Mask and respiratory device manufacturer Fisher & Paykel Healthcare (ASX: FPH) took the market by surprise yesterday, unveiling a record full-year revenue result and smashing the company's increased profit guidance issued in February.

The company reported total revenues of NZ$556 million, up 11% in constant currency terms (ignoring the impact of currency fluctuations), and net profit after tax (NPAT) of NZ$77.1 million for the year ending 31 March, a 20% increase on the year prior.

Fisher & Paykel Healthcare is a leading company in the respiratory and healthcare industry, competing closely with products produced by Phillips Healthcare (NYSE: AEX) and Australia's own ResMed (ASX: RMD).

The full-year results were backed up with an optimistic forecast for 2014 profit to growth between 10% and 17% from growth in the company's higher margin products and new range of masks.

For most healthcare manufacturers, including companies like hearing aid manufacturer Cochlear (ASX: CCH), growth is driven by heavy investment in research and development to stay at the forefront of the market. Fisher & Paykel Healthcare allocated 8.2% of 2013's operating revenue to R&D, an increase of 9%, but the investment will result in a number of new products being released in the 2014 financial year.

The company will benefit over the long-term as populations age and there is increased spending on both private and public healthcare. Another medical trend is the increasing incidence of obesity prevalent in the west. Obesity is a major cause of obstructive sleep apnea, an ailment for which FPH provide respiratory devices.

Despite it being a competitive market, FPH's continued investment in R&D, as well as cost reductions by shifting production to lower cost countries closer to the company's international markets will set FPH in a good position to capitalize in the foreseeable future.

Foolish takeaway

The strong profit announcement pushed FPH's share price up 7.2% to $2.68. Shares are up 29% in the last 12 months, compared to the S&P/ASX 200 Index's (Index: ^AXJO) (ASX: XJO) increase of 27%. However the increase is still a long way from RMD's price appreciation in the last 12 months of 57.8%.

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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Regan Pearson owns shares in FPH.

The post Why you should bank on Fisher & Paykel Healthcare appeared first on The Motley Fool Australia.

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It's a big call to make, but ResMed (ASX: RMD) chairman Peter Farrell believes that the breathing apparatus manufacturer may just have found the "holy grail of healthcare delivery" with the mask systems the company provides. If his evidence is record company revenue and earnings, he could be right.

ResMed announced record revenue for the quarter to March 31 up 10%, and net income up 31% on the same period in 2012. The company announces quarterly results in accordance with its listing on the NYSE, but the news will be welcomed by investors with a 32% jump in diluted earnings per share (eps).

A key driver behind the result is ResMed's focus on a new breathing mask range. In comments to the Associated Press, Farrell described the masks as meeting various needs for sufferers of sleeping disorders like sleep apnea – improving patient quality of life, slowing the progression of co-morbid (or additional) disease and reducing healthcare costs. The company is planning to launch two new mask products this year which it hopes will keep the revenue flowing in.

Rival mask manufacturer Fisher & Paykel Healthcare (ASX: FPH) is also expecting a big jump in mask sales this year. In February the company raised its earning guidance from between NZ$69-72 million to NZ$75 million. The company is expecting a 14% increase in second half operating revenue, up from 8% in the first half of the financial year.

Breathing-derived sleep-disorders affect one in four people according to ResMed's Farrell, who estimates the company has only reached 5-15% of the potential market. This market includes individuals as well as public and private hospitals like Ramsay Health Care (ASX: RHC) and Primary Health Care (ASX: PRY). The masks can be sold at good margins, so increasing volumes without too much price discounting should continue to yield good results for both suppliers.  In 2012 RMD had a full-year operating margin of 21.5%, while FPH was slightly lower at 18%.

Foolish takeaway

Both companies have increased their spending on research to develop new mask products. ResMed's R&D spending was up 10% for the quarter, but it will be money well spent if it can continue to deliver strong growth.

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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Regan Pearson owns shares in FPH. 

The post Has ResMed found the 'holy grail' of healthcare? appeared first on The Motley Fool Australia.

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Make what you will of trans-Tasman rivalry, when push comes to shove Kiwis and Aussies love each other like family. And like family, there are always ups and downs. ANZAC Day is a day to remember both the sacrifices of our military service men and women, and the standing partnership between our two countries.

This enduring relationship has resulted in success for many dual-listed companies, and with this in mind here is an instant five-company portfolio featuring some of the best and brightest prospects with operations on both sides of the Tasman.

