Eastpharma Ltd reports 76.7% Net Income growth and 0.53 pp EBITDA Margin growth from 23.3% to 23.9%
10 Mar 2017 • About Eastpharma Ltd (
$EAST) • By InTwits
Eastpharma Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Eastpharma Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.9%. At the same time it's in pair with industry average of 9.5%.
- CAPEX is quite volatile: 15.1 in 2016, 13.0 in 2015, 15.0 in 2014, 26.8 in 2013, 27.6 in 2012
- The company has business model with average profitability: ROIC is at 10.2%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.8x while industry average is 1.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Eastpharma Ltd ($EAST) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 232.0 | 217.1 | 210.5 | 209.9 | 224.9 | 7.2% |
| Gross Profit | 99.0 | 88.3 | 79.9 | 92.4 | 102.0 | 10.4% |
| SG&A | 68.0 | 46.6 | 61.5 | 57.6 | 59.1 | 2.6% |
| EBITDA | 48.9 | 33.9 | 33.9 | 49.0 | 53.7 | 9.6% |
| Net Income | 9.1 | -0.5 | -1.6 | 8.7 | 15.4 | 76.7% |
Balance Sheet
|
|---|
| Cash | 18.2 | 34.0 | 23.3 | 15.9 | 12.5 | -21.4% |
| Short Term Debt | 120.6 | 78.3 | 85.5 | 129.8 | 43.4 | -66.5% |
| Long Term Debt | 30.2 | 85.2 | 85.0 | 16.7 | 64.1 | 283.6% |
Cash flow
|
|---|
| Capex | 27.6 | 26.8 | 15.0 | 13.0 | 15.1 | 16.3% |
Ratios
|
|---|
| Revenue growth | -4.2% | -6.4% | -3.0% | -0.3% | 7.2% | |
| EBITDA growth | 616.8% | -30.7% | 0.3% | 44.4% | 9.6% | |
| Gross Margin | 42.7% | 40.7% | 37.9% | 44.0% | 45.3% | 1.3% |
| EBITDA Margin | 21.1% | 15.6% | 16.1% | 23.3% | 23.9% | 0.5% |
| Net Income Margin | 3.9% | -0.2% | -0.8% | 4.1% | 6.8% | 2.7% |
| SG&A, % of revenue | 29.3% | 21.5% | 29.2% | 27.5% | 26.3% | -1.2% |
| CAPEX, % of revenue | 11.9% | 12.3% | 7.1% | 6.2% | 6.7% | 0.5% |
| ROIC | 6.3% | 3.0% | 3.5% | 7.8% | 10.2% | 2.3% |
| ROE | 3.0% | -0.2% | -0.6% | 4.0% | 8.3% | 4.3% |
| Net Debt/EBITDA | 2.7x | 3.8x | 4.3x | 2.7x | 1.8x | -0.9x |
Revenue and profitability
The company's Revenue increased on 7.2% in 2016. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 0.53 pp from 23.3% to 23.9% in 2016.
Gross Margin increased slightly on 1.3 pp from 44.0% to 45.3% in 2016. SG&A as a % of Revenue decreased slightly on 1.2 pp from 27.5% to 26.3% in 2016.
Net Income marign increased on 2.7 pp from 4.1% to 6.8% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 6.7% in 2016. The company's CAPEX/Revenue decreased on 5.6 pp from 12.3% in 2013 to 6.7% in 2016. It's average level of CAPEX/Revenue for the last three years was 6.7%.
Return on investment
The company operates at low ROIC (10.15%) and ROE (8.29%). ROIC increased on 2.3 pp from 7.8% to 10.2% in 2016. ROE increased on 4.3 pp from 4.0% to 8.3% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.8x and Debt / EBITDA is 2.0x. Net Debt / EBITDA dropped on 0.9x from 2.7x to 1.8x in 2016. Debt dropped on 26.6% in 2016 while cash dropped on 21.4% in 2016.
Valuation
Eastpharma Ltd's trades at EV/EBITDA 1.8x and P/E 0.1x while industy averages are 15.6x and 19.1x. Eastpharma Ltd's EV/(EBITDA-CAPEX) is 2.5x with the industry average at 19.0x.
