Pretoria News - - BUSINESS REPORT -

ASPEN Phar­ma­care’s shares surged

5.7 per­cent yes­ter­day, putting the South African drug man­u­fac­turer on track for its big­gest one-day gain in more than two months af­ter it said its half-year re­sults would likely beat es­ti­mates. The nearly 170-year-old com­pany, with a pres­ence in about 56 coun­tries, said on Fri­day that it ex­pected to re­port half-year re­sults slightly above its forecast as its man­u­fac­tur­ing unit ben­e­fited from the restart of hep­arin sales to third party customers. By 10.56am shares in Aspen were 3.11 per­cent firmer at R110.88, hav­ing risen as high as R113.72, and on course for their big­gest one-day gain since De­cem­ber 17. The mar­ket also cheered Aspen for low­er­ing its debt to about R38 bil­lion by De­cem­ber 31. The firm said that its lever­age ra­tio, which as­sesses the abil­ity of a firm to meet its fi­nan­cial obli­ga­tions, is likely to end be­tween 3.50x and 3.60x against a covenant thresh­old of 4.0x, the firm added. Aspen said as­sum­ing the net pro­ceeds from the sale of its Ja­panese busi­ness to Swiss drug man­u­fac­turer No­var­tis were re­ceived on De­cem­ber 31, the lever­age ra­tio would have been be­tween 3.20x and 3.30x. In­vestors have been con­cerned about Aspen’s debt in the past two years af­ter lev­els moved close to breach­ing debt covenants. In Septem­ber it said it was aim­ing for a lever­age ra­tio of less than 3.0x in the medium term as it bets on pos­i­tive free cash flows and a sub­stan­tial de­cline in planned cap­i­tal ex­pen­di­ture af­ter the 2020 fi­nan­cial year. “The forced sale of the for­mula busi­ness and the Ja­panese busi­ness seems to have saved Aspen from a rights is­sue,” Ves­tact port­fo­lio man­ager By­ron Lot­ter said in a note. “I ex­pect the share price to re­act pos­i­tively to this news. At these lev­els, it seems to be a good po­ten­tial turn­around story.” | Reuters

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