Earnings Report /
Bangladesh

Square Pharmaceuticals: FY 19: Earnings growth picked up in Q4; reiterate Buy

    Tanay Kumar Roy
    Tanay Kumar Roy

    Research Analyst

    IDLC Securities
    22 October 2019
    Published by

    Annual EPS of BDT16.03 meets our expectations, growing by c9% yoy. As we expected, Square generated BDT4.09 EPS in Q4 FY 19, c17% yoy growth. The company generated double-digit bottom line growth after five quarters, which we think is an indication that Square is gradually recovering its growth trajectory.

    26% dividend payout is close to our expectationSquare declared BDT4.2 dividend per share in its FY 19 annual declaration compared with BDT3.5 (c25% dividend payout) in FY 18.

    We reiterate Buy with TP BDT348 (48% ETR). Square is currently trading at 12.5x 2020e PE, 3.8x 2020e EV/Sales and appears cheap compared to its historical PE median of 20x and 2020e earnings growth of 18%. We believe recovery of sales growth along with a 100bps EBITDA margin expansion from drug price increase will contribute to this strong growth. 

    Please note that detailed financials will be available when Square publishes its annual report. We will provide further updates then.