CSL’s market cap beats NAB’s as biotech’s shares hit new high

The biotech has quietly overtaken big four lender NAB in terms of market capitalisation and is on track to pass ANZ.

CSL chairman Brian McNamee. Picture: Janine Eastgate

CSL has quietly overtaken big four lender National Australia Bank in terms of market capitalisation, as shares in the globally focused biotech surged to a record high with the help of a weaker Australian dollar.

The move underscores the changing fortunes of the big four banks, which have seen their shares come under pressure amid a slowing housing market and the launch of a royal commission. At the same time the nation’s biggest banks have also reversed their offshore growth strategies, offloading assets while also slimming down in the local market.

Shares in the Melbourne-based CSL surged to $176.08 yesterday — their highest level since listing in 1994 — which boosted its market capitalisation to $79.7 billion. That takes it above NAB’s $77.8bn valuation.

CSL, which is a global leader in blood plasma products and develops influenza vaccines, is closing in on third-ranked bank ANZ, which is valued at $81.4bn.

Peter Morgan, a private investor and former Perpetual fund manager, who has followed CSL since its market listing, said the biotechnology firm was a good example of a company retaining earnings and growing sensibly.

“They have also made some good acquisitions and there is a lot of pride in the organisation,” he said.

“It is not like CSL has been protected by a monopoly or oligopoly position like the banks or Telstra. They have had to make their own success and the market is rewarding them for that and is happy to pay them a premium.”

One leading healthcare analyst who declined to be named said CSL’s success had been a combination of high demand for its products and the fact that its competitors were unable to take up market share.

The analyst also said CSL’s recent market growth had come in above expectations, as underlying demand had proved to be higher.

Mr Morgan added that CSL was a good study in how to do things right, saying that it had started its listed life with one of the best managing directors he ­believed the market had seen. Brian McNamee led CSL from Australian government ownership through privatisation and to its listing on the Australian Securities Exchange.

He transformed the company into a global industry leader — 90 per cent of its revenue is now generated outside Australia. He stepped down in 2013 but returned to CSL this year as its chairman.

When Mr McNamee first joined the company, CSL had been assessed by a consultant as being worth almost nothing. Shortly after he took charge of the federal government’s little-known blood processing operations in the early 1990s, the Melbourne-based laboratories were about to be broken up and sold.

Market capitalisation C S L

His pitch to government was to keep the company together — including its sprawling Broadmeadows labs in Melbourne’s north — but get it out of government ownership.

The company was renamed CSL and in 1994 shares were sold in an initial public offer at $2.30 each, valuing the company, which held a long-term contract to manufacture blood products for the government, at nearly $300 million.

For anyone who bought $10,000 worth of shares in CSL when it listed, their investment would be worth about $1.7m today.

Mr Morgan said that Mr McNamee was underrated by the market when CSL listed 24 years ago, adding that the company struggled in the first six months.

“No one really understood blood, which was the cash side of the business, but it then got a few breaks,” he said. A big break was its involvement in the development of the world’s first cervical cancer vaccine, HPV, which is now used globally.

CSL’s chief executive Paul Perreault has described the company as a “quiet performer” and Mr Morgan said the biotech did not “grandstand” about its own success.

“If you’re sensible and got skin in the game and pride in the game, you can be globally successful,” Mr Morgan said.

He added that the market was crying out for another CSL.

“Superannuation in Australian has $2.3 trillion today, when CSL came to the market super was probably a tenth of that, or less.

“There is a lot of money out there looking to invest successfully and it can’t keep going into banking and mining.”