The note Ridgewell published in late November 2012 explains the move to a buy rating was made in anticipation of an "upgrade cycle" that could last 18 months.
F&P Healthcare lifted profit guidance on February 20 the following year and hasn't look back since.
New product launches, successful hedging and the cost-reducing benefits of a Mexican factory have driven a string of earnings upgrades and record financial results that have pushed the stock price ever higher.
Ten thousand dollars invested at $2.50 a share in November 2012 would have grown to more than $27,000 by yesterday afternoon.
Room to grow
Ridgewell maintained his buy rating on F&P Healthcare "with increased conviction" after last week's reporting of a $113.2 million annual net profit, well above the company's guidance range of $105 million to $110 million.
He's also bumped up his 12-month target price by 15 per cent to $7.94 as a result of factors including a weaker exchange rate with the greenback, strong margin expansion and the impact of the company's move to direct distribution of its respiratory acute care products in the US.
In a note Ridgewell points out that the full-year profit would have been $116 million if not for a $3.5 million pre-tax write-off related to the reclassification of interest rate swaps.
The company didn't even bother to promote an adjusted net profit figure, excluding the write-offs, in the results announcement. Its bottom-line was impressive enough.
The company is in a sweet spot as it reaps the rewards of heavy investment in research and development (9.7 per cent of operating revenue last year). There are risks, such as a New Zealand dollar run against the greenback or unforseen competitive pressure. But all indicators point to the good times rolling on, while demand for its shares is likely to be boosted by the company's entrance into Australia's S&P/ASX 200 index last Friday.
F&P Healthcare has given guidance for a net profit in this financial year of $125 million to $130 million from revenue of around $750 million. Craigs is forecasting a $132 million bottom-line result.
Back to NZX 50?
Refining NZ has floated the possibility of returning to the NZX 50 on the back of increased liquidity provided by Chevron NZ's exit from its shareholding in the firm.
The local division of the American oil giant offloaded the shares last week to retail and institutional investors through a block trade that preceded Tuesday's announcement of Z Energy's plans to acquire Chevron's remaining assets, including its Caltex and Challenge service station operations, for $785 million.
Refining NZ was removed from the NZX 50 in December 2012 after failing to meet the minimum liquidity requirements, but Chevron's departure has increased the company's free float to 46.3 per cent.
Mobil, Z Energy and BP still hold a combined stake of 46.1 per cent in Refining NZ, whose shares have gained about 45 per cent since November as oil prices, which are a major input cost, have plunged.
Meanwhile, Z shares closed at $6.04 last night, below the record $6.20 they hit on Tuesday following the news of the planned Caltex acquisition. Some market players are questioning whether the deal - which would give Z a 49 per cent share of the local fuel market - will get Commerce Commission approval to go ahead.
Different paths
A transtasman divergence is emerging around equity crowdfunding regulation.
Australia appears to be taking a more conservative approach, with its Productivity Commission recently recommending a two-tiered structure that would separate retail and professional investors.
The former group would have the amount of cash they could invest into equity crowdfunding offers capped at a certain level, expected to be between A$20,000 to A$25,000.
No such cap exists in New Zealand, where equity crowdfunding became possible last year following an overhaul of securities legislation. Companies can raise up to $2 million in any 12-month period.
Concerns have been raised by local market commentators about whether Kiwi investors fully understand the risks involved with this kind of investing.
