The Sigma Healthcare Ltd (ASX: SIG) share price could be a really appealing investment for a number of reasons.
The business may still have the name of Sigma Healthcare, but the biggest profit generator within the business is now Chemist Warehouse, which is the biggest pharmacy business in Australia. It also owns Amcal, Discount Drug Stores, and Optometrist Warehouse.
Following the merger earlier this year between Sigma Healthcare and Chemist Warehouse, I think the business is a compelling opportunity. Let's get into why I'm optimistic.
Defensive earnings
With the current uncertainty because of global events, some investors may be drawn to the defensive nature of the business.
I think most Chemist Warehouse customers will continue shopping at the stores (or online), whether the world is going through geopolitical uncertainty or a downturn.
Having defensive, dependable earnings in the current circumstances is appealing because of how consistent the profit can be, which could help support the Sigma Healthcare share price.
When a defensive business can grow earnings, it becomes even more attractive.
Strong core growth
Sigma says that Chemist Warehouse has a proven track record of sustained strong domestic growth and it's under-penetrated in certain states, providing it with organic growth opportunities.
Management think annual new store openings for Chemist Warehouse in the short to medium-term will be in line with the past five years. The company also believes there is an opportunity to expand the Amcal and Discount Drug Store networks through an 'enhanced retail offering.'
The business reported that its normalised operating profit (EBIT) for the group was around 36% for the nine months to 31 March 2025, which is an excellent growth rate to help power the Sigma Healthcare share price higher if that continues.
Domestically, the business has potential and there's also significant potential overseas.
International growth
The business currently has 56 stores in New Zealand and has intentions to grow in a number of other countries. At the end of Chemist warehouse's first half of FY25, it had 12 locations in Ireland, 11 locations China, and two locations in Dubai.
Chemist Warehouse says that the New Zealand experience demonstrates the transportability and acceptance of the Chemist Warehouse brand and value proposition in new geographies.
It's taking a "measured" approach to expansion in current geographies and it's evaluating opportunities to expand into new geographies. Overall, the international segment could play an important part in the performance of the Sigma Healthcare share price in the coming years and could allow the business to become much bigger.
