Beruflich Dokumente
Kultur Dokumente
Corporate
Credit Analysis
September 2005
Current
Rating
BBB
Previous
Rating
BBB
BBB
BBB
Positive
Stable
Rating Outlook
Operating Statistics
Figures in EGP mn
ROA (%)
ROE (%)
Operating Margin (%)
EBITDA
EBITDA Margin (%)
Phone
1H05*
FY 04
23.8
46.0
33.3
144.4
36.0
10.8
24.4
24.7
90.7
28.0
Analyst
FY 03
0.8
2.1
18.3
58.4
23.0
FY 02
0.5
1.5
21.3
62.7
26.0
Figures in EGP mn
Turnover
Total Assets
Debt/EBITDA (x)
EBITDA/Interest Ex. (x)
Cash & C. Equivalent/
Current Liabilities (%)
1H05*
403.3
523.54
1.1
5.8
2.0
FY 04
322.67
477.23
1.5
3.4
2.0
FY 03
258.6
502.2
4.1
1.3
0.4
FY 02
240.9
509.4
4.2
1.3
1.0
Strengths/Opportunities
1. Strong and high caliber management team with a proven track record.
2. Solid improvement in business and financial operations, in light of the sales restructuring plan, which took place in
early 2004.
3. The introduction of new drugs is anticipated to improve the companys cash flow and financial position.
4. Well diversified product mix, with no single concentration higher than 15% of total sales.
5. Relatively strong portfolio in the pipeline.
6. High demand for Amoun products, as a result of the high quality of its products and their reasonable prices.
7. Large hidden value in the state-of-the-art factory.
8. Health expenditure in Egypt is below average compared to other countries in the region, which gives more room for
potential growth.
Challenges/Risks
1.
2.
3.
4.
5.
MERIS Analysis 1
COMPANY FUNDAMENTALS
Amoun Pharmaceuticals Co. ("Amoun"), in El-Obour City, Egypt, is one of the best known pharmaceutical companies in
the domestic market with around 5.5% market share in June 2005 up from 4.62% in 2003 (according to IMS-HealthCare, the worlds leading provider of information on the global pharmaceutical and healthcare industries)1. Amoun owns
a state-of-the-art factory designed by John Brown Construction Co. in Chicago according to the US Food & Drugs
Administration (FDA) requirements. Amoun establishment roots back to the 70s, when Dr. Sarwat Bassily established
the first private sector pharmaceutical company in Egypt, which took over the importation and distribution activities for
pharmaceutical products in Egypt. Going forward, in 1985 he established "Advanced Biochemical Industries (ABI)"
which was sold in 1989 to Glaxo. In 1991, the second factory Amoun Pharmaceutical Industries Company (APIC) was
established and was again sold to GlaxoWellcome Egypt in 1998, in a deal valued at EGP 427mn, which was one of
the biggest deals on Cairo & Alex. Stock Exchange at that time. Around 8% of the deal was against total assets, while
the balance was the selling price of 25 generic products. At that time APIC ranked the fourth company among the
Egyptian pharmaceutical companies. Finally, Amoun Pharmaceutical Company the company under consideration
(Amoun) was launched in 1998 as a joint stock company. Since 1985 and until today, Amoun has been the fastest
growing pharmaceutical company in Egypt, and it ranked the second player in the current year (fifth player last year) in
the local market. It is worth noting that the company has been recognized by UNIDO in 1997, as one of the most
innovative and successful companies in Africa; Amoun is the sole pharmaceutical company in Egypt to be granted this
certificate. Moreover and in line with Amoun strategy to build its quality and credibility by pursuing high international
standards, the company has been awarded a number of certificates, namely; ISO 9001, ISO 14001, ISO 18001 and BS
7799. Most of these certificates recognize its ability to manufacture products according to international standards.
Amoun holds a very broad product portfolio, containing a mix of human, veterinary and additive nutrient products. The
human drugs account for most of the production mix, with nearly 375 out of 460 products in 1H05, compared to 333 out
of 416 in mid 2004. The human category includes products in many different pharmaceutical formulations including
capsules, tablets, dry syrups, powders, effervescents, syrups, solutions, drops, creams, suppositories, sprays, besides
sterile products such as ampoules, vials, sterile drops and ointments. On the other hand the company maintains a good
market position across many diverse therapeutic classes, especially in vitamins & minerals, cardio-vascular, antacids &
anti-ulcer and antibiotics plus other areas, backed by a large sales force and impressive marketing team allowing the
company to effectively compete against multinational companies. Amoun produces a number of drugs under license
from multinational companies, such as Merck (Germany), Rowa Wagner (Germany) and Leurquin (France), as well as
Sanofi (France) for some veterinary products.
