AFT Pharmaceuticals

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Originally Posted by winner69

Maxigesic to appear on NZ Warriors shorts


Up the Wahs

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Suprised the boost in price didn't really happen last week. But this is a great hold. All upside and not much downside at all.
One great company. They've taken awhile to get going but all looking positive from now on.
Disc. Accumulating

Anyone wondered about poor cash conversion on this co? I've held and admired AFT for a while but recently sold based on this. Looks attractive on a reported earnings multiple but not sure that's the case under the hood.

AFT spend c.$10m p.a. on drug development capex, over 10x the c.$800k annual drug development amortisation. I realise now this is because development costs are all capitalised (no amortisation) during the development phase. Amortisation charges only commence when the new drug is finished & provides benefits.

Makes a big difference if drug dev takes a long period. As an example, from what I can see AFT first began Maxigesic IV in 2012 (collaboration with Hyloris) and looking to launch this year. Call it a c.10 year development period. Amortisation on income statement only starts in 2024 but there's cash capex outflows for 10 years before that. Big TVM factor.

Obviously if AFT stopped new development there would be a time in future when the cash conversion flips. But as long as they're growing development spend each year (which they are) cash earnings will lag reported (might do $20m reported FY24 but negligible free cash flow).

I assume this is common amongst a lot of pharma companies(?) but it took me by surprise. Ultimately probably doesn't impact the market's valuation multiple..

Updated guidance …..not really an upgrade

AFT now expects FY 24 operating profit, including the company’s share of the license fee (estimated at NZ$6 million), to range between $23 million to $25 million. AFT’s earlier guidance for an FY 24 operating profit of $22 million to $24 million, excluded the Hikma license income

Just as well that license fee is coming through other wise it seems profit would have been $16m to $18m v guidance $22m to $24m

Still $23m pretty good compared to $20.4m two years ago and $19.7m last year …but gobs comments above are interesting

http://nzx-prod-s7fsd7f98s.s3-websit...277/412652.pdf

Market not happy. SP back down to low $3 range again i guess.

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Originally Posted by ronaldson

Likely $3.31 will not be seen again for a while now. I did more than double my holding when I posted but still only a small holder. Patience will be rewarded here!

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It was only on 9 January that I posted as above, and the share price was running quite strongly then, but the last announcement pointing to a reduction in NPAT if the $6m licence fee receipt now due (has it actually been paid I wonder?) is excluded has caused a retreat back to the low $3.30's.

We won't learn any more now until the FY24 announcement due in May so a bit of a hiatus meantime. If I have any loose change over that timeframe I may be tempted to continue topping up at this price as a dividend seems all but certain at that point and the access granted to the China market might even be kicking a contribution in.

Market doesn't agree with me, but I bought another 7500 today at $3.21. That seems enough just now despite the attempt to provide a bit of hype via the NZX announcement today, indicative that they continue to spend for growth as signalled previously.

Time to hit the pause button pending the FY24 results release in May.

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Originally Posted by ronaldson

Market doesn't agree with me, but I bought another 7500 today at $3.21. That seems enough just now despite the attempt to provide a bit of hype via the NZX announcement today, indicative that they continue to spend for growth as signalled previously.

Time to hit the pause button pending the FY24 results release in May.

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You’re right. ….in spite of all the announcements AFT can’t seem to find any market love.

Chart says it all

Still watching

I exited my small shareholding in this business after the last announcement which was a downgrade in disguise. They keep spending more and more on distribution, ANZ margins are under pressure, they keep missing guidance. Should have a great growth runway and I'm sure they do in terms of topline but likewise have no confidence they won't continue to ramp up spending which'll offset it. Broker earning downgrades have been harsh. It's highly priced but has woeful cashflows. Plus worth mentioning maxigesic tablets patents expire in 2025 n NZ and 2028 in Australia. There is another next generation non opioid pain relief treatment that looks set to gain certification in America which could be a real competitor to AFT's newly gained access to the US non opioid pain relief market. A pity as it was a little company that I thought had legs and maybe it still does but risk/reward equation for me became too unbalanced. Good luck to all holders.

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Originally Posted by Muse

I exited my small shareholding in this business after the last announcement which was a downgrade in disguise. They keep spending more and more on distribution, ANZ margins are under pressure, they keep missing guidance. Should have a great growth runway and I'm sure they do in terms of topline but likewise have no confidence they won't continue to ramp up spending which'll offset it. Broker earning downgrades have been harsh. It's highly priced but has woeful cashflows. Plus worth mentioning maxigesic tablets patents expire in 2025 n NZ and 2028 in Australia. There is another next generation non opioid pain relief treatment that looks set to gain certification in America which could be a real competitor to AFT's newly gained access to the US non opioid pain relief market. A pity as it was a little company that I thought had legs and maybe it still does but risk/reward equation for me became too unbalanced. Good luck to all holders.

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Yes, cash flow pretty abysmal

Probably pay a divie to add ‘credibility’ to their financials ……….and seduce a few punters to join the share register.

I arrived at a similar conclusion Muse but I'm probably less concerned about the patent expiry. I suspect where maxigesic is mature it has brand value and people buy it mainly out of habit as that's what they always buy when they're sick. Whether it's still under patent or not I'm not sure would get noticed by the usual buyer, at least for ANZ.

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Originally Posted by Goob

I arrived at a similar conclusion Muse but I'm probably less concerned about the patent expiry. I suspect where maxigesic is mature it has brand value and people buy it mainly out of habit as that's what they always buy when they're sick. Whether it's still under patent or not I'm not sure would get noticed by the usual buyer, at least for ANZ.

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I violated their patent the other day when I took a Panadol and ibuprofen together - oops.

Below 3 bucks

Hasn’t been under 3 bucks much in its life

Even more unloved than a few weeks ago

Harley might need a Maxigesic!! :scared:

I have this on my watch list, but I am struggling to come up with the right time to buy given the downward pressure. I see no announcement anywhere to add downwards pressure....

I bought around $3.90 quite a while back. Sold recently at $3.30. Have always being sceptical on the maxigesic oral and iv* forms but thought they would plug a whole lot of other gaps in the generic supply market which continues to be problematic. Not to be! Back on Watchlist. *I think they have a product for a market that doesn’t exist. Better options are available.