Richter Gedeon - Cheap Valuation Vs. Strong Ability To Constantly Drive Value
- We raise our 12-month TP from HUF 9,900 per share to HUF 10,325, recognizing Richter’s ability to improve profitability and maintain growth, which is primarily driven by its innovative specialty products and significant FX tailwinds (ie. the weakening in HUF against the EUR, RUB and USD).
- Our new 12-month TP leaves a 28% upside potential from the current share price. We note that Richter may continue to pay dividend in the coming years which would imply a DIVY of ca. 4% on the basis of the current share price.
- Based on our estimates of non-recurring items, Richter currently trades at 6.2x and 9.3x 2022 EV/EBITDA and P/E multiplies, which are approximately 25% lower than their historical average.
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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