Appendix 1: Peers in Pharmaceuticals & Biotechnology
Below you can find Eastpharma Ltd benchmarking vs. other companies in Pharmaceuticals & Biotechnology industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ergomed ($ERGO) | 21.1% | 3.7% | 39.7% | 42.7% | |
| Cyprotex ($CRX) | 5.3% | 17.3% | 18.5% | 34.9% | |
| Beximco Pharmaceuticals ($BXP) | | 12.9% | 6.8% | 15.7% | 6.3% |
| Quantum Pharma ($QP.) | | 26.0% | 10.8% | 15.4% | 13.4% |
| Pharmstandard OJSC ($PHST) | 19.1% | 12.4% | -27.7% | 14.5% | |
| |
|---|
| Median (11 companies) | 13.6% | 12.4% | 6.8% | 5.1% | 8.1% |
|---|
| Eastpharma Ltd ($EAST) | | -6.4% | -3.0% | -0.3% | 7.2% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Pfizer Inc ($PFZ) | 82.0% | 81.4% | 80.7% | 80.3% | 76.7% |
| Cyprotex ($CRX) | 81.9% | 80.0% | 75.0% | 77.3% | |
| Animalcare Group ($ANCR) | 54.0% | 56.0% | 55.4% | 55.9% | 54.4% |
| Source Bioscience ($SBS) | 45.1% | 46.0% | 48.6% | 50.5% | |
| Beximco Pharmaceuticals ($BXP) | 47.3% | 46.1% | 45.5% | 46.3% | 46.5% |
| |
|---|
| Median (11 companies) | 45.1% | 46.0% | 45.5% | 44.9% | 47.0% |
|---|
| Eastpharma Ltd ($EAST) | 42.7% | 40.7% | 37.9% | 44.0% | 45.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Pfizer Inc ($PFZ) | 41.9% | 41.9% | 37.9% | 34.8% | 33.6% |
| Pharmstandard OJSC ($PHST) | 26.1% | 30.3% | 30.9% | 29.0% | |
| Beximco Pharmaceuticals ($BXP) | 29.1% | 26.9% | 27.2% | 26.6% | 28.9% |
| Animalcare Group ($ANCR) | 24.2% | 25.2% | 24.5% | 25.4% | 23.5% |
| Source Bioscience ($SBS) | 16.1% | 16.7% | 20.1% | 20.5% | |
| |
|---|
| Median (11 companies) | 16.1% | 14.5% | 18.5% | 20.0% | 23.5% |
|---|
| Eastpharma Ltd ($EAST) | 21.1% | 15.6% | 16.1% | 23.3% | 23.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Taihua ($TAIH) | 0.9% | 0.1% | 1.6% | 62.2% | |
| Beximco Pharmaceuticals ($BXP) | 11.1% | 26.1% | 24.8% | 19.4% | 13.5% |
| Cathay International Hldgs Ltd ($CTI) | 16.7% | 12.1% | 4.0% | 5.5% | |
| Cyprotex ($CRX) | 3.5% | 12.0% | 12.9% | 5.3% | |
| Source Bioscience ($SBS) | 13.7% | 7.9% | 5.3% | 5.3% | |
| |
|---|
| Median (11 companies) | 2.7% | 3.1% | 2.4% | 4.9% | 3.0% |
|---|
| Eastpharma Ltd ($EAST) | 11.9% | 12.3% | 7.1% | 6.2% | 6.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Pharmstandard OJSC ($PHST) | 34.0% | 42.6% | 28.8% | 23.9% | |
| Quantum Pharma ($QP.) | | 8.9% | 4.6% | 17.8% | 9.1% |
| Cyprotex ($CRX) | 4.3% | 8.4% | -9.7% | 15.0% | |
| Animalcare Group ($ANCR) | 14.0% | 15.4% | 14.2% | 14.8% | 13.8% |
| Ergomed ($ERGO) | 82.0% | 148.0% | 15.5% | 14.6% | |
| |
|---|
| Median (11 companies) | 10.7% | 8.9% | 8.7% | 13.8% | 9.2% |
|---|
| Eastpharma Ltd ($EAST) | 6.3% | 3.0% | 3.5% | 7.8% | 10.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Cathay International Hldgs Ltd ($CTI) | 15.0x | 12.2x | 6.3x | 12.7x | |
| Cyprotex ($CRX) | 0.6x | -4.3x | 20.0x | 3.9x | |
| Pfizer Inc ($PFZ) | 1.2x | 1.6x | 1.8x | 2.1x | 2.2x |
| Beximco Pharmaceuticals ($BXP) | 1.1x | 1.5x | 1.5x | 1.4x | 1.0x |
| Quantum Pharma ($QP.) | 6.4x | 8.3x | 15.5x | 0.8x | 2.8x |
| |
|---|
| Median (10 companies) | 0.3x | -0.5x | 0.8x | 0.7x | 1.0x |
|---|
| Eastpharma Ltd ($EAST) | 2.7x | 3.8x | 4.3x | 2.7x | 1.8x |
