Excellent performance

Q1 2023 results

12 June 2023

  • The Group’s sales revenue increased by BGN 70.0m or 17.5%, reaching BGN 470.7m by the end of Q1 compared to BGN 400.7m for the same period last year. Sales of goods, which are distributed through Sopharma Trading, increased by BGN 48.9m or 14.5%, reaching BGN 387.3m compared to BGN 338.4m Q1’22. Sales of finished products, which are own production, increased by BGN 20.7m BGN or 35%, to BGN 79.9m for Q1’23 compared to BGN 59.2 million for Q1’22.
  • Тhe growth in sales in Bulgaria of self-manufactured products, compared to the previous period, is 4%. Sopharma maintained its market share and occupied 2.22% of the total volume of the Bulgarian pharmaceutical market in terms of sales value and 7.89% in terms of items
  • Self-manufactured products marked sizeable increases in the export markets as well. The growth was highest in markets like Russia (185%), Belarus (401%) – mainly due to the low base of the previous war-related periods, Georgia (63%), Azerbaijan (254%), Armenia (127%), Vietnam (388%), Moldova (169%), Latvia (140%), Poland (със 134%). Decreases were recorded in Mongolia by 37%, Ukraine by 3%.
  • EBIT increased by BGN 9.6m to BGN 32.1m, or up 42.9% from Q1’22.
  • Net profit increased by BGN 11.6m or a jump of 56.0% to BGN 32.3m. The main factors for this growth are the increase in sales in both main business segments by a total of 17.5% at insignificant changes in the gross profit margin, as well as the good management of operating costs (sales, marketing, logistics and administration costs).
  • Non-current assets at the end of the Q1’23 increased by BGN 8.9m compared to the end of last year. Acquired tangible and intangible fixed assets assets for the period amount to BGN 12 million, of which those related to leasing contracts, are in the amount of BGN 4.9 million. Investments in associated and joint companies are increase by BGN 8.8m mainly as a result of the reported share in the current profit and the increased stake in the associated company „Trust-United Holding“ AD.
  • Current assets at the end of the first quarter of 2023 increased by BGN 57.7m compared to the end of last year, which is mainly due to the increase in commercial receivables with BGN 29.5m and inventories with BGN 17.4m.
  • Liabilities decrease by BGN 24.7m compared to the end of the Q1’ Total the Group’s obligations under bank loans, leasing and factoring increased by BGN 5.3m, as the net debt after deducting cash and cash equivalents increased by BGN 5.6m to BGN 269m. Trade payables decreased by BGN 25.5m compared to the end of last year.

Atanas Videv
Equity Analyst
Tel.: +359 88 834 3583
e-mail: videv@sis.bg

Svetozar Abrashev
Senior Managing Partner
Tel.: +359 2 937 9869
e-mail: abrashev@sis.bg

Sofia International Securities
Sofia 1000,
140 G. S. Rakovski Str.
Tel.: + 359 2 937 98 65
e-mail: info@sis.bg

The report can be downloaded in a pdf format here.

The review of Q4 2022 can be found here

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Disclaimers and Required Disclosures

Sofia International Securities AD is a member of Bulgarian Stock Exchange (BSE) and the Central Depository of Bulgaria. The company provides brokerage, investment banking, equity research, portfolio management and other services. Sofia International Securities AD is regulated by the Financial Supervision Commission of Bulgaria.

Analyst Certification
The individuals responsible for the preparation of this report certify that: (1) all of the views and opinions expressed in this report are their own and reflect their personal views about the issuer(s) and the securities subject of this report, and (2) no part of any analyst’s compensation was, is, or will be directly or indirectly related to the specific views or recommendations expressed by them in this report.

Regulatory Restrictions
Sofia International Securities is not registered as a broker or dealer with the Securities and Exchange Commission or NASD in the United States of America and the information may be distributed in the US only to individuals who by acceptance hereof confirm that they represent “major institutional investors” as defined in Regulation 15a-16 of the Securities Exchange Act of 1934. Notwithstanding this, no publication of Sofia International Securities AD shall be construed as an offer (or solicitation of an offer) in any jurisdiction in which such offer or solicitation would be illegal.

Financial Interest
Sofia International Securities may or may not own shares of the company that is subject of this document. The individuals who are responsible for the preparation of this report may or may not own shares of the company that is subject of the report. Sofia International Securities is not a market maker in the securities that are subject of this document. In the past, Sofia International Securities might have provided corporate services to the company that is subject of this presentation and may seek to provide such and other services in the future. As of the date of this document Sofia International Services provides brokerage services to the company subject of this document.

Equity Valuation and Risks
The value estimate(s) stated in this report is (are) valid only in light of the valuation methods used to derive this estimation. The use of other or more comprehensive approaches could result in other estimates of value that could diverge substantially from the results presented herein. With regard to the above, when making our conclusions about the intrinsic value of the Company’s share capital, we have not considered or evaluated any possible tax, legal or other effects that might arise from engaging in transaction(s) with the shares of the company. The document should not be regarded by recipients as a substitute for the exercise of their own independent judgment and they should seek and obtain independent investment advice is necessary. Any facts and/or information stated in this document are subject to change without notice and Sofia International Securities is not under any obligation to update or keep current the information contained herein. Any opinions expressed herein are only correct as of the stated date. Past performance is not indicative of future results. Foreign currency rates of exchange may adversely affect the value, price or income of any security.

General
The report is prepared solely for informational purposes and is not to be construed as a solicitation, recommendation, investment advice or an offer to buy or sell any securities or related financial instruments. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. The document is based on information obtained from sources believed to be reliable but Sofia International Securities do not warrant its accuracy, nor that it is a complete summary of the securities, markets or developments referred to in the report. This report does not intend to provide assurance on the value of the company’s shares or on the achievability of the projections, statements and assumptions used by us. Actual results achieved in future periods might differ substantially from the projected ones because events and circumstances frequently do not occur as expected. Sofia International Securities accepts no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this report. Additional information will be made available upon request.