ASPEN

Financial Mail - Investors Monthly - - Opening Bell -

Share price: R300,49 JSE code: APN

BUY THE SHARE PRICE OF THIS phar­ma­ceu­ti­cal gi­ant has shown some weak­ness, los­ing 12,9% over the past year and per­haps more tellingly, 25,7% in the year to date. That in it­self is a good rea­son to buy the share. Op­er­a­tionally, there is noth­ing wrong. CE Stephen Saad runs a tight ship which has made some very use­ful off­shore ac­qui­si­tions as it con­tin­ues to ex­pand glob­ally.

Most re­cent financial re­sults, for the year to end-June, were solid enough but seem to have dis­ap­pointed some mar­ket watch­ers be­cause they were not quite in line with the high norm Aspen has set. One of the rea­sons was the sev­eral cur­ren­cies Aspen has to deal in with op­er­a­tions and ex­ports to most parts of the world. What Saad calls the “tricky cur­ren­cies” can play havoc with re­sults.

All in­vestors have to do is take a longer-term look at Aspen. Shortly af­ter list­ing in 1999, when Aspen was not the fa­mil­iar name it is to­day, the share was trad­ing around R5,30. To­day it’s worth more than R300. That must be one of the most spec­tac­u­lar cap­i­tal gains recorded on the JSE, along with reg­u­lar div­i­dend pay­ments.

Two lines stand out in the fi­nan­cials. Cash gen­er­a­tion is up 26% to R4,8bn. That can fund a lot; Aspen is con­stantly look­ing for some­thing worth buy­ing. And, mak­ing a use­ful com­bi­na­tion, gear­ing is down to 47%. The share is ex­pen­sive, on a for­ward earn­ings mul­ti­ple of 20,5, but the point is that Aspen’s share may never be this cheap again.

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