Jun-05
Dec-04
O
th
er
s
V
ita
m
in
A
s
nt
&
ib
io
M
tic
in
er
s
A
al
&
na
s
A
lg
nt
es
ifu
ic C
ng
s
al
& ard
M io
us va
cu sc
lo ul
sk ar
el
le
G
ta
as
l
t
ro
A
nt
A
I
nt
nt
ac
ic
es
id
ou
tin
s
gh
&
al
A
&
n
tiA
nt
ul
i-H
ce
r
is
ta
m
C
in
N
e
E
S
nd
D
oc
is
or
rin
de
al
rs
D
is
or
de
rs
U
ru
lo
C
gi
or
ca
tic
ls
os
te
ro
id
s
Dec-03
Note: The above graph contains breakdown for 40 drugs, which represent 80% of total sales, while others include the remaining balance.
June figures is based on six months results
MERIS Analysis 2
Group 2
Growth rate
> 21%
Concor
Neuroton
Hibiotic
Haema-caps
Xenus
Kerovit
Nalufin
Erypoetin
Urivin
Ultrasolv
Levoxin
Hi-Chrome
Fladazole
Vermizole
1
2
3
4
5
6
7
8
9
Group 3
Growth rate
16% - 20%
Antodine
Ketolgin
Gast-reg
Melocam
Cal-heparine
Mosedin
Kapron
Aqua-Vera
Allerfen
1
2
3
4
5
6
7
Group 4
Growth rate
11% - 15%
Antinal
Vitamount
Apidon
Xethrone
Lactodel
Stimulan
Cyrinol
1
2
3
4
5
6
7
8
9
10
5% - 10%
Telebrix
Ibiamox
Alphintern
A-Chemotrypsin
Rowatinex
Rowachol
Rowabraxin
Michaelon
Philozac
Zolam
In early 2004, Amoun management started implementing a new sales strategy focusing on the most profitable drugs
with higher growth potential, while at the same time, gradually eliminating those with low profitability margins. According
to the new re-ordering plan, the total number of drugs constituting the majority of sales (almost 80% of total sales) is
divided into 4 sub-groups as shown in the table below. As the above table illustrates, these groups are broken down
according to different projected growth rates: Group 1 includes 14 drugs with more than 21% growth rate, Group 2
includes drugs with a growth rate between 16% and 20%, Group 3 consists of drugs with a growth rate of 11% to 15%
and finally the last group contains drugs growing within 5% to 10% growth rates. This scheme started to reap fruit,
which was reflected into the notable improvement in Amouns operations and financial performance. As such, turnover
has shown almost 25% increase between year 2003 and year 2004. In our view, this restructuring plan appears
promising with a positive impact on the companys operations.
Top Ten Pharmaceutical Products
Figures in EGP mn
Product
Indication
Sales
1H05
% of
Total
Sales
2004
% Of
Total
% Sales
Growth*
1- Concor
Cardiovascular
25.48
13.0
32.88
10.0
55%
2- Neuroton
3- Hibiotic
11.18
8.03
6.0
4.0
14.82
13.95
5.0
4.0
51.0
15.0
44.69
22.0
61.65
19.0
45.0
7.76
7.2
4.0
4.0
13.44
10.9
4.0
3.0
15.0
32.0
59.65
30.0
85.99
27.0
39.0
6- Vitamount
7- Ibiamox
7.15
5.07
4.0
3.0
11.82
8.78
4.0
3.0
21.0
15.0
8- Alphintern
Analgesics
5.01
2.0
9.06
3.0
11.0
9- Rowachol
Gastrointestinal
4.04
2.0
5.86
2.0
38.0
Analgesics
4.0
2.0
10.6
3.0
(24.0)
84.92
42.0
132.11
41.0
116.75
190.56
59.0
29.0
23.0
Total pharmaceuticals
* Based on Annualized Assumptions for 1H05
201.67
58.0
100.0
322.67
100.0
25.0
Subtotal
from
Generic Product
Under License from Istituto
Biochemico Italiano (IBI)
SpA
Under
license
Lab.
LEURQUIN, Paris
Under
License
from
ROWA-WAGNER,
Germany
Under
License
from
LEURQIN, France
MERIS Analysis 3
Drug
Date of
introduction
Rank /Number of
competitive drugs in the
same segment
Cardio-vascular
Concor (AG-Merck-under
license )
2000
Antacids
Antodine (Generic)
1994/2003
Vitamins
Neuroton (Generic)
2000/2003
No.1 of 21
Antibiotics
Hibiotic (Generic)
2000
No. 7 of 44
Main competitors
drugs in the same segment
Tenormin (Under License (UN-L) Astra
Zenica ),
Blokium (UN-L of Brodiese )
Zantac
(UN-L
of
GlaxoWelcome),
Rantidol (Nasr Phar, Compnay)
Becozyme (UN-L of Roche)
Beco (Misr Ph. Company)
Flumox (EIPICO)
Augmentin (UN-L of Smithkline Beecham)
MERIS Analysis 5
1H05
FY04
FY03
FY02
201.7
n.a.
322.7
24.8
258.6
7.3
240.9
13.0
72.2
36.0
90.7
28.0
58.4
23.0
90.7
26.0
67.1
33.3
79.7
24.7
47.4
18.3
51.3
21.3
134.9
169.1
190.4
240.7
59.5
29.0
53.0
16.0
3.9
2.0
2.7
1.0
It is worth noting that more than 90% of the distribution activities are done through Amoun for Distribution Company, a
sister company wholly owned by Dr. and Mrs. Basiliy. The accounts receivable days on hand have shown signs of
recovery backed by the better collection policy, which the company has applied lately. Management foresees that this
figure will continue improving in the future to reach 120 days, backed by the efficiency of the new collection policy, in
addition to the new strategy applied to export sales, where all export sales are done on a cash basis.
