Financial Mail - Investors Monthly - - Opening Bell - Shaun Har­ris

Share price: R50,37 JSE code: AIP

SELL BOB DY­LAN’S “TAN­GLED UP IN BLUE” springs to mind when con­sid­er­ing Ad­cock. The phar­ma­ceu­ti­cal group has spent much time in a tan­gle, of­ten of its own mak­ing, and could re­main so un­til rel­a­tively new CE Kevin Wake­ford finds a way out. Don’t ex­pect that to hap­pen soon.

Many Ad­cock prod­ucts are house­hold names. Yet it has not man­aged to cap­i­talise on them. In­stead the fo­cus has been turned in­wards on the com­pany it­self. Delist­ing in 2000, relist­ing eight years later, and turn­ing down a fairly gen­er­ous R52/share of­fer from Bid­vest’s Brian Joffe — that was wasted time that could have been bet­ter spent get­ting the full com­mer­cial value of their prod­ucts.

At­tempts to be­come more global have failed, ex­pen­sively. In late Au­gust Ad­cock an­nounced it would sell its loss-mak­ing unit in In­dia, Cosme Farma Lab­o­ra­to­ries. The an­nounce­ment drove the share price up by 6% to R50,50. Ad­cock bought the busi­ness for R822m in 2013. Since then it has taken two write-downs: R278m, then R74,4m.

The value of the over-the-counter prod­ucts comes through clearly in re­sults for the year to end-June, where turnover of R1,45bn for th­ese prod­ucts is up 16,6% on the pre­vi­ous year. Turnover of R1,81bn for pre­scrip­tion med­i­ca­tion, on the other hand, is down 2,6%.

Maybe the po­ten­tial will come through later. But un­til then, in­vestors don’t want this share.

Pic­tures: iS­TOCK

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