Topline Securities Limited - Searle (SEARL) The Searle Company (SEARL): Reinstating with a Buy

Report

Topline Securities Limited

Fawad Basir

EUR 100.00 For Business Accounts Only

The Searle Company (SEARL): Reinstating with a Buy

We reinstate our coverage on The Searle Company Limited (SEARL) with a ‘Buy’ stance. Our Target Price of Rs254, implies a total return of 26%.
We believe the current COVID-19 pandemic bodes well for Pharmaceutical companies, with an expected increase in consumer and government spending towards healthcare and medical services.
Four key earnings drivers for SEARL are:
(i) Focus on market share on the back of both organic and inorganic growth: SEARL has a diversified portfolio of drugs in Pakistan and has increased its market share to 6.5%, (second highest in terms of sales value) in 1Q2020. Revenues over the past 5-years have grown at a CAGR of 19%, with the company consistently looking to introduce new products.
(ii) Acquisition of OBS: The company is also in the middle of closing the acquisition of OBS Pakistan portfolio, which is expected to increase SEARL profitability going forward.
(iII) More spending on Health: Increase in health awareness will ensure higher health spending, with COVID-19 related drugs to increase existing market share. The company is importing Remdesivir from Bangladesh, which is expected to reduce hospitalization days by up to 30% for COVID-19 stricken patients. The OBS portfolio also includes Decadron, which is expected to reduce fatality chances among COVID-19 patients.
(iv)CPI linked Pricing Policy: According to Pakistan Drug pricing policy, pharmaceutical companies can increase their prices in line with the annual CPI, which will help keep Gross Margins intact.
Key Risks: (i) Higher than expected PKR depreciation, (ii) Changes in Drug Pricing Policy, (ii) Supply chain disruptions of API, and (iv) any other regulatory changes.

Regards,

Hammad Akram

03/07/2020 17 EN

Underlying

Searle

The Searle Company Limited is a holding company, which is principally engaged in the manufacture of pharmaceutical products and other consumer products. In addition, the Company is engaged in sale of food and consumer products, and manufacture of pharmaceutical products for other companies. The Company operates through three segments: Pharma, Consumer and Investment property. The Company's geographical segments include Pakistan, South Asia, East Africa, South-East Asia and Middle East. The Company's portfolio includes three divisions: Pharma, Consumer Health and Nutrition. Its products include Selanz SR, Levoxin, Lomotil, Xaroban, Vitrum, Rhulef, Canderel, Peditral, Ezium, Hydryllin, Xadine, Zenbar, Extor, Adronil, Nuberol/Nuberol Forte and Byscard. The Company has pharmaceutical range across therapeutic areas, such as cardiovascular, respiratory care, gastroenterology, pain management, orthocare, neuropsychiatry, probiotics, antibiotics and nutritional care.

See profile

PK0061701014 Pakistan Stock Exchange Pakistan

Provider

Topline Securities Limited

Topline Securities is one of the fastest-growing brokerage houses in Pakistan. It has strong Equity Brokerage, Economic/ Equity Research, Commodity Trading and Corporate Finance & Advisory functions.

Topline Securities has been endowed with numerous awards by renowned international financial organizations. The highlights of which consists of the award for ‘Best Local Brokerage House of Pakistan’ by Asiamoney Brokers Poll (the largest Asia-focused equity services provider poll) in 2016 and ‘Best Equity Brokerage House’ by CFA Society Pakistan in 2015.

Previously, Topline Securities held the title for ‘Best Brokerage House’ for 4 consecutive years (2011-2014) by Asiamoney Brokers Poll. Other awards include the ‘Best Salesperson’ award by Asiamoney for 6 consecutive years (2011-2016), the ‘Arabia Fast Growth 500’ award and ‘Pakistan Fast Growth 100’ award in 2012 and 2013 by AllWorld Network.

JCR-VIS, a credit rating agency providing independent rating services in Pakistan has assigned initial rating of “A-2” for short term and “A” for long term to Topline Securities. Topline Securities is registered as Underwriter, Book Runner and Research Entity with Securities & Exchange Commission of Pakistan (SECP).

