Egis held a presentation for analysts after releasing the quarterly results yesterday. Deputy-CEO László Marossfy attributed Egis's better-than-expected first-quarter performance to advance drug purchases on the domestic market and to the strengthening of the U.S. dollar. Mr. Marossfy added that Egis targeted a 25% yearly increase of exports to Russia in its medium-term strategy, but the most recent figures have surpassed this and based on the current trends Egis might exceed this target. He also confirmed that sales to the Russian reimbursement could reach USD 1-1.3m per month in 2006. Thus it could reach some 15% of Egis total turnover in the country, according to our model.
We were let known, that weak Polish sales in 1Q06/05 was a temporary fallback only, the company sees healthy figures in the remaining part of its fiscal year. Speaking about the very strong export performance to Ukraine (+160% y/y growth), the CFO revealed that they have extended their sales network in the country by almost 100 new doctor visitors, seeing very good market opportunities there.
Egis confirmed that it expects its domestic sales to rise slightly more than 10% this year, and its sales to other countries in Eastern Europe to increase 15%. However, sales of drugs and active ingredients to Western Europe are expected to fall further.
The guidances the company gave us yesterday are mostly in line with our estimates. It now seems to us however, that we should adjust our Ukrainian and Hungarian sales forecasts upwards, such as our estimate on Egis’ the gross margin.
Although the presentation did not contain any major surprises, the management practically confirmed our positive view on the company. We are going to issue our flashnote on Egis soon, with potential upgrade of earnings estimates and recommendation.