AGP has reported 3QCY21 NPAT of PKR342mn (EPS: PKR1.22), down 17% yoy and 12%qoq. The result is lower than our estimated EPS of PKR1.60, where the deviation has stemmed from disruptions in the Afghanistan business with sales suspended due to border closure – barring which this is a strong result by AGP, in our view. The result takes 9M net profits to PKR1.1bn (EPS: PKR3.98/sh), down 5% yoy.

AGP has successfully consolidated Sandoz Pakistan, where sales from the same are in line at PKR750mn, albeit with better than expected GMs of c. 51% vs. our estimated 47%.

3QCY21 Key result highlights:

§ AGP reported revenue of PKR2.3bn, up 26% yoy and 14% qoq. This is lower than our estimated sales of PKR2.6bn with the deviation stemming from absence of sales to Afghanistan and lower institutional sales. Revenue from Sandoz Pakistan clocked in at PKR750mn, largely in line with our estimated PKR700mn.

§ AGP posted gross margins of 53.4% – higher than our estimated 50.2% with the deviation led by Sandoz (51% vs. our estimated 47%). AGP has not witnessed any meaningful exchange rate volatility due to strong inventory buildup, as expected.

§ SG&A expenses have risen 1.5x yoy in line with rising sales. Finance costs, on the other hand, have doubled to PKR70mn (albeit slightly higher than expected).

This is a decent result by AGP, in our view, despite disruptions being faced by the Afghanistan operations. Sandoz has beat expectations and earnings can only rise from here. We reiterate our Buy stance on AGP with a TP of PKR140/sh.

Courtesy –  Intermarket Securities Limited