Mayne Pharma Group Ltd

MYX Details

Boost from new product launches and acquisitions: Mayne Pharma Group Ltd (ASX: MYX) reported a revenue growth of 114% yoy (year on year) to $572.6m, while posting 133% and 137% growth, respectively, in underlying EBITDA at $206.5m and reported NPAT (Net profit after tax) at $88.6m. Importantly, performance is driven by product acquisitions in Generic Products and Speciality Brands businesses, new product launches and continuing strong growth in Metrics Contract Services. However, the Group reported results have been impacted by the $25m non-cash (pre-tax) charge largely relating to intangible asset impairment and reassessment of the useful life of the acquired Teva portfolio assets to 15 years. As a result, the stock was down 4.9% on August 25, 2017.


Results summary; (Source: Company reports)

The Company successfully launched 50 new products in the US and Australia of which 37 were acquired from Teva Pharmaceutical Industries Limited and Allergan plc (acquired Teva portfolio). Another six generic products were launched in the US with the first-to-market doxycycline hyclate immediate-release (IR) tablets (generic Acticlate®) achieving 100% return on investment of all development costs in the first week of shipments. The launch of three patent-protected dermatology products - Doryx® MPC (doxycycline delayed-release), Fabior® (tazarotene foam) and Sorilux® (calcipotrene foam) drove a much stronger performance in the second half for Specialty Brands.  However, 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 $ 0.67

Bellamy's Australia Ltd

BAL Details

Trying to be on a recovery mode: Bellamy's Australia Ltd (ASX: BAL) reported a revenue growth of 3% yoy at $240 million, while posting net loss after tax of $0.8 million (down from $38 million profit previously), impacted by one off costs associated with the business reset including a $27.5 million one off payment to Fonterra. Normalised operating cash-flow has been positive since March 2017 and currently in a net cash position. The company’s sales gained momentum through 2H17, price realisation increased, and there has been a slow recovery in market pricing across retailers and platforms. Further, operating cost base has been reset with a 23% reduction in overheads versus 1H17 and the company is able to reinvest. Moreover, FY18 will be a year of continued investment in brand, marketing, product, supply-chain and internal capability.


Financial summary; (Source: Company reports)

The Camperdown acquisition and reinstatement of the CNCA licence provides a path to CFDA registration in China. This registration relates specifically to ‘Chinese labelled’ product and the offline channel in China representing 15.4% of FY17 sales. In addition to its licence, the Camperdown business can become an important contributor given its existing customer base and future Bellamy’s volumes. The company is forecasting profitable growth in FY18 for the core business (excluding Camperdown), with a target of 5-10% revenue growth and 15-20% EBITDA margin. Owing to the mixed bag of ups and downs in the result, the stock moved down 7.5% on August 25, 2017. We maintain a “Hold” recommendation on the stock at the current price of $ 7.73

Automotive Holdings Group Ltd

AHG Details

Strong performance in Refrigerated Logistics in the second half: For FY17, Automotive Holdings Group Ltd (ASX: AHG) reported 10.2% yoy decline in operating NPAT at $87.3 million in line with its guidance. However, statutory NPAT (Net profit after tax) was down 38.4% yoy to $55.5 million, primarily due to one?off costs associated with the Refrigerated Logistics transformation program and restructuring of the Company’s operations. Moreover, FY17 was a challenging year in Automotive, given the acknowledged decline in the new vehicle market in Western Australia and the tightening of consumer credit conditions, which impacted the Company’s finance and insurance income. The stock has fallen 5.6% on August 25, 2017 at the back of the result. On the other hand, AHG has delivered a strong performance in Refrigerated Logistics in the second half of the year, with EBITDA up 68% on last year as the restructuring of the division began delivering expected improvements. Currently, the performance of dealerships in New Zealand and the eastern states of Australia has been strong and the group has commenced the restructuring of the Automotive division, while implementing several cost reduction initiatives that will mitigate anticipated insurance commission changes in FY2018. Further, the company is accelerating the roll?out of the easyauto123 fixed?price used car warehouse model in conjunction with its acquisition of a majority stake in the Carlins auction and wholesale business. The company expects modest uplift in operating performance based on prospects that the Western Australian economy is stabilising, realising the benefits of AHG’s cost reduction programs and the ongoing improvement in Refrigerated Logistics. We maintain a “Buy” recommendation on the stock at the current price of $ 3.31

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