Earnings Report /
Bangladesh

Square Pharmaceuticals: Q1 FY23: EPS rose c10% yoy, due to higher revenue growth, forex gain and margin.

  • EPS in Q1 FY23 stood at BDT 6.20 against BDT 5.64 reported in Q1 FY22.

  • SQURPHARMA’s revenue growth was one of the highest among its peers in Q1 FY23.

  • Exchange rate gain rose from BDT 31 mn in Q1 FY22 to BDT 399 mn in Q1 FY23.

IDLC Securities
15 November 2022
Published byIDLC Securities
  • EPS rose c10% yoy in Q1 FY23. EPS in Q1 FY23 stood at BDT 6.20 against BDT 5.64 reported in Q1 FY22. Major drivers include 8% revenue growth, BDT 399mn foreign exchange gain and 39 bps rise in gross margin. If earnings were adjusted for foreign exchange gain, earnings growth would stand at c2% yoy. Associates — which contributed c9% to total earnings — grew c18% yoy, driven mostly by SQUAREFASHION’s c61% yoy earnings growth.

  • Revenue rose c8% in Q1 FY23. Revenue rose to BDT 16,070 mn in Q1 FY23 from BDT 14,877 mn in Q1 FY22. SQURPHARMA’s revenue growth was one of the highest among its peers in Q1 FY23. Compared to SQURPHARMA, peer companies such as RENATA (human & animal health, contract manufacturing), BEXIMCO (Stand alone) and IBNSINA experienced revenue growth of c8%, c6%, and c4% respectively. Thus, SQURPHARMA was one of the high performers, in terms of revenue growth in Q1 FY23.

  • Gross margin rose slightly by 39 bps yoy, Opex/Sales rose 168 bps yoy in Q1 FY23. SQURPHARMA’s gross margin rose slightly to c52% in Q1 FY23 from c51% in Q1 FY22. Opex/Sales rose to c20% in Q1 FY23 from c19% in Q1 FY22. SQURPHARMA experienced an increase in gross margin unlike peer companies whose gross margins fell or remained flat in Q1 FY23. Opex/Sales also rose in Q1 FY23 likely due to c18% rise in operating expenses, driven by inflationary pressure.

  • Other income rose c42% yoy in Q1 FY23. Other income rose to BDT 1,420 mn in Q1 FY23 from BDT 1,002 mn in Q1 FY22. Exchange rate gain is a major driver of this rise in other income. It rose from BDT 31 mn in Q1 FY22 to BDT 399 mn in Q1 FY23. Whereas peer companies experienced exchange rate loss, SQURPHARMA registered a significant gain.

  • Effective tax rate rose 61 bps yoy in Q1 FY23. Effective tax rate rose to 22.1% in Q1 FY23 to 21.5%. SQURPHARMA reported a corporate tax rate of 22.5% in Q1 FY23. This suggests that the company was unable to meet the criteria required to avail the tax cut.