Report
Primaresearch
Tumi Makoah
EUR 173.18 For Business Accounts Only

Ascendis Health (ASC ) - Under Pressure

Summary

Ascendis second rights issue in as many years is meant to manage the c. ZAR2bn worth of deferred vendor liabilities as a result of acquisitions. The subscription price of ZAR20 is at a premium to the 30-day VWAP and lower than the ZAR22 price of the first rights issue. We also show that ASC share price has always traded at a premium to NAV and that on 30 June 2017, it was trading at c.76% premium to NAV.

 On a divisional basis, organic sales growth for the Consumer Brands division has recently slowed-down to -30% y-y. Although management have cited various reasons for challenges faced by the Direct unit in Nigeria, we believe the Direct business model played a role in the ongoing underperformance. Although we are pleased by attempts to turnaround Scitec, we are concerned that this might not be sufficient to mitigate rising raw material input costs.

29/11/2017 11 EN
Underlying
Ascendis Health Ltd
Ascendis Health Ltd

Ascendis Health Limited is a health and care brands company. The Company operates through four segments: Consumer Brands, Pharma-Med, Phyto-Vet and International. Its Consumer Brands segment consists of health and personal care products sold to the public, primarily at the retail store level. It offers over the counter (OTC) medicines and consumer brands products, including vitamins and minerals, homeopathic, herbal products, dermaceuticals, functional foods, functional super foods, sports nutrition, health beverages, weight management and therapeutic cosmetics. Its Pharma-Med segment consists of the sale of prescription and selected OTC pharmaceuticals, and includes medical devices. The Phyto-Vet segment supplies health and care products to the plant and animal markets. It manufactures and supplies over 3,500 products. The International segment sells health and personal care products, prescription and selected OTC pharmaceuticals and medical devices operating in the European market.

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ZAE000185005 Johannesburg Stock Exchange South Africa
Provider
Primaresearch
Primaresearch

Primaresearch is an independent, sell-side, equity research firm based in Cape Town, South Africa. We focus our research on consumer-facing companies as we have credible experience in this space. The name “primaresearch” invokes both high quality (prime) as well as “primary” research – being novel and offering value-add investment insights for our clients.

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Our vision is to be the leading independent sell-side research firm in Africa. While we start with South Africa, we are looking into providing our clients with comprehensive, Africa-wide consumer-facing company and market research. Africa is poised to emerge as a significant consumer market, for which investors in South Africa and abroad will require thorough research and insights on. We aim to be the “go-to” research firm for these investors.

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Analysts
Tumi Makoah

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