Besides the shrinking share price, weak full year results as at the end of March 2019 are said to have scared investors and triggered doubts about the firm’s growth forecast.
Institutional investors at the Uganda Securities Exchange have adopted a wait-and-see approach towards Cipla Quality Chemicals Industries Ltd following a sharp decline in both its share price and profit after tax.
The share price of the firm — which produces anti-retroviral, anti-malaria and Hepatitis B drugs — has dropped by 49 per cent since it started trading on the USE in September 2018. It fell from its initial public offering price of Ush256.5 ($0.069) per share to Ush130 ($0.035) per share at the end of July, amid low trading activity and limited earnings offered to investors.
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Besides the shrinking share price, weak full year results as at the end of March 2019 are said to have scared investors and triggered doubts about the firm’s growth forecast.
Profit after tax fell by 84.8 per cent to Ush6.79 billion ($1.79 million) as at the end of March 2019. Total sales revenues declined to Ush195.1 billion ($51.4 million) from Ush227.3 billion ($59.9 million) as at the end of March 2018, attributed to drastic declines in procurement orders made by the Global Fund, the firm’s largest donor.
Total cost of sales dropped to Ush125.5 billion ($33 million) by close of March 2019 from Ush130.9 billion ($34.5 million) as at the end of March 2018, while total administration expenses rose to Ush23.6 billion ($6.2 million) from Ush17 billion ($4.48 million) during the same period.
Cipla’s total assets rose to Ush287.6 billion ($75.8 million) by the close of March 2019, from Ush209.2 billion ($55 million) as at the end of March 2018. The drug maker declined to issue a dividend at the end of March 2019, citing high capitalisation needs faced by the business, a rare move for a newly listed company.
But company executives remain optimistic, announcing in their annual report that opening of new markets like Zambia will improve the future outlook. They also argue that some investments that ate into the company’s profit last year included a Ush12 billion ($3.3 million) pallet storage facility, distribution centre and warehouse as well as the expansion of the production line to 130 million tablets per month from 80 million are one-off expenses likely to bring better returns.
APPROVALS
The company previously secured regulatory approvals for drug exports to […]
