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BEXIMCO PHARMACEUTICALS LIMITED (UPDATED)

Company Overview

Investment Negatives

Beximco Pharmaceuticals Limited was incorporated as a public limited


company in Bangladesh in 1976. It commenced its manufacturing
operation in 1980. It is among the top three pharmaceutical firms in the
country holding 8.62% market share within industry. It received GMP
accreditation from AGES, Austria (for European Union); and win
National Export Trophy (Gold) for the fourth time.
The company is engaged in manufacturing and marketing of generic
pharmaceuticals formulation products. It has production facility over an
area of 23 acres in line with cGMP. It utilized 79.59% and 69.91% of its
production capacity at tablet & capsule segment and liquid & cream
segment respectively. The firm earned 95% of its revenue from local
sales and the rest from export. Napa, Napa Extra, Tofeen,
Azithrocin, Neoceptin R, Antacid MAX etc. are some blockbusters of
the Company.
The firm was listed in DSE in 1986 and also in the Alternative
Investment Market (AIM) of the London Stock Exchange in 2005
through issuance of Global Depository Receipts (GDRs).

The firm imports around 60% of its COGS therefore unfavorable


foreign exchange situation has been slowing down operating and
net profit growth.
Total BDT 267.91 mn contingent liabilities (Income Tax BDT
101.29 mn; VATBDT 144.11 and Custom Duty BDT 22.51 mn) claim
against the firm may badly affect its future profitability.

Company Fundamentals
Market Cap (BDT mn)
Market weight
Free-float
Paid-up Capital (BDT mn)
3-month Average Turnover (BDT mn)
3-month Return
Current Price (BDT)
52-week price range (BDT)
Sector Forward P/E

Industry Overview
Pharmaceutical Industry in Bangladesh, currently valued at $1.7 billion,
is primarily produces generics drugs of around 8,000 different brands
which can furnish up to 98% of the domestic demand. At present, there
are 250 registered pharmaceutical manufacturers in Bangladesh out of
which 168 are operational. Yet, top three firms held 36.85% of total
market share Square Pharma (19.18%), Incepta (9.05%) and Beximco
Pharma (8.62%). The market share of the local companies is around 80
%.

2010

15,134.5
0.8%
86%
3,503.0
9.2
2.1%
44.7
39.5 - 66.3
17.4
2011

2012

2013
(Annualized)

Financial Information (BDT mn):


Sales

6,491

7,890

9,289

10,160

Operating Profit

1,636
1,052

1,988
1,199

2,208
1,319

2,214

21,372

23,033

24,590

25,512

2,885

3,257

3,117

3,150

15,974

17,128

18,408

19,452

20%B

21%B

15%B

---

Gross Profit

48.9%

48.0%

47.3%

45.4%

Operating Profit

25.2%

25.2%

23.8%

21.8%

Pretax Profit

21.0%

21.3%

20.6%

20.1%

Net Profit

16.2%

15.2%

14.2%

14.2%

Sales

33.3%

21.6%

17.7%

9.4%

Gross Profit

37.8%

19.3%

15.9%

5.2%

Operating Profit

63.4%

21.6%

11.0%

0.3%

Investment Positives

Net Profit

68.3%

14.0%

10.1%

9.5%

Profitability:
ROA

5.1%

5.4%

5.5%

5.8%

ROE

7.8%

7.2%

7.4%

7.6%

Debt Ratio

18.2%

16.9%

14.9%

12.9%

Debt-Equity

24.4%

22.7%

19.9%

17.0%

2.5

3.5

3.4

3.8

14.9

13.1

11.9

10.8

Price/BV

1.0

0.9

0.9

0.8

EPS(BDT)

3.0

3.4

3.8

4.1

45.6

48.9

52.5

55.5

In 2012, this industry earned 12% year-on-year growth. However, this


rate declined compared to 24% accomplished in year 2011 and year
2010 due to adverse exchange rate movement against USD which
escalated raw material prices. At present, pharmaceuticals products are
exported to 87 Countries. Exports of Pharmaceuticals sector increased
by 19.71 % in July-December period of the fiscal 2012-13, and the
sector earned around US$ 27.76 million.
Nevertheless, Pharmaceutical sector may face a setback in December
2015, when waiver for pharmaceutical patents for LDCs will come to an
end. Then cost of import, manufacturing and export will become high
for patented products. However, BD Government will start negotiation
next year with WTO to extend the period for another 8 years.

The firm showed its continual effort to increase sales by


penetrating new market niche. In Q1 of 2013, it launched 13 new
products. It also registered 20 new products in overseas markets
during the same period. It also commenced exports to Germany
and Austria and obtained marketing authorization for a product
in Australia.
The firm have good brand image, product basket of more than
500 items and some of them are blockbuster so that profit growth
is relatively more sustainable.
The firm is less dependent on debt capital. At the same time it has
adequate capacity for existing debt servicing.
The firm has paid stable dividend (15%B; 21%B & 20%B) over last
three years. This trend may continue in near future.

Profit After Tax


Assets
Long Term Debt
Equity
Dividend (C/B)%

1,444

Margin:

Growth:

Leverage:

Int. Coverage
Valuation:
Price/Earnings

NAVPS (BDT)

November 04, 2013

Concluding Remark

6 Year Earnings Per Share


5.00
4.00
3.00
2.00
1.00
Yaer 2008

Yaer 2009

Yaer 2010

Yaer 2011

Yaer 2012

Yaer 2013
(Annu.)

Beximco Pharmaceuticals Ltd. showed stable performance over the


years. However, in recent times its movement of price and turnover
became little bit flat. In Q1 of 2013, the firms performance dampened
down as a result of adverse foreign exchange movement which
increased the cost of imported raw material. However, this scenario has
gradually improved in Q2 and Q3 which has already been reflected in
profit margins.

6-yr Price Performance

250
200
150
100
50
0
Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Disclaimer: This document has been prepared by International Leasing Securities Limited (ILSL) for information only of its clients on the basis of the publicly available information in the market and own research.
This document has been prepared for information purpose only and does not solicit any action based on the material contained herein and should not be construed as an offer or solicitation to buy or sell or
subscribe to any security. Neither ILSL nor any of its directors, shareholders, member of the management or employee represents or warrants expressly or impliedly that the information or data of the sources used
in the documents are genuine, accurate, complete, authentic and correct. However all reasonable care has been taken to ensure the accuracy of the contents of this document. ILSL will not take any responsibility for
any decisions made by investors based on the information herein.

November 04, 2013

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