Guidance unchanged, clean EBIT beat estimates
Summary: Richter posted its Q3/24 results today morning. The Company matched theconsensus for revenues at HUF 217bn, while the clean EBIT beat estimates by 3% as it
came in at HUF 75bn. However, normal EBIT of HUF 64bn and net profit of HUF 37bn fell
short of even our depressed expectation as an inventory impairment (HUF 9bn), provision
(HUF 5bn) and an unrealized FX loss (HUF 20.8bn) dragged down earnings. The
management fully reiterated its 2024 guidance. They continue to guide revenues to finish
this year in the range of between EUR 2.15-2.25bn, while EBIT is seen in the range of
between EUR 725-750mn.
We leave our forecasts, TP and recommendation unchanged as we see no fundamental
reason to alter our LT bullish stance on the stock. Considering a huge FX loss, which
will likely be reversed in Q4, we don’t attribute much importance to the bottom line.
Richter’s free cash amounted to HUF 74bn by the end of Q3. We also find it positive
that the foreign ownership picked up first since Q4/22. R&D pipelines also improved as
RGH-932/ABBV-932 (CNS portfolio) entered Phase 2 clinical trials by achieving the first
subject dosed in October. This could be an increasing significance following
yesterday’s news about Abbvie, which we detail later in the report.
Chemical Works of Richter Gedeon is a multinational pharmaceutical company that is engaged in the research, development, production and marketing and trade of pharmaceutical products. Co.'s activities are divided into two major business segments: Pharmaceutical, including research, development and manufacturing of pharmaceutical products; and Wholesale and Retail including wholesale and retail trade through the distribution chain as well as marketing of its products. Co. is primarily engaged in production of gynecological, cardiovascular and gastroenterological products, antibiotics, antimicotics, OTC and medicines for treatment of the central nervous system.
Concorde Securities Ltd. is Hungary’s leading independent company engaged in investment banking activities. It provides its clients with integrated financial services, including securities trading, research, corporate financing advisory, capital market transactions, wealth management and investment advisory. The operational management of the company is the responsibility of the CEO, while the owners/managers (who control one-third of the company through their shares and options) are in charge of its strategic governance. Concorde Securities Ltd. is a member of the Budapest, Frankfurt, Warsaw and Bucharest stock exchanges, as well as of the Hungarian Association of Investment Service Providers.
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