CSL Limited: A Meteoric Rise Despite Risky Bets Highlights Overvaluation

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About: CSL Limited (CSLLY), Includes: GRFS, RHHBY
by: Dulan Lokuwithana
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Dulan Lokuwithana
Research Analyst, Long/Short Equity, healthcare, restaurants
Summary

CSL Limited is diversifying the top-line amid stagnation in key markets.

Amid slipping cash flows, its acquisitions in China have increased the leverage.

Working in partnerships, the competitors are far more focused and well-funded.

However, CSL trades at a significant premium to its last five-year average TTM PE.

A premium in line with peers and the company’s guidance indicates a sizable overvaluation.

Investment Thesis

CSL Limited (OTCPK:CSLLY) has become the second-largest company in the Australian Stock Exchange after an excellent run in the past twelve months, where its share price shot up ~54% compared to