Beximco Pharma reports results for CY2016

Last time I wrote about Beximco Pharma I told that I sold a bit of my position recently, and today I have the same disclosure to make. It’s a bit unfortunate because the company keeps reporting great numbers, and the latest results are not different. The stock jumped 17% higher today in London, and because of that the discount between the shares that trade in Dhaka and London keeps shrinking. When I entered my position in 2014 the discount was a bit above 60%. In November it was still at 40%, at the end of the year roughly 35% and now it’s just 25%. That is making the shares of course less attractive than before, but it’s still a nice discount.

Beximco Pharma reported 13.4% revenue growth while operating profit grew with 18.2% in 2016. By buying the shares in London you are currently just paying a 13.3x P/E-ratio for the shares compared to the 17.8x P/E-ratio domestic investors are willing to pay in Dhaka. I think both numbers are pretty cheap for this kind of growth. Now that my Beximco position is not oversized anymore I will hang on to my current shares at the current discount.


Author is long Beximco Pharma

9 thoughts on “Beximco Pharma reports results for CY2016

  1. Rupert

    When you bought BXP it was trading at a 4.3x P/E and a 60% discount and it’s now at 13.3x P/E with 25% discount. Is it the discount that is appealing or the fact that it is a cheap stock on its own merits independent of the discount? If it were trading at a 40x P/E, or even had no earnings, but was trading at a 25-60% discount would that still be attractive on a market efficiency basis or is there more weight in the argument that the domestic shares are just overpriced at that point?

    1. Alpha Vulture Post author

      For me the discount is by far the most important factor, unless it’s trading at a valuation that absolutely doesn’t make sense to me. In that case I would only want to own it with a really big discount. Here the valuation makes sense to me, so also happy with a medium sized discount 🙂

  2. Rupert

    With no real catalyst in place as to why the discount has thinned, do you think it has closed because the company has been putting out good results and so getting more attention or another reason (perhaps just luck)?

    1. Alpha Vulture Post author

      I think it’s highly likely that it’s because of the recent good results, I guess because of that there are now some more non-Bangladeshi investors who are excited about owning this company.

  3. John Sampson

    Hi mate,

    Really cool blog.

    Can you explain how you calculate the discount: on the CSE, the market cap is listed at 27,422m Taka or 276m GBP. On the LSE, market cap is listed at 243m which implies an 11% discount. When you then look at the CSE website, it is just a mess showing a P/E using EPS that doesn’t seem to have any reality as compared to actual financials.

    How do you calculate the discount between what locals are paying and GDR holders? Is the CSE website just hopeless or have I mucked up the fx.



    1. pietje

      It is much easier. 1 GDR converts into 1 normal share. So just convert the Bangladesh price to GBP and you know how much the GDRs’ should be worth.


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