Mayne Pharma Group Ltd

MYX Details

Facing competitive pricing pressure in the retail channel: Mayne Pharma Group Limited’s preliminary full year FY17 revenue is expected to grow by 115% yoy to A$581 million with 140% yoy growth in underlying EBITDA to be A$212 - A$216 million (excluding A$25m non-cash charge). Accordingly, reported NPAT is estimated to increase by 145% at A$92 - A$95 million. Results were anticipated to be driven by product acquisitions, new product launches and continuing growth in Metrics Contract Services. The effective tax rate is expected to be approximately 27% across the full year, higher than the first half, which benefited from abnormally high US domestic product allowances and a one off non-assessable item. The acquired Teva products are expected to achieve FY17 EBITDA of approximately US$94.5 million. However, sales were down in the second half reflecting a more competitive generic sector pricing environment coupled with very strong trading in December. In addition, the results relating to the acquired Teva products were negatively impacted in May and June by approximately US$5m due to unanticipated pricing and one-off shelf stock adjustments associated with the finalisation of bids with large buying consortiums.

Whilst Generic Products is facing competitive pricing pressure in the retail channel, the Company is focused on a number of initiatives to offset these headwinds, including diversifying its channels to market into government and specialty pharmacy, pursuing new market share opportunities with the retail customer base, extracting US$12 million of annual product cost savings from transferring the Teva products into new manufacturing sites by FY19, new product launches and further business development activity. The stock has declined 12.5% in the last five trading sessions owing to Teva revised guidance due to anticipated competition and price erosion in generic pharma business. Although the company’s outlook is positive, given the ongoing pricing pressure in generic products and the retail channel, we maintain an “Expensive” recommendation on the stock at the current market price of $0.74


MYX Daily Chart (Source: Thomson Reuters)

Trade Me Group Ltd

TME Details

In July 2017, Trade Me has entered into a conditional agreement to purchase Limelight Software Limited, trading as Motorcentral (motorcentral.co.nz), a cloud-based dealer management platform for motor vehicle dealers. Motorcentral is based in Christchurch and has 15 staff. Motorcentral’s system provides dealers with an easy-to-use platform that includes inventory management, customer relationship management, advertising plug-in options and website functions. Motorcentral was an attractive business with an experienced team, and has a proven track record of delivering great services that add value to dealers. It would be business as usual for Motorcentral customers, as it would continue to operate as a standalone business. This would include the ability for dealers to upload listings to a range of websites including Autotrader, Driven and Trade Me Motors. We reiterate an “Expensive” recommendation at the current price of $4.46
 

TME Daily Chart (Source: Thomson Reuters)

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