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⭐️IPO Ozon Farma💊
And this has nothing to do with the market.
What happens to the company after the IPO and who benefits from it is discussed here. And the historical analysis is as follows: 🏗APRI, 💊Promed, 🔨All instruments, 💰MTS Bank. And there is also an analysis of bonds! Join Cat.Finance
10% in cash (money in favor of the company). As usual, a message about re-subscription has already appeared😂
❗It is important to note that there is a risk of one-time gains in the last 12 months due to unusually low earnings in the first half of 2023.
This has nothing to do with the market. Generics: 84% of sales are generics. Almost three quarters are prescription drugs. 66% of essential drugs are in negative territory. Price rules apply.
Ozone Pharma has over 100 items in its range. Overall, the average price range is 150-300 rubles per package, although some of them are expensive (cycloserine, abacavir: ~1000 per package).
Generics are similar to original drugs whose patent protection has expired. Patent protection usually expires 20 years after the original drug is released.
As always, we'll start with the audit report. Why is this important?
The corresponding 2021 conclusion (disclosure threshold) and reconciliation of the 2022 accounts. I'm glad he's a first-class auditor. Otherwise it would be a bit annoying.
They are selling us a growing company. Do you believe in a five-fold growth in 9 years? – We always conservatively evaluate such initiatives without a clear market advantage (generic launch – available from other manufacturers).
The main costs are raw materials (64%), wages (16%) and depreciation (8%; capital-intensive business). None of these cost items are getting cheaper
The company has seen significant growth in fixed assets and intangible assets (blue), primarily due to third-party acquisitions. That's inorganic growth.
· Capital-intensive business with high entry barriers (usually does not reduce competition between other pharmaceutical companies)
· High competition from generics (essential drugs) – any pharmaceutical company can produce them, so it matters which pharmacy shelf your package is on.
· In the financial statements, an increase in tangible assets means a purchase of the company. In our experience, this may be an "air" asset. Because... Auditors confirm the existence and value solely on the basis of marketable securities. This affects the amount of capital and, therefore, the multiple.
· The fact that retained earnings grew more than net income is due to the effect of the merger with another company. We take a conservative view of the effectiveness of inorganic growth.
The company is interesting and not expensive. But I will skip this agreement. Because... We conservatively estimate the efficiency of our business growth due to purchases from other companies. There is no strong portfolio in sight (all companies can produce generics). And in general, we are very comfortable with bonds with an interest rate above 20%.