AFT Pharmaceuticals

[trader_jackson]

The first time AFT has showed its operating profits as well (slide 9), it is good to see a return to profitability, and a very strong uplift of nearly possibly 100% growth on operating profit in the next year.

We all knew it was going to be operating cash flow positive as well - so nice to see this (and again, this will only continue to grow bigly).
Nice to see also that they have shown they can keep virtually all expenses under control - achieving 14% underlying top line growth, whilst keeping costs of goods sold, selling and disti expenses and admin expenses under control (in fact, they have reduced them) is very impressive.

Good underlying revenue and profit growth, although people might get not so excited when they look at actual profit growth of 5% (and don't bother reading any further). 'Other income' payments should also grow strongly.

Rest of world growing strongly as well - in fact looks like countries outside of aussie and NZ will be the real drivers of growth going forward, as I previously mentioned on this thread.

Finance costs was a killer, in fact if they had a similar finance cost as FY18, they would have made a NPAT of $4m ish. I believe debt has been a concern previously for AFT, and it is great they now have the cash flow/good feeling to make a separate announcement to go out to local banks and get an interest rate at probably half what they are currently paying (13.5%).

It would not surprise me to see AFT make a NPAT of $10m in FY20, putting a growth company on a PE of 26x in FY20, and probably a PE of 10-15 in FY21 - not that bad given the strong growth earnings growth ahead.

Then in FY22 when NPAT is $30m+, the founder might be ok with selling out at $5 a share I certainly wouldn't mind my investment doubling ish in the next 3 years, might get a dividend then as well.

In conclusion, if you couldn't be bothered reading the above, or anything related to AFT, the headline says it all: AFT Pharmaceuticals poised for strong earnings growth