How To Buy CSL Shares: The Complete Guide

CSL Limited was founded in 1916 as Commonwealth Serum Laboratories, an Australian Government body focused on vaccine manufacture before it was privatised, and eventually, went public on the ASX almost 30 years ago. For Australians who have watched the evolution of the country’s biotech industry, CSL’s trajectory serves as a testament to the sector’s potential for growth and innovation.

When CSL debuted in the stock market in 1994, its shares were priced at $2.30 each. However, in 2007, the company implemented a three-for-one share split. Adjusting for this split, the effective IPO price becomes 76.7c.

At the turn of the millennium, the company’s shares were priced in the lower end of the double-digit range for much of the period between 2000 and 2010. The share price rose slowly, marking a consistent upward trend over the decade, with few notable price surges.

The subsequent decade, from 2010 to 2020, was particularly notable for CSL. The company’s share price experienced a significant surge, marking its presence in the triple-digit realm by crossing the $100 mark in 2015. The company’s all-time high came during the pandemic in 2020 when the shares touched an all-time high of over $340. Such a meteoric rise in value highlighted CSL’s growing prominence in the biotech sector and its expanding global footprint.

Nonetheless, the pandemic was double-sided for CSL. Due to the financial market collapse triggered by the Covid-19 pandemic and ensuing economic instability, there was a consolidation phase for CSL shares. The prices mainly traded sideways, with a slight downward trend since the all-time high in 2020.

In early October, CSL faced a shareholder backlash over performance with more than 20% of shareholders voting against the company’s most recent remuneration report, citing concerns over small dividend payouts, the acquisition of kidney disease treatment company Vifor, and challenges to the bottom line owing to inflationary pressures.

As of 11 Oct, 2023, shares sat at $255, but by April 2024 were at $281.830. With a market capitalisation of $135.33 billion, a price-to-earnings ratio of 14.91, and a dividend yield of 1.35%, CSL continues to be a significant player in the biotech scene in Australia and globally.

Share investing is an exciting journey, but it demands a combination of research, understanding, and vigilance. Investing in an established company, such as CSL, is no different. Here are some important factors to explore and understand before taking the plunge:

Understand the Financial Metrics:

• P/E Ratio (Price-to-Earnings): The P/E ratio compares the company’s share price to its earnings per share. A higher P/E can indicate that the market has high hopes for a company’s growth. A lower ratio might mean the opposite. However, context is essential. Compare the P/E ratio with other companies in the biotech sector to get a holistic view. For comparison, one of CSL’s ASX-listed competitors, Sonic Healthcare Ltd, has a P/E ratio of 27.12 as of April, 2024.
• Dividend Yield: This metric represents the dividend payout in relation to the share price. A higher dividend yield can be attractive for those looking for regular income from their investments. Still, it’s crucial to ensure that dividends are sustainable. CSL’s annual dividend yield sits at 1.35% as of April, 2024.
• Market Capitalisation: It gives a quick snapshot of a company’s overall value. A higher market cap generally indicates a more established, stable company, but viewing it in conjunction with other metrics is essential. CSL has a market cap of $135.33 billion and is ranked third on the ASX, making it one of the top three biggest companies listed on the ASX as of April 8, 2024.

Understand the economic outlook: Economic factors can significantly impact the biotech sector. For instance, changes in healthcare policies, global health crises, or significant advancements in medical technology can influence CSL’s performance. Other factors, such as rising interest rates, can also affect the stock market in general, indirectly impacting CSL’s share price.

Explore company financials: Before investing, familiarise yourself with CSL’s financial statements. These include the balance sheet, income statement, and cash flow statement. Look for consistent revenue growth, manageable levels of debt, and healthy profit margins. Investors can find these statements in CSL’s annual report or official website.

Check out the competition: The biotech sector is bustling with innovation, and many companies are vying for market share. Analyse how CSL stands in relation to its competitors, its unique selling points, and any potential threats from emerging players. Many of CSL’s competitors are listed on overseas exchanges, so be sure to look beyond the ASX.

Buying shares using a traditional broker or an online share trading platform often boils down to individual preferences, investment knowledge, and the level of involvement one desires in the trading process. Here are some key differences:

Traditional Broker:

• Personalised service: Brokers often provide a tailored experience. They understand your financial goals and risk appetite, offering advice accordingly.
• Research and insights: Many brokers can access in-depth market research and insights, which they share with their clients, helping them make informed decisions.
• Hands-on approach: For those unfamiliar with the stock market or those who prefer to avoid managing every detail, brokers can handle most of the trading process for you.
• Cost: Traditional brokers typically charge higher fees than online platforms. These can be flat fees, commission-based, or a combination of both.

