Highnoon Laboratories Limited (HINOON) held its Corporate Briefing to discuss its 2022 year-end financial result and future outlook of the company. During the year, HINOON recorded total revenue of Rs16bn, which is an increase of 21% YoY and revenue has grown at a 5-year CAGR of 23%. Major contributions were from the Cardiometabolic segment at Rs5.18bn (29% of revenue), Respiratory segment at Rs3.6bn (20% of revenue) and Anti-Infectives at Rs4.2bn (23% of revenue) where HINOON leads the market.

Abbott Laboratories is one of the key partners of HINOON for toll manufacturing. HINOON manufactures qualitative harmonal products for them and is the leading brand of this segment. HINOON’s top brands include Combivair, which contributed Rs1.3bn, and Tagipmet contributing Rs1.16bn.

HINOON currently exports 205 products globally and 100 products are further in the pipeline for exporting. HINOON plans to expand its product portfolio further by introducing 10-12 new products in 2023.

As per management, HINOON has about 40%-50% of its product as essential drugs which will benefit from the proposed price increase by ECC.

HINOON continuously reinvests in its people, technology and plant. It has invested Capex amounting to Rs780mn in 2022 which is mainly invested into R&D facility and manufacturing facility for organic growth to meet the rising demand for its products.

HINOON has planned further expansions by acquiring a 12-acre land in e Quaid-e-Azam Business Park, a special economic zone which will give a 10-year tax break to the company. Management plans to complete the expansion by 2027 allowing the company to sell its products in International Markets and bring further efficiency in the cost of the existing products both in local and International market.

HINOON is leading the Pharma industry in terms of profitability and valuations with Gross Margins being the highest at 52%, Net Margins at 15% and ROE at 33%. In terms of valuation, it is trading at a P/E of 9.29 which is attractive in the sector considering the growth potential.

To recall, HINOON recorded earnings of Rs2.4bn (EPS: Rs57.71) in 2022 compared to earnings of Rs1.8bn (EPS: Rs43.17) in 2021 an increase of 34% YoY. Management stated that the reason for improved profitability was due to new product launches with higher profitability, increased focus on profitable product mix in the existing segment and improved working capital management generating higher financial income of Rs240mn as compared to last year.Curtesy – Topline Research