Bastide Le Confort Médical continues to grow

In a market plagued by doubts, investors are clinging to safe stocks. Health values ​​are one of them. The health crisis highlights the importance of their business, and they can rely on structural factors to support their long-term growth. Bastide Le Confort Médical, a company specializing in home care for the elderly or sick, fits fully into this framework.

His business is doing well. The annual results have provided the best proof of this. Revenue increased 14% in the 2019/2020 fiscal year ended June 30 to $ 382.7 million thanks to strong sales acceleration in the fourth quarter. By segment, it was the “Home care” activity that drove growth with a 21.8% increase in billings, while sales of the “Respiratory” and “Nutrition-Perfusion-Stomatherapy” divisions grew on the period of 11% and 9% respectively. The franchise network continued to develop, with the opening of 6 stores. It now has 91 stores, knowing that the goal is to reach 120 to 150 franchisees eventually. Despite a less favorable product mix, current operating income amounted to € 32.8 million, up 15.3%, showing an operating margin of 8.6%, in line with forecasts. As for net profit, it stood at 12.6 million euros compared to 5.1 million a year earlier.

A growing market

On the other hand, the financial situation remains still tense, but under control, with net debt (210.7 million excluding rental debts) representing 2.64 times the amount of equity. No problem, however, the group is respecting its banking covenants, and as of June 30, it had available cash of 35.4 million.

The current financial year promises to be equally favorable. The activity is still well oriented, driven by sales of consumables and medical devices. With the integration of the five companies acquired in July (3 in France, 2 in Spain), the group intends to exceed the € 400 million turnover mark and expects a current operating margin of between 8, 5% and 9%. Small-scale external growth operations are not excluded in order to strengthen the group’s positions in its strategic businesses.

The share capitalizes 19 times the estimated net profit for 2020/2021 (18 million euros), which may appear reasonable in view of the group’s growth. But the activity of the leader in home healthcare services is based on a growing market (it represents around 9 billion in France) due to the aging of the population, and on recurring sales of consumables and services, in particular for patients with chronic pathologies. The development of its activity in Europe, of its franchise network, but also of home care (as a collateral consequence of the current health crisis) constitute additional support. The title has rebounded strongly over the past six months (+ 50%). In this context, we advise to take advantage of any downturn resulting from profit taking to invest in the stock over the medium term.

Our opinion: Buy Bastide Le Confort Médical at 46 euros to target 54 euros in the medium term. Code: FR0000035370.


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