AFT Pharmaceuticals

[percy]

A good result and a very positive outlook.
The modest divie is the icing on the cake.

[Rawz]

A good result and a very positive outlook.
The modest divie is the icing on the cake.

Agree.

the revenue growth is clockwork. this is a revenue compounder!!

good result. Wonder how much GP margins currently at ~49% could grow? Did a quick google search and and some pharmaceuticals get up to 70% wow

this is the key bit for me: "Operating profit from product sales and royalties (excluding licensing income) rose 38% to $18.8 million from $13.7 million in the prior year, despite increased investment to capitalise on growth opportunities."

[winner69]

Where’s t_j when we want his comments

Might see his $5 shareprice price soon.

[Muse]

Well they are paying a divy - that's good. Rakon should take a note from AFT's book.

Look like the license revenue whack (100% margin) may not come in FY24 & if one was conservative would expect in FY25 (first half of calendar yr 2024 - AFT operates w/ a march ye - so a coin toss). It goes to show the licensing revenue and earnings are lumpy, unpredictable, and lower quality earnings source. Company has done well to highlight revenue and earnings from core product sales, which are going well, as its easy to get a bit disheartened comparing earnings from year to year where license revenue is in one year but not the other.

[Rawz]

Is the licensing revenue a one off thing? or does a license term apply? Like every 10 years AFT can relicense in any given country and collect another lump sum?

[JeffW]

Well they are paying a divy - that's good. Rakon should take a note from AFT's book.

Is it good though - I note that the dividend is completely un-imputed - My view is in a lot of instances the shareholder is worse off - 33% of the dividend amount goes to IRD, and this cash would have remained in the company to the benefit of the shareholders if the dividend was not paid

[Muse]

Is it good though - I note that the dividend is completely un-imputed - My view is in a lot of instances the shareholder is worse off - 33% of the dividend amount goes to IRD, and this cash would have remained in the company to the benefit of the shareholders if the dividend was not paid

That's a fair point (I didn't look at the distribution notice so hadn't appreciated it was un-imputed). Dividend relatively small so the lack of imputation doesn't materially change the yield picture (small either way)

But I think paying a dividend is good discipline from the company....getting into the habit of paying dividends, having a bit of difference to shareholders and emotional awareness that many like dividends, not hoarding cash as a safety blanket (which can lead to sloppy or lazy decision making). Payment of regular dividends helpful to investors staying on capital account.

[Rawz]

Striping out the licensing revenue the operating profit will increase another 17% to 27% for FY24. This is on the back of a 283% increase in the last 4 years (4 years since operating profit turned positive).

FY25 will see first USA sales.

A lot to like over the short term

[HITMAN]

Is it good though - I note that the dividend is completely un-imputed - My view is in a lot of instances the shareholder is worse off - 33% of the dividend amount goes to IRD, and this cash would have remained in the company to the benefit of the shareholders if the dividend was not paid

That's not true, The company has to pay NZ Company tax rate on profits, so 28% The extra cost is only 5% difference.

[Muse]

Is the licensing revenue a one off thing? or does a license term apply? Like every 10 years AFT can relicense in any given country and collect another lump sum?

I'd need to revist my notes as its been some time since I did any real work on the company but if my memory serves me right I think the licensing revenues are paid to AFT when it signs up a new commercial partner (IE a distributor) for a new product and geography. AFT does the R&D and formulations, does the hard yards in lodging dossiers with regulatory authorities and getting approvals, but may not do the distribution in new geographies (like the United States). So once the product is developed & approved for sale, AFT has to go about finding the right distributor with the right channels to market for its product (probably talks to several to find the best distributor and best commercial deal). The distributor pays AFT an upfront license fee for the right to sell the drug, and some sort of ongoing profit share. That's how i recall it anyway. I think AFT does the distribution itself in Australasia but uses distributors for its international business.