In morning trade the Sigma Pharmaceutical Limited (ASX: SIP) share price has climbed almost 4% higher following the release of its full-year result.
Here are key takeaways from the release:
- Revenue increased 26.2% to $4.4 billion.
- Underlying earnings before interest and tax (EBIT) rose 12.4% to $100.2 million.
- Reported net profit after tax up 5.3% to $53.2 million.
- Underlying net profit after tax was up 13% to $66.9 million. (Excludes the impact of a one-off insurance settlement and doubtful debt provision.)
- Earnings per share of 5.4 cents.
- Full-year dividend of 5.5 cents per share.
- Share buy-back refreshed for up to a further 10% of shares on issue.
Now what?
Overall I felt the company behind pharmacy chain brands such as Amcal, Chemist King, and Guardian posted a solid underlying result today.
One particular highlight was the performance of its Amcal business online in China. According to management the move has been a big success so far with sales more than double initial expectations.
In light of this the company now intends to leverage the platform it has established in mainland China to expand into the Hong Kong market.
Another positive was its like for like sales growth at Sigma branded pharmacies. They rose an impressive 8.2% during the period.
One slight disappointment was that management only reiterated previous guidance of at least 5% underlying EBIT growth for FY 2018.
Should you invest?
Based on the underlying result Sigma's shares are changing hands at approximately 19x earnings and provide a trailing fully franked 4.6% dividend.
I think this is a reasonably fair price to pay to own its shares and puts it in line with rival Australian Pharmaceutical Industries Ltd (ASX: API), but with a greater yield.
Although its growth may be slowing, the company does have the potential to surprise through its activities in China and Hong Kong. In light of this I think Sigma could prove to be a solid long-term investment.