Sopharma AD

Excellent performance

Q2 2023 results

7 August 2023

  • Revenues from sales of manufactured medicinal products and increased by BGN 14.7m to BGN 123.8m, compared to BGN 109.1m in the H1’22.
  • Sales revenue for the H1’23 for European countries increased by BGN 10.1m or 18.4% compared to H1’2022. Sales in Russia and Ukraine have the largest share, and for the current period they grew by 18.8% and 1.5%, respectively. Growth was also registered in other traditional markets, with sales revenue increasing in Belarus by 69%, in Moldova by 75%, in Serbia by 40%, in Latvia by 21%, in Poland by 25%. Sales in Lithuania fell by 27%.
  • Sales of Sopharma on the domestic market decreased by BGN 0.3m or 0.7% in the H1’23, to BGN 45.4m. According to IQVIA data, at the end of the H1’2023, the company occupies 2.18% (fourteenth position) of the total volume of the Bulgarian pharmaceutical market in value and 7.62% (second position) of sales in natural terms.
  • For the current period, the costs for materials increase by BGN 2m compared to the H1’22 in the part of basic, laboratory and technical materials. A decrease was registered in the costs of heating and electricity. Personnel costs increased by BGN 6.1m as a result of an increase in remuneration, and in external services costs, which increased by BGN 5.1m, the largest change was registered in the costs of manufacturing medicines and in the costs of advertising and marketing services, increasing by BGN 1.7m and BGN 2.2m, respectively.
  • Financial income increased by BGN 0.5m to BGN 3.8m in the H1’23, mainly due to the increase in interest income on granted loans in the amount of BGN 0.3m. Financial expenses increased by BGN 0.5m to BGN 1.2m in the H1’2023, the main reason being the impairment charge for credit losses on receivables on commercial loans granted in the amount of BGN 0.5m.
  • EBITDA in the H1’23 increased by BGN 15.6m, or by 42.6%, to BGN 52.4m, compared to BGN 36.8m in H1’22. The growth achieved during the period is due to the increase in sales in the main markets and the improved gross profit margin on the one hand, as well as a relatively stable structure of operating expenses.
  • Net profit increased by BGN 14.4m, or 61.8%, to BGN 37.8m compared to BGN 23.3m in the H1’22.
  • Current assets increased by BGN 49.8m to BGN 244.4m, with an increase in inventories of BGN 24.6m, where the most significant growth was BGN 15.2m. is registered with the finished product. An increase is reported in receivables from related enterprises in the amount of BGN 13.5m, in trade receivables by BGN 9.3m and in loans granted to third parties by BGN 2.9m.
  • Current liabilities increased by BGN 82.7m, to BGN 155.7m, as a result of the increase in liabilities under ST bank loans by BGN 30.3m, as well as as a result of accrued liabilities to related and third parties to receive dividends in the amount of BGN 72.8m.
    Trade payables decreased by BGN 23m, which is the result of the reduction in advances received for the sale of finished products, which decreased by BGN 20m.

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 for Q1 2023 can be found here

The review for 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.