Alkaloid AD Skopje: expansion and antibiotics drive strong earnings (stays HOLD)
Following Alkaloid’s strong 3Q22 results, we have, again, revised up our 2022-24E earnings, with a new price target (PT) of MKD 18,763/share, or upside of c.14%. We maintain our HOLD recommendation. Once again, the results in both the Russia/CIS and EU-27 markets have outperformed; while, for now, the gross margins remain surprisingly resilient. Demand for antibiotics – its largest product line – remains extremely strong, including cephalosporins, a niche drug, where the company is one of the few global competitors. Finally, the upside from recent growth investments – in both capacity and new products – is increasingly visible in the company’s earnings. We must still highlight the stock’s material premiums vs. its sector peers, but these are narrowing as we upgrade our numbers – instead of over 40%, it is now c.30% on 2023-24E EV/EBITDAs. Also, despite the higher rate environment, the stock still generates ROICs some 230bps above its cost of capital.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
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