Auckland-based Fisher & Paykel Healthcare (ASX: FPH) designs, manufactures and markets healthcare devices to assist people breathing, competing against fellow healthcare company Resmed (ASX: RMD). The company has a well-managed growth strategy in place which has seen operating revenues grow 44% over the last five years. In February the company increased its profit guidance for the second half of FY13, with profits expected to jump 14% on the prior period, while the company's newly opened Mexico production factory will likely lower costs further going forward.

Origin Energy (ASX: ORG) is not dual listed, but owns 53% of New Zealand electricity producer and retailer Contact Energy (NZX: CEN) – one of the largest energy producers and retailers in the country. This holding adds a dollop of diversification to Origin's portfolio of Australia electricity generation and LPG production. The 37.5% stake Origin holds in $24.7 billion coal seam gas project APLNG gives the company prospects of strong cash-flows over the long term when the project comes online in mid-2015, as demand peaks.

Australia's only publicly listed health insurance company NIB Holdings (ASX: NHF) has made huge strides in the last five years, growing earnings per share a massive 29% per annum compounded. Last year the company announced a grand entrance into the NZ health insurance industry with its acquisition the New Zealand's second largest health insurance provider Tower Medical Insurance for $81.3 million. Despite NIBs share price rising strongly over the last six months the company still sells for a reasonable price-to-earnings ratio of 15.

SkyCity Entertainment (ASX: SKC) adds some spice to the ANZAC portfolio with a healthy dividend yield of 3.7% and growth on the cards. The company generates 60% of revenues from the flag-ship Auckland casino, which it operates as a monopoly, but also has casinos across NZ as well as Adelaide and Darwin. SkyCity has a number of expansion plans in place to grow revenues and have recently been scouting opportunities in the fast growing Philippines.

A final pick is financial group AMP Limited (ASX: AMP). AMP holds a strong brand on both sides of the Tasman offering financial services and life insurance. The company pays a worthy dividend yielding 4.7% and will produce strong cash flows over the coming years benefiting from the strong sales network and recent addition of AXA Asia Pacific.

Foolish takeaway

The company's selected would provide a well-rounded and diversified portfolio spreading across a range of industries from healthcare to gaming, as well as a mix of both growth and dividend focused companies. With many of the company's operating in a number other of regions outside of Australia and NZ there is also a degree of diversification in geography, something all good portfolios should try and embrace.

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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Regan Pearson owns shares in FPH and SKC.

The post Your instant five-share ANZAC portfolio appeared first on The Motley Fool Australia.

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As the coal dust settles on NSW state government's decision to limit coal seam gas (CSG) activities to at least 2 km outside urban areas, and implementing tougher checks on mines, the first casualty has emerged. On Wednesday Metgasco Limited (ASX: MEL), a Sydney-based CSG exploration and production company, announced the suspension of the company's Clarence Moreton exploration and develop program.

Despite the new regulations not being finalised yet Metgasco highlighted substantial uncertainty around the approval process as causing the development to be too inefficient to proceed with. The decision is a massive blow for both the company and investors who have committed nearly $100 million to the project over the last 10 years. The decision pushed Metgasco's share price down towards all-time lows of $0.07. The news will raise questions of other CSG explorers like Origin Energy (ASX: ORG).

Importantly for investors, it is a reminder of the huge and sudden impact regulatory changes can have on the companies we own, and how tough they can be to protect against. Cuts to government healthcare funding in both Australia and the US have had impacts on contracts held by companies including Fisher and Paykel Healthcare Limited (ASX: FPH) and Sonic Healthcare (ASX: SHL).

A more recent example is the government's media reform plan that would require potential mergers between media companies to first be blessed by a government bureaucrat to ensure they are in the public's best interest. With several media companies currently going through significant metamorphosis the reform is another potential stone to derail progress.

New reforms and regulations are being churned out all the time (I haven't even started on companies involved in liquor, tobacco and gambling…) but what protection is there for investors from policies that could change at any time?

The best protection investors can take is simple diversification across different industries, and ideally, different countries.  Spreading the risk across industries will protect against the chances of one particular policy change causing long term damage to a company's source of earnings and to a personal portfolio. It's the old cliché of not putting all your eggs in one basket, and is as important as ever in an election year.

Foolish takeaway

For the most part regulation and policy changes aim to correct problems society faces. However in the case of Metgasco and others, the changes can have a negative impact on company earnings; a risk which can be diluted by holding a range of quality companies across different industries and even geographies.

The Australian Financial Review says "good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit." Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Regan Pearson owns shares in Fisher & Paykel Healthcare Limited.

The post What investors can learn from Metgasco appeared first on The Motley Fool Australia.

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