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.