Research archive for APN

Aspen have announced yet another deal yesterday afternoon, in the baby formula market again. Or infant nutrition (IN) as it is called. Cast your mind back to Aspen acquires more baby formula in April of this year. The concluding lines were "... this acquisition is roughly the same size (as the consumer division). And working backwards from that EBITA margins for the Rest of Africa business, I can presume that they paid a cheaper price than Nestle paid Pfizer." Read that piece and then come back here, but hurry!

Aspen Pharma, what happened there yesterday? The stock climbed 4.44 percent on the day to 193.25 ZAR and is up another two odd percent at the open of trade. Well, there was some more clarity on the transaction with their main shareholder, GlaxoSmithKline (GSK) and their local and international businesses (Aspen Global Incorporated – AGI). It seems big, really big. Six month revenues (at last count) were just shy of nine billion Rands, this current transaction that we are talking about here could potentially add 35 percent (at current exchange rates) to their annual revenue. Which would then makes the business more than a two thirds offshore revenue business, which is not necessarily a great thing, but it is amazing how much the business has changed over the last half a decade.

This is interesting. Just this morning there is an announcement from Aspen who are paying 215 million US Dollars for infant nutritional products both in Southern Africa and Down Under in Australia. It looks a little complicated after having read it a few times, but the thing to remember is that they used to actually manufacture this product here under licence from Wyeth. Anyone with a small child will be familiar with the S26 and SMA formula products. The amount of "stuff" that you have to carry around with your baby far exceeds the physical size of the child. Formula, bottles, bibs, and the list really goes on and on.

Ok, one of the most important stocks in the Vestact stable, Aspen Pharma reported numbers for the half year to end December. Revenues from continuing operations increased 20 percent to 9 billion Rands, operating profits increased by 24 percent to 2.5 billion Rands. This translated to normalised diluted headline earnings per share of 379 cents. Cash generated from operating activities grew 9 percent to 1.3 billion Rands. Gross profits grew 22 percent to 4.3 billion ZAR. Profits before tax grew by 29 percent.

Yet another trading update came at us this morning from a recommended stock, this time from Aspen. They too have been very busy for the 6 months leading up to 31 December 2012. This means that there is a significant difference between earnings per share and headline earnings per share which only includes continuing operations. There was also a dilution because 17.6 million shares were converted to ordinary shares.

This morning we had a very interesting announcement from Aspen which has put them under cautionary. ...

Aspen Pharma released their full year numbers yesterday, not in time for us to catch them and put them in the message. We first added this to the recommended list as a core part of our clients portfolios, back in 2005 Adding Aspen Pharmacare to the A-list. I laughed when I saw that last line from Paul, who writes much better than us, but does so not as often: "Perhaps more importantly, we believe that Aspen is a company which could double its earnings repeatedly in the years ahead, producing outstanding returns for its shareholders." Well, I would guess that has been about right. Over the last five years, compounded annual revenue growth of 36.5 percent, whilst profits on the same basis have increased 36.6 percent. The market actually has afforded the company a higher valuation, as the size and scale has increased, in part due to their geographic diversity and in part due to their Glaxo tie up.

wonderful performer, a great company with exceptional leadership. We know that. Their timing from an acquisitive point of view has also been nothing short of very good, and the praise should be laid directly at the desk of management. But one must learn to never get married to a company. Stockholm syndrome in a way, you know, believing yourself and being captured by a specific investment at the same time.

This morning we had an interesting announcement from our recommended healthcare stock Aspen. The company has reached another agreement with GlaxoSmithKline to acquire 25 established pharma products which are distributed throughout Australia. It is a fairly big acquisition by South African standards, GBP 172 million or R2.2bn which will be raised through new offshore debt facilities. According to the latest financial statements the company is sitting on about R 3bn in cash with borrowings of about R6bn. Remember the Sigma acquisition was worth R5.8bn.

Aspen released results yesterday, for the half year to December. And this is where management must be given a huge pat on the back for a number of things. First, the decision to diversify geographically. At the time I remember people asking questions, like, is this a good idea to leverage up and acquire these businesses, they are doing so well here. Next, the big transaction, the recent one between themselves and the Australian business Sigma, perhaps that is related to the first point, Aspen was seen to be paying up, too much. The Aspen management team are really well regarded, they are top of the pile, I know it is a cliché to say this time after time, but they seem to have the golden touch. And share holders best interests at heart, because they themselves are big shareholders. Perhaps most importantly, while Aspen have been growing like this they have maintained margins. That does not lie, and also it is not a chase revenue at all costs.

Aspen released a trading update this morning, and it looks good. Here is the complete announcement, just so I do not leave anything out: "Aspen shareholders are hereby advised that earnings per share, for the 6 months ended 31 December 2011, are expected to exceed those reported in the comparative period, ended 31 December 2010, by 24% to 30%." Nice! They continue to say that there is a discrepancy between EPS and HEPS, as a result of disposals of discontinued businesses and products.

Some results to have hit the screens yesterday includes one of our recommended stocks, Aspen. These were the results for the full year to end June. Paul is actually at the results presentation (yes, this is unusual for us) and will come back with some further insight I guess, which we can add to tomorrow. So first up, a look at the numbers. Revenue increased by 29 percent to 12,4 billion ZAR, operating profits increased by 25 percent to 3.1 billion ZAR. There was a significant acquisition in the year, Sigma in Australia, so the numbers given are for normalised earnings, which came in per share at 523.3 cents per share. Up 20 percent and in line with the trading update, so no surprises. After a pause in the distribution in 2009, the company is back with a share premium of 105 cents being declared.

Talking Aspen, they have just released a trading update for the full year end June. And the market is liking it, I can tell, because they are outperforming the broader index by around three percent. Quite simply, earnings per share are expected to be between 18 to 22 percent higher. HEPS are expected to be below that. BUT, HEPS from continuing operations are expected to exceed that 18 – 22 percent range given for EPS. It will be interesting to see how the Aussie operation is doing, we will learn more in 11 days time, on the 13th of September. Look forward to those!

Aspen results yesterday. First things first, more shares in issue, remember Glaxo taking a big slug? Check it out: "The rise in headline earnings per share was diluted by an increase in the weighted average number of shares in issue as a consequence of the issue of shares on 1 December 2009 in settlement of the transaction with GlaxoSmithKline ("GSK") concluded on that date." Roger, got that thanks. I mean Stephen, got that Stephen and Gus.

On Friday Aspen, our recommended generic drug producer confirmed its R6.1 Billion acquisition of Australian pharma Sigma. "Aspen is pleased to announce that, following approval of the transaction received at the extraordinary General Meeting of Sigma's Shareholders, held on 14 January 2011, all the conditions precedent to the Transaction have now been met and the Transaction is now unconditional. The Transaction is scheduled to complete on 31 January 2011."