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Monash IVF (MVF)

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Question asked 05/07/2025

Monash IVF (MVF)

Dear MM, I noted you are buying Helia Group, HLI, for the active income portfolio after its recent drop in price. I was wondering what you thought of Monash IVF, MVF, as an option for this portfolio or as a high risk/reward opportunity. There may be similarities to HLI. Good dividend, possible SP recovery, and a reasonable response (?) to their second mistake. Hopefully they don’t come in threes! Best regards Mark Hi MM, I'd appreciate your view on MVF as a growth/dividend stock. I know they have had recent issues that have impacted share price but are these issues systemic or can they be addressed? Thanks.

Answer

Hi Mark,

There are some similarities in performance but they are very different businesses. HLI holds a heap of regulatory capital, so when earnings take a hit, it creates the probability of capital returns & buy-backs (the latter of which reduces the EPS impact). We also know broadly what the earnings hit will be.

MVF on the other hand will just have an earnings hit that’s hard to quantify at the moment. Who will use them after multiple major issues? What will the regulatory response be and how much will it cost (one offs) and ongoing, impacting the financial economics of the business into the future.

The company has taken a huge reputational hit leading to growing pressure for tighter regulation of Australia’s fertility industry, plus of course there may be additional legal challenges lurking in the shadows.

We think its too early to consider MVF as a turnaround story.

Ultimately, we would only view MVF as a potential takeover opportunity. We think if the pain continues to build for MVF, private equity would take a look, get the company back behind closed doors for a few years, rebrand it and reposition it in the market – that would be the only play here in our view.

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Monash IVF Group Ltd (MVF)

LAST UPDATED 03/07/2025 14:22

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