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CSL: Australia's Best Growth Business?

Mar. 05, 2018 11:34 AM ETCSL Limited (CSLLY)3 Comments


  • CSL, a plasma and blood products business, has delivered excellent long-term performance for shareholders.
  • Recent results saw 13% revenue growth and over 30% net profit growth.
  • CSL is a rare combination of a defensive business that offers strong capital appreciation potential.

Australia is home to a few select high-quality gross businesses, and CSL Ltd. (OTCPK:CSLLY) may be amongst the top of the bunch. CSL is a plasma fractioning business that was privatized by the Australian government in the mid-1990s. Over the last 15 years, CSL has been an exceptional performer netting investors a compounded return of close to 27% per annum.

CSL's core business is in blood collection, fractionization and commercialization of plasma proteins and constituents derive from blood products. While this may not sound that 'sexy', it's a business with high regulatory barriers to entry and one that has significant compliance and execution challenges. That means that new competitors don't appear overnight, and that the industry essentially functions like an oligopoly.

There are only three players of meaningful scale, and CSL is the marketshare leader in the space. Baxter and Grifols are the other players in this cozy triumvirate. Together, they make up 90% of the plasma collection industry.

The market has traditionally been characterized by very limited price competition and discipline with respect to capacity. In many ways, the plasma collection industry operates in a similar manner to the mining industry where participants need to be disciplined and with respect to overcapacity i.e. too much plasma collection leads to lower prices and conversely, too little plasma collection means high prices can be attained at the expense of lower revenue. As the market share leader, CSL tends to be the volume control in the market and, if recent results are suggestive, has been doing a very good job.

CSL recently delivered results that showed revenue growth was up an impressive 13% year-over-year, not bad for a fairly mature business. Even more notable was that profit was up an impressive 35% year on year. CSL is also a very financially disciplined business that has significant pricing

This article was written by

Integrator profile picture

I am an investor who is focused on disruptive businesses that are transforming industries lead by visionary leaders with substantial skin in the game. I have spent nearly 20 years in a formal capacity in various investment banking and corporate advisory roles, having attained my MBA with a concentration in finance. This led me toward a path in Venture Capital and working with entrepreneurs building new technology businesses, and I have had the opportunity to not only invest in a number of amazing privately held businesses, but also play a meaningful role in growing several of these early stage enterprises as well. I am now focused on applying my lens of private market disruption and leveraging secular tail winds to the public markets. This was a journey which I started with my public Project $1M portfolio series and which I have deepened with my marketplace service, Sustainable Growth

Analyst’s Disclosure: I am/we are long CSLLY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (3)

Peter Balint profile picture
Yes, a very good article, straight to the point, no mind-numbing useless garbage.
Holmes Osborne profile picture
Good article. Amazing this flies under the radar for so many Americans.
Fantastic article. Added to my “watchlist”
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