Research archive for APN

We still prefer Aspen. Who (Aspen) have a management team that have grown the business sharply over the years, more risk oriented and have some sort of Midas touch. That Sigma acquisition seems to be progressing well. And that is the main reason I guess why Aspen commands a premium to their peer group, their growth prospects are simply better. The end of that story.

Aspen Pharmacare released results yesterday for the full year to end June. Remember that this second half includes the GSK tie up, because that part only had one month worth of the relationship. Of course there would be a dilution because there are over 70 million more shares in issue now.

Aspen put out a trading update yesterday morning, here goes: "Aspen shareholders are hereby advised that headline earnings per share, for the 12 months ended 30 June 2010, are expected to exceed those reported in the comparative period, ended 30 June 2009, by 20% to 25%. Earnings per share are anticipated to exceed those of the comparative period by 30% to 35%. The lower increase in headline earnings per share is caused by the exclusion of non-recurring capital profits and losses in the determination thereof. The Group's South African business has been the leading contributor to the growth recorded."

Just when I thought that we were going to have a slow news day, Aspen finally made the announcement about Sigma, and they are going for it. Yip, you heard right, Sigma and their board have accepted a cash offer from the Aspen board. A little more complicated than that, but we will get into it. And then MTN out with a trading statement, grrrr... lots of different moving earnings numbers makes for difficult comparisons. Who should you really be listening to when tuning into the sphere? I am talking about the investment community specifically, I have a few gripes with the experts who called the crisis.

I guess if you don't try you don't get, perhaps Sigma shareholders and the board reckon that the business might well be able to survive under the mountain of debt, if they are a little more nimble. The Australian reports that with the rejection, Sigma have found new life: Sigma boss Mark Hooper turns to generics to reject Aspen's bid. The end for Aspen in this very short chapter? I don't know, they have taken a look under the hood and lowered the offer, that tells me all I need to know. As the article points out, Sigma has to roll over some debt early next year. So who knows the extent of it all, Aspen might have been courting some of the key shareholders. It aint dead in the water, but Aspen might need to cough up, as AFR reports, Sigma says will work with Aspen on offer.

Aspen, will, they or wont they give Sigma a real wind. Aspen have lowered their price for the Australian distressed company, shareholders down under not happy. Mooi river is not just a pretty place, but rather a the point where a key piece of economic data comes out every month. And you know the best thing about it, the data, it is fresh and new, long ahead of the fellows over at the official releases. One more time, courtesy of the think tank at Greenfields farm, shot dudes. All this double dip talk is attracting more and more attention and making me hungry for octopus tentacles, all the rage in Germany as from last night.

OK, that Aspen deal. Who are they buying and why would they want this business? Well they are going to be paying 60 Aussie cents a share for a business called Sigma. Not too much detail, although the official release does say that it is a "Detailed cautionary announcement". Where will the funding will come from, or how, or whether there will be a listing in Australia of any sort. Although they do say that we should know in due course. So, from the announcement so far, this is what we do know:

Aspen announced yesterday that it has sold its 50 percent stake in an oncology joint venture (Onco Therapies in India and Onco Laboratories in Cyprus) that it got involved in at the end of 2007. The initial investment amounted to USD43m and the sale to Strides reeled in USD117m (R854m). Sounds like a good transaction to me, and the market agreed. The share was up 5.2 percent! Gus Atteridge the company's Deputy Chief Executive said Aspen was not abandoning cancer medicines as a category to distribute, but rather it was moving away from their production and manufacturing. The cash will also bring relief to their balance sheet. The debt to equity ratio is currently 29 percent, so this chunk of money will beef up their bank balances and maybe even allow some scope for more exciting acquisitions.

Aspen results yesterday, for the first half to December 2009. They were good. Profits up 31 percent, revenue up ten percent. HEPS up 27 percent to 242.3 cents per share. They, Aspen, outline the GSK transaction. The South African business grew sharply. The consumer division only grew a little, this was as a result of the milk formula not being available, remember that facility burnt down. I had problems getting milk for my youngest, Lexi.