AGP Limited | Company Update | Much needed price dose
We revise our estimates by 13-15% for AGP Limited (AGP) incorporating recently approved increase in product prices by Drug Regulatory Authority of Pakistan (DRAP). Subsequently, we hold positive stance on the stock with 11% upside to our December 2019 target price of PKR 101.0/share. AGP manages to capture higher than average increase in its drugs under hardship category which contributes approximately 12% in its sales mix (excluding Mylan portfolio). Moreover, 15% increase in all other drugs has also been announced. Having said that, impact of increased API cost in the wake of currency devaluation is likely to keep near term margins in check. The impact would be more visible in 4QCY18 results where we estimate earnings of PKR 1.0/share with a gross margin of 51%. However, we expect the company continues to enjoy health margins going forward. While we anticipate annual price increment to be made as per schedule in July 2019, we do not rule a possibility of delay in its implementation in the wake of mid-year price revision.
AGP CORPORATION is in the provision of power including electricity, air conditioner to the aircraft, as well as maintenance of special airport related facilities. The Company operates though three segment business. The Power Supply segment is in the provision of electricity, air conditioner and compressed air to the aircraft. The Maintenance segment is engaged in maintenance and management of special airport related facilities, buildings and utilities. The Associated segment is engaged in manufacturing and sales of food cart, operation and management of checked baggage inspection device, production and sales of low potassium vegetable, provision of support services for business jet, as well as sales of ground support equipment (GSE).
Ismail Iqbal Securities (Private) Limited (IISPL) is a TREC holder of the Pakistan Stock Exchange, as well as an SECP registered Underwriter and Book Runner. IISPL provides comprehensive financial services including Equity Sales, Research on Equities and the Macro-Economy, Investment Advisory, Portfolio Management, Corporate Finance, and extensive services for Private Equity investors. IISPL services a diversified client base, from Institutional to Retail Investors including High Net worth Individuals.
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