Beximco Pharmaceuticals (LON:BXP) reported results for the first half of 2016 today. Because of a new rule of the Bangladesh Securities and Exchange Commission the company is in the process of changing the end of its fiscal year from December to June. Because of that the reported financials are a bit messy since this is the transition year that counts 18 months. The change is annoying, because including a 18 month period in the historical financial results hurts comparability while changing all the historical results to align with the new fiscal year end date is just too much work. For this year I have separated the results as if the change has not happened yet. But enough about this accounting issue, time to check the numbers:
As you can see the results in the first half of 2016 were pretty good. Revenue grew with 13.12% thanks to a 5.3% increase in export sales and 13.6% more domestic sales and the period doesn’t yet include the start of the sales of Beximco Pharma’s first drug in the USA. Pretax profit is up 20.8%, but due to abnormal low taxes in the first half of 2015 net income is down a bit.
Overall good results, and with the stock up 8.4% in London at the time of writing this, the company is getting more expensive compared to my entry in 2014. At that time you could effectively buy the company at a 4.3x P/E-ratio and a 0.31x P/B-ratio in London. Now it’s trading at a 9.0x P/E-ratio and a 0.78 P/B-ratio. Still not expensive, and the discount compared to the price in Bangladesh remains consistently high. Because the results were released after the market closed in Bangladesh I cannot give you an exact discount. Using stale data from Bangladesh, it’s still 43%, but I expect that it will be back to 50% again tomorrow. While the company is getting less cheap when we look at simple valuation metrics I think this discount is the most meaningful, I don’t have any plans yet for exiting my position as long as it persists.
Author is long Beximco Pharmaceuticals