Cash Flow & Coverages
Figures in EGP mn
EBITDA
Tax
Interest Paid
CAPEX
Dividends Paid
Net Free Cash Flow
Retained Cash Flow
Cash coverage
EBITDA / Interest Expenses (X)
1H05
FY04
FY03
FY02
72.2
0.0
(12.4)
(5.4)
(9.3)
45.1
90.7
0.0
(26.7)
(13.1)
0.0
50.9
58.4
0.0
(46.0)
(11.8)
0.0
0.6
62.7
0.0
(48.8)
(22.2)
0.0
(8.3)
64.6
2.1
5.8
64.0
1.9
3.4
14.9
0.4
1.3
14.1
1.1
1.3
MERIS Analysis 6
1H05
FY04
FY03
FY02
Short-term Debt
Long-term Debt
Total Financial Debt
122.8
18.9
141.7
101.6
30.7
132.3
211.9
23.7
235.6
229.0
33.3
262.3
Shareholders Loans
Lease Obligations and others
Contingent Liabilities and Guarantees
Total Adjusted Debt
Cash and Cash Equivalent
Net Adjusted Debt
41.7
11.5
45.5
240.4
3.2
237.2
56.5
4.3
39.0
232.1
2.6
229.5
35.2
6.9
0.0
277.7
1.0
276.7
23.2
6.6
0.0
292.1
2.9
289.2
Equity
273.3
244.2
191.1
186.5
88.0
45.5
27.2
34.0
95.0
48.4
27.9
39.5
145.3
6.3
5.4
6.1
156.6
5.3
4.9
10.1
Proposed Bond
Amoun; intends to issue an EGP 150mn, seven-year bond with two year grace period. The issue will be non-convertible
and callable starting the beginning of the second year. A prepayment penalty of 1.5% will be applicable for exercising
this option in the third year and 1% in the third year. The bond is planned to replace all of the outstanding medium and
short term loans and to release all security that was mortgaged to lenders. The issue will be guaranteed by all the
tangible assets of the factory located in Al -Obour City.
The planned bond issue, in our view, will have a positive impact on both the debt structure and cash generative ability.
With regard to the debt profile, it is anticipated to bring the short tern debt to long-term debt ratio to less than 20%.
MERIS Analysis 7
Rating Outlook
The fundamental factor supporting the positive outlook is significant improvement in the companys business and
financial profile.
MERIS Analysis 8
30/6/2005
31/12/ 2004
31/12/2003
31/12/2002
31/12/2001
Income Statement
Turnover
Growth Profit Margin (%)
EBITDA
EBIT
Interest Incurred
Net Income
201.7
36.0
72.2
67.1
0.0
59.5
322.67
28.0
90.7
79.7
0.0
53.0
258.6
23.0
58.4
47.4
0.0
3.9
240.9
26.0
62.7
51.3
0.0
2.7
213.2
30.0
63.0
19.5
0.0
(31.7)
Balance Sheet
Cash and Equivalents
Total Assets
3.2
523.5
2.6
477.2
1.0
502.2
2.9
509.4
6.4
514.3
Short-Term Debt
CPLTD
Medium-Term Debt
Long-Term Debt
Leasehold Improvement (short/Long)
Others
Total Liabilities
90.6
32.2
17.1
1.9
9.5
2.0
153.3
66.9
34.6
25.5
5.2
1.5
2.8
136.5
176.4
35.5
17.0
6.6
2.8
4.1
242.4
195.8
33.2
33.3
0.0
1.4
5.2
268.9
190.5
34.3
22.2
15.1
0.0
5.1
267.2
41.7
200.0
273.26
56.5
200.0
244.2
35.2
200.0
191.1
23.2
200.0
186.5
19.4
200.0
183.8
18.3
79.4
(5.4)
0.0
(12.4)
0.0
(9.3)
99.4
97.6
(13.1)
0.0
(26.7)
0.0
0.0
35.1
19.1
(11.8)
0.0
(46.0)
0.0
0.0
20.7
31.6
(22.2)
0.0
(48.8)
0.0
0.0
-22.3
20.7
(23.9)
0.0
(47.3)
0.0
0.0
22.7
43.5
35.9
29.5
10.8
24.4
28.1
16.4
0.8
2.1
22.6
1.5
0.5
1.5
26.0
1.1
-6.4
(15.9)
29.5
(14.9)
74.0
134.9
0.6
2.0
42.0
172.7
0.6
2.0
61.0
190.4
0.2
0.0
63.0
240.7
0.6
1.0
73.0
259.7
1.2
2.0
5.8
56.0
55.0
2.0
3.4
56.
55.8
1.5
1.3
126.9
126.0
4.0
1.3
144.2
143.1
4.2
1.3
145.0
142.0
4.2
MERIS Analysis 9