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#9
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Reports (7) My Report Forum Investors
Forum Topics AHC AHC H1 2024 Results

Pinned straw:
JPPicard
Added 9 months ago

I’ve only looked at the results quickly from being tied down with work, but I make it that the TLDR on Austco’s results is that they are mixed with growth that is yet again to come ‘in the near future’. 

It’s not like they’re making this up because the continued and impressive growth of the order book supports this (up $5M to $44M total since reported at the AGM). But still, I’m a little surprised given I thought management had hinted they would start to chip away at the order book. 

Perhaps someone that’s more properly read could shed a little more light and offer their opinion. Certainly nothing worrying here with top line of 11%, but thought we might get more, especially considering recent acquisitions (although I admit I reckon they would have only just been integrated and barely had time to add). 
Noddy74
Added 9 months ago

Hey @JPPicard , similar to your Smart Parking straw, I was very much in line with your thinking in regard to your Austco straw. I'm very much a visual thinker and when it comes to these types of companies (and mining services....and Cogstate) I think of the order book as the top of the funnel. Ok, not the top because you have the tender book and then the pre-tender book...but those get increasingly theoretical, so the order book is the top of the funnel...that matters. In that regard, happy days, the top of the funnel is filling faster than it's coming out the bottom i.e. revenue. Sui evidenter, you have a growing company.

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However, it does feel like the bottom of the funnel is constricted. It grew...but at a much slower rate than the order book. They're almost at a year's worth of order book...better than the alternative but where's the constriction? Is it at their end, or is it at the client's end? And if the latter what is the quality of the order book?

I'm not sure whether the market reaction today was a reflection of that or whether it was more simply around the fact earnings didn't grow on pcp. It had earnings and FCF and revenue growth and an acquisition to swallow and had forecast they are investing for growth, so weighing that all up it's a solid pass...but questions to answer. Pity they don't want to come on Strawman to answer them....

[Held]

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JPPicard
Added 9 months ago

Nice ???? one @Noddy74 aa always.

im keen to see what the full year looks like now. I have good confidence in the team.

8
Wini
Added 9 months ago

@Noddy74 once again find myself nodding along to one of your Straws. The result from AHC was fine if the context was where it has been the last few years. Covid impacting revenue delivery, but the top of the funnel growing nicely and the potential for that to make it's way down the P&L over time. It seemed like FY23 was the end of those impacts with the 2H in particular quite strong and just when AHC looks set for another breakout year...we are back growing the order book faster than revenue.

Ultimately it's a lumpy business, you have to be a harsh critic to judge them on any one half and the progress made over the last few years has earned Clayton and co the right to see what the 2H looks like. But you are correct it's all theoretical if it just sits in an open order book, never closing.

My final comment/observation that ties into the 2H being an important period to see some operating leverage return is the balance sheet is not in a bad shape by any means, but AHC has just committed to outlaying another $5m on a new acquisition which needs to be funded somehow. They have just enough cash and have a working capital facility to fall back on as well, but a lumpy revenue and cash business with a very tight balance sheet is asking for problems. Hopefully a few projects have been completed in this new year, some of that order book is eaten into, AHC has recorded a bunch of revenue and collected the cash and the problem solves itself!

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