Frequent Research Report

9 Month Financial Year'16 Earnings Update of Square Pharmacueticals

Square Pharmaceuticals Ltd. (SPL) has posted astounding 38.4% YoY growth in bottom line in Q3FY16 in line with our estimate
        SPL’s consolidated net revenue and net profit after tax in Q3FY16 stood at BDT 7614mn and BDT 2115mn recording 19.5% and 38.4% YoY growth respectively. The growth in topline was mainly driven by generic growth in Bang-ladesh pharmaceutical industry.
        The staggering growth in bottom line was driven by topline growth, gross margin expansion and higher level of efficiency. SPL’s gross margin during Q3FY16 expanded by 381 bps mainly due to higher sales of high margin products and reduced price of raw materials.
        The company’s operating expenses grew by only 9.6% during the quarter (YoY). This efficiency was achieved due to wide acceptance of the brand.
        The company has paid all of its long term and short term debt. During the quar-ter, the company’s NOCF stood at BDT 7850 mn recording 62.3% YoY growth. Currently, SPL has BDT 7505 mn of cash & cash equivalents in its balance sheet (BDT 12.03 Cash Per Share). Since the company does not need any large CAPEX, we believe cash balance will increase substantially during next few years. We expect the payout ratio to increase significantly in coming years.