See profile

Analysts

Fawad Basir

Other Reports on these Companies

Tellimer

The Searle Company: 2QFY23 Review - Faring better than peers

SEARL has announced 2QFY23 NPAT of PKR365mn (EPS: PKR0.93), down 31% YoY, but up 38% QoQ led by improved margins – a seasonal increase in our view. This takes 1HFY23 NPAT to PKR629mn (EPS: PKR1.61), down 56% YoY. Sharp earnings contraction is primarily led by (i) higher raw material and distribution costs and inability to pass on the same and (ii) higher finance costs. SEARL did not announce any dividends in line with expectations. 2QFY23 KEY RESULT HIGHLIGHTS: * SEARL has reported revenue o...

PREMIUM

February 28, 2023 February 28, 2023 1 EN

Tellimer

Pakistan Pharmaceuticals: Some relief on the way

As per news sources, the Health Ministry and DRAP have forwarded a summary to the federal cabinet, seeking upto 350% increase in prices of 119 medicines. These includes drugs used in the treatment of typhoid, malaria, colds and other diseases. To recall, over 70 drug makers applied for an ad-hoc increase in drug prices to counter the impact of high inflation (7MFY23 average CPI: 25.4%) and sharp PKR devaluation (+50% since Jan’22). This will help address shortage of medicines in the country a...

PREMIUM

February 9, 2023 February 9, 2023 1 EN

SmartInsider

The Searle Company Ltd: 1 director

A director at The Searle Company Ltd sold 200,000 shares at 83.690PKR and the significance rating of the trade was 52/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two years clearly showing Close periods where trading activity is restricted under listing rules. The names...

Free Trial

October 21, 2022 October 21, 2022 1 EN

Pakistan Strategy: Foreign selling at PSX; Will this trend continue in 2021?

The continuous foreign corporate selling has been affecting share prices and stock market sentiments in Pakistan. During the past six years, total net foreign selling has been recorded at US$2.1bn, which is 15% of the market’s free float capitalization. In 2020 alone, net foreign corporate selling has clocked in at US$529mn till Dec 18, 2020 (total net foreign selling: US$504mn). This follows foreign buying that came in on two major accounts in 2014/15 and 2017: Secondary Public Offerings (SPO) by the government in 2014/15. Two of these transactions, UBL and HBL attracted strong foreign ...

EUR 50.00

December 21, 2020 December 21, 2020 6 EN

Syed Atif Zafar

Syed Atif Zafar

Pakistan Strategy: Pakistan Outlook 2021 based on Topline Poll

Topline Securities conducted a poll during the first week of Dec-2020 of over 50 top funds managers and corporates, asking range of questions on their expectations of the economy and the equity market for the upcoming year. Around 65% of the survey were fund managers, where the remaining participants belonged to the Pakistan corporate sector from sectors like Banks, Oil and Gas, Cements, Steel, Autos etc. The excerpts of the survey were published in our detailed report titled ‘Pak Strategy: A year of economic stabilization, Index likely to reach 52,500’ published on December 10, 2020. The...

EUR 100.00

December 17, 2020 December 17, 2020 10 EN

Shankar Talreja

Shankar Talreja

Pakistan Automobiles: Car sales (including KIA) up ~63% YoY in Nov-2020

Car sales, as reported by PAMA, increased by 48% YoY in Nov-2020 to 14,454 units. The same, including Lucky Motor Corporation (KIA, non-member of PAMA), is up by 63% YoY. Indus Motor (INDU), Honda Car (HCAR) and Pak Suzuki Motor Company (PSMC) registered sales increases of 87% YoY, 72% YoY and 16% YoY respectively. This is the first YoY increase in FY21 for PSMC as some of the production issues have been resolved. Car sales also increased by 3% MoM in Nov-2020. The increase was driven by PSMC’s increase of 12% MoM as Cultus sales grew by 86% MoM followed by Ravi sales improving by 255% MoM...

EUR 20.00

December 11, 2020 December 11, 2020 1 EN

Sign-up for free to access full reports immediately

Email Address*

Choose Password* ( 6 or more characters )

Due to regulatory restrictions regarding the distribution of financial research, this report is restricted to a specific region or investor type. Get access to exclusive reports by answering the questions below.

Select your country*

Get financial insights straight to your inbox

By clicking "register" you accept the Terms and Conditions & Privacy Policy

Already on ResearchPool?

Almost there...

Are you a professional investor?

Select your country

REGISTER

Create a free ResearchPool account to access full reports, get a personalised dashboard and follow providers or companies

In order to access this report please create an account.

LOGIN