Krka: Strong 1H18 as Krka is on a good path to deliver or even surpass its 2018 guidance.
In 1H18 Krka sold more than 7 bn units which represents a 6% volume increase YoY. This translated into EUR 680.5m of sales, up by 3.9% YoY. Growth is broad based in terms of geographic and production segments. One exception is their biggest market, as Russia value sales are down 2% despite being up 12% in local currency. Consequently, Krka Group delivered EBITDA of 190.9m in 1H18, up by 7.7%, and profit of EUR 101.7m, up by 11% YoY. While 1Q18 results were a clear beat, 2Q18 added to that albeit with lower intensity. Cumulatively looking, Krka was ahead of our expectations regarding profit by roughly EUR 5.4m, therefore we have adjusted our guidance, especially since some of the CAPEX could move to 2019 and since management noted that without FX surprises, gross margins should be repeated in 2H. Main investment thesis warranted no change, albeit valsartan issue with competitors could be Krkas gain. Our target price is lifted to EUR 68 with buy recommendation still intact.
Krka is a public generic pharmaceutical company based in Slovenia. Co. is engaged in the development, production, sale and marketing of human health products (prescription and selfmedication pharmaceuticals and cosmetics), animal health products and health resort and tourist services. Co. focuses on a range of generic prescription pharmaceuticals, which are marketed under Co.'s own brands. Co. offers customers in over 70 countries a broad range of prescription pharmaceuticals, self-medication products and animal health and cosmetic products. Co.'s activities are supplemented by health resort and tourist services of Terme Krka.
ALTA Invest, investicijske storitve, d.d., (ALTA Invest, investment services, Inc.) is a part of ALTA Group, the biggest financial non-banking group in Slovenia. ALTA Invest has around 28% market share on the domestic Ljubljana Stock Exchange and has more than EUR 95m of assets under management.
Our trading advantage is our execution of large trading blocks with low impact on the market. We offer trading on several platforms on numerous markets, with a wide variety of financial instruments. Our advantage is also a research department, which is both sell side and buy side and has the far most extensive and regular coverage of domestic companies. We cover 9 companies on Ljubljana Stock Exchange, which is around 90% of Mcap on LJSE – and here we are practically the only local broker providing this kind of extensive and regular coverage for Slovenian companies.
A part of ALTA Group are ALTA Skladi, a mutual fund asset management company with roughly EUR 260m of asset under management. ALTA Group is also extensively involved in corporate finance projects and raised considerable assets (fixed income and equity) in the last two years for several companies.
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