Acquisitions should give it a shot in the bottom
Ascendis, which listed in late 2013, appears to have overcome the market’s initial fear that patching together niche healthcare brands by rapid acquisition might not gel into a compelling conglomerate structure.
Directors have stressed that acquisitions involve sustainably profitable and cash-generative assets that can be slotted as standalone operations into a corporate structure that unlocks efficiencies by centralising marketing, distribution and administration functions.
Ascendis estimates that acquisitions since June 2014 have added more than 30% annualised growth to headline earnings since the last financial year. So no surprise then that turnaround situations are not contemplated by Ascendis, at least at this stage.
In truth, it’s early days in judging Ascendis’s business model. But the recent strong buy-in from smaller institutions to a R400m shares-for-cash issue suggests growing market interest in its proposition.
Fundamentally, the recent year to end-June results prescribed some soothing key numbers, even if a full check-up is difficult on the performance potential of Ascendis because of four key acquisitions since the June year-end.
Comparative figures are meaningless, but it’s worth noting the chunky 45% gross margin and a more than decent 13% operating margin.
Ascendis also boasts a surprisingly good cash conversion ratio (considering retailers