The Point

ASX midcaps: Why medical imager Pro Medicus has captured our attention

Sam Hupert started as a GP in 1980 and within a couple of years realised the then-nascent world of computing would have a big impact on medicine.

Within three years he’d started Pro Medicus, an imaging software provider working with hospitals, imaging centres and health care groups.

Today the ASX-listed group – held in Pendal Midcaps Fund – is worth more than $6 billion.

The global diagnostic imaging market is worth some $US28 billion globally – and growing at 4.9%, according to Grand View Research.

Growth drivers include an increasing prevalence of lifestyle-related diseases, rising demand for early detection tools, speedier diagnosis, government investment and expansion into developing nations, Grand View reports.

Pro Medicus is mainly in radiology now, but its technology could be used in cardiology, ophthalmology and pathology and all areas of reflected light, says Pendal equities analyst Oliver Renton.

Tim Hext: Where the RBA’s head is at right now

The RBA seems happy with 3.85% for a few more months – and will likely wait for stronger data before considering another hike.

But lagging data like employment – and very laggy data like wages and inflation – is driving decision-making at the moment, cautions our head of government bond strategies Tim Hext.

“This risks a policy mistake of overtightening. As the RBA itself expects, wages won’t peak until later this year.

“I am reminded of the last time this happened in February and March 2008. Credit wobbles had been building all through 2007. Bear Stearns was teetering.

“Yet the high CPI print of January 2008 – on the tail of a mining boom – saw the RBA hike twice to 7.25%. Wage growth didn’t peak til 2009.

“I’m not suggesting another GFC looms. The financial system has been massively redesigned since then.

“But it shows that relying on inflation and wage numbers to set monthly policy can be dangerous, leaving you well behind the current pulse.”

US inflation: 4pc on the horizon, but 2pc still a way off

Last night’s US inflation data was “mildly encouraging”, says our head of bond strategies Tim Hext.

The headline monthly (0.4%) and annual (4.9%) numbers were as expected.

The mildly encouraging bit – which saw yields fall and equities rally – comes from excluding rent data, which tends to swamp the US CPI (it accounts for 41 per cent, compared to 25 per cent in Australia).

This measure came in at 0.11% – the smallest monthly increase since July last year. So for the first time there are signs we may settle at a pace closer to the Fed’s 2% target.

“Markets now believe the Fed is done with hiking,” says Tim. “Without a new surge in employment or inflation this looks fair.

“US markets cannot stand still though, so they’ve factored in 75 basis points of cuts.

“This will be a test for the Fed’s resolve on inflation. Even though the pace of inflation will fall soon to around 0.2-0.3% a month, it will still leave inflation above the Fed’s 2% target.”

Reverse-vending machine maker TOMRA aims to convert trash to cash

Every year, humans use 1.4 trillion beverage containers – a huge amount of material that potentially could be collected, reused and recycled.

It’s also an opportunity for “impact investors” looking for a way to make money and make the world better, believes Maxine Wille, an analyst with sustainable investing leader Regnan.

Regnan’s Global Equity Impact Solutions fund is an investor in Oslo-listed TOMRA, which makes “reverse vending machines” – those big metal kiosks that swallow your empty bottles and cans in exchange for a deposit refund.

TOMRA’s technology can identify a bottle or can by its shape, material and barcode, sort it into the right recycling queue and provide a payout.

“Now TOMRA has pioneered a machine which collects over 100 bottles in one go,” says Maxine. “You throw them in, and the machine sorts them.”

Last month TOMRA Cleanaway – a joint venture between TOMRA and waste management business Cleanaway and – won a deal to install its machines in parts of Victoria under a new recycling scheme.