Richter results have a very important positive implication on Egis. Those two markets, namely CEE and Russia, which performed the best for Richter, are also critical for the growth of Egis.
When compared the 2Q performance of the two pharmas we would highlight the followings:
Richter reported 14% top line growth y/y, we expect 23% in case of Egis.
Richter’s EBIT grew 15% y/y, we see Egis to report 52% increase.
We see Egis bottom line at HUF 4.4bn (IFRS consolidated quarterly net profit), up 55-60% y/y versus Richter 47%. (Please note that Egis recently changed for quarterly IFRS reporting, therefore we still lack the base figures. However, HAS-non consolidated profit is seen up 55%, which makes an indication of IFRS quarterly profit development.)
Structure of the two earnings is also different a bit: Financials contributed 31% to the bottom line of Richter in the second quarter. In case of Egis we expect 24% “only”.
We see Egis’ 9M non-consolidated IFRS net profit at 14.4bn, 93% of the consensus FY06 estimate. Earnings upgrades are certainly needed needed.
Another argument besides Egis is its hedging policy. While Richter keeps hedging EUR-USD only (and not USD-HUF or EUR-HUF). Egis is actively hedging HUF against USD. In the light of the recent strengthening of the forint they seem to be more saved than Richter.
Egis reports on August 10, before market.