Business daily Napi Gazdaság speculates that weakening of the forint might have a substantial positive impact on the results of the pharmaceutical companies. In case of Richter the press sees HUF 2.5bn gain, while in case of Egis profit could be HUF 2bn higher.
Although the exact calculation of the profit increase is really difficult in the lack of information on hedging positions. Our latest information from Egis is that they have only EUR/USD positions and not EUR/HUF, which would provide full excess to forint weakening in 1Q06. Please also note, that revaluation of foreign currency based trade receivables could result in a significant increase in financial result for both companies.
We have Buy recommendation on Egis with a price target of HUF 35,570 while keep Richter at Hold with a target of HUF 41,193.