Share Trading Platform:

• Flexibility: Online platforms offer flexibility as you can trade anytime and anywhere.
• Lower fees: Most online trading platforms have lower fees than traditional brokers, which can benefit those trading frequently or with smaller amounts.
• Resources: Many platforms offer a range of tools like charting software, news feeds, and educational resources to help investors make decisions.
• DIY approach: Using a trading platform requires a more hands-on approach. Investors are responsible for conducting their research, deciding what to buy or sell, and executing the trades.

Your choice between a traditional broker and a share trading platform should align with your investment goals, the level of assistance you seek, and the fees you’re willing to pay. Those seeking a more personalised touch and guidance lean towards brokers, while independent and tech-savvy investors find online platforms more appealing.

Whether you’re a seasoned investor or just starting, purchasing shares can seem daunting. Here’s a straightforward guide on how to buy CSL shares:

1. Research: Start by understanding CSL as a company, its financials, and its position in the market. Familiarise yourself with the key metrics and recent news to make an informed decision.
2. Choose a platform:
   1. Brokers: If you prefer expert advice and a hands-on approach, consider engaging a traditional stockbroker.
   2. Share Trading Platforms: For a more DIY approach, online share trading platforms might be suitable.
3. Open an account: You’ll need to open an account with your chosen platform or broker, which usually requires providing personal information, proof of identity, and sometimes a minimum deposit.
4. Deposit funds: Once your account is active, deposit the amount you wish to invest. Most platforms offer multiple methods, such as bank transfers or card payments.
5. Search for CSL: Use the search function to locate CSL Limited on your chosen platform.
6. Place your order: Decide on the number of shares you wish to purchase and place your order. You can opt for a ‘market order’ (buying at the current market price) or a ‘limit order’ (setting a maximum price you’re willing to pay).
7. Review and confirm: Before finalising, review your order to ensure everything is correct. Confirm your purchase.
8. Monitor your investment: Once you own CSL shares, monitoring their performance and the broader market is essential. Stay updated with CSL’s announcements and consider periodic reviews of your investment strategy.

Deciding to sell shares is as significant as the decision to buy. Here’s a structured approach to help you navigate this crucial decision:

Re-evaluate your investment goals: Remember the reasons you initially invested in CSL. Has your financial situation changed? You may have reached your targeted returns or need money for another venture. Revisiting your initial objectives can offer clarity.

Examine CSL’s recent and past performance: While past performance doesn’t always indicate future results, it can provide insights. Analyse CSL’s recent quarterly results, growth trajectory, and any strategic changes in its business model. Comparing these against your initial expectations can help in decision-making.

Consider tax implications: In Australia, selling shares has capital gains tax (CGT) implications. However, there’s a silver lining. If you’ve held onto your CSL shares for more than 12 months, you may be eligible for a 50% CGT discount, meaning you’ll only get taxed on half of your gain. Ensure you understand this benefit and consider consulting a tax advisor to grasp the full financial implications.

Keep emotions at bay: The stock market is a roller-coaster of highs and lows, and it’s natural to feel a rush of emotions. However, making decisions based on rational analysis rather than emotions is vital. Whether it’s the euphoria of hitting an all-time high or the panic during a market downturn, remember to stay grounded and revisit your research and strategy.

Seek expert advice: If you’re on the fence, consider seeking advice from a financial expert who can provide an outside perspective.

Selling shares is a significant decision that is influenced by a range of factors. Regularly reviewing your investment, staying updated with CSL’s performance, understanding the tax consequences, and ensuring emotion doesn’t cloud judgement are pivotal steps in making an informed choice.

Selling shares can often be a more straightforward process than buying them. Here’s a quick guide on how to sell your CSL shares:

1. Log in to Your Account: Access the platform or broker where you purchased your CSL shares.
2. Locate Your CSL Shares: Navigate to your portfolio and find your CSL holdings.
3. Select ‘Sell’ Option: Most platforms will have a clear ‘Sell’ button or option next to your CSL shares.
4. Enter the Quantity: Decide how many shares you wish to sell and enter that number.
5. Choose Order Type: Opt for a ‘market order’ to sell at the current price or a ‘limit order’ to set a minimum sale price.
6. Confirm the Sale: Review all details to ensure accuracy, then confirm to finalise the sale.
7. Receive Funds: Once sold, the proceeds will typically be deposited into your account linked with the platform or broker.

Remember to record the sale for tax purposes, especially considering the potential capital gains tax implications.