Still looking good...

Finweek English Edition - - MARKETPLACE -

Aspen was the dar­ling of the JSE for over a decade as the price went from 1 000c in 2004 to al­most R450 in Jan­uary last year. Then in March of last year Glax­oSmithK­line an­nounced it was sell­ing a sec­ond tranche of Aspen shares and this spooked the mar­ket.

The re­al­ity is that Glax­oSmithK­line held some 18% in Aspen and was al­ways go­ing to sell the stake down to zero. It had sold the first third back in Fe­bru­ary 2014, and will sell the re­main­ing 6.19% in time.

Since last year’s sale Aspen has been un­der pres­sure, and even at these lower lev­els it re­mains a highly val­ued stock, with a price-to-earn­ings ra­tio (P/E) of some 35 times, while the lat­est deal with As­traZeneca has ex­cited the mar­ket again. This deal will add some 15% to profit be­fore tax, putting the pur­chase price on a P/E of some 15 times be­fore tax – a great deal.

Health­care is an ex­cel­lent sec­tor but I worry about leg­isla­tive risk and, as such, al­ways say the only space I would want to in­vest in is the generic drug man­u­fac­tur­ers.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.