Equity
Hungary Egis to lose USD 4 m on DLO reshuffle
Egis will have 27 products and 18 active agents left on the DLO list.
In its financial year ended on 30 September 2006 Egis posted USD 4 million revenues from DLO sales and this is the sum the company expects to lose over the changes.
Nevertheless, Marossfy still believes the 25% revenue growth targeted for the current business year earlier could still be achieved, despite the DLO programme modifications.
As the company is not fully aware of the changes the Hungarian government is planning to make in local regulations, it cannot say just yet what impact the “reforms" will have on its revenues and profits, the CFO added.
According to portfolio.hu's calculations, the USD 4 m lost revenue could entail a 2.8% profit decline in the current financial year. The fact, however, that the Russian market still has a great growth potential, may be considered a sliver lining on the cloudy sky over Egis. We also find it possible that Q3 figures will show impressive growth on this market (a sales report published by Krka on Tuesday also helped us reach this conclusion), which could naturally offset a decline in analysts' consensus.
We believe the Russian and Hungarian changes could push down the profit of Egis by 15-22% in FY2006/07, depending on the sum the company will need to pay into the national drugs fund.
As for Richter, the profit could go down by 11-14% in 2007, according to our calculations.
In its financial year ended on 30 September 2006 Egis posted USD 4 million revenues from DLO sales and this is the sum the company expects to lose over the changes.
Nevertheless, Marossfy still believes the 25% revenue growth targeted for the current business year earlier could still be achieved, despite the DLO programme modifications.
As the company is not fully aware of the changes the Hungarian government is planning to make in local regulations, it cannot say just yet what impact the “reforms" will have on its revenues and profits, the CFO added.
According to portfolio.hu's calculations, the USD 4 m lost revenue could entail a 2.8% profit decline in the current financial year. The fact, however, that the Russian market still has a great growth potential, may be considered a sliver lining on the cloudy sky over Egis. We also find it possible that Q3 figures will show impressive growth on this market (a sales report published by Krka on Tuesday also helped us reach this conclusion), which could naturally offset a decline in analysts' consensus.
We believe the Russian and Hungarian changes could push down the profit of Egis by 15-22% in FY2006/07, depending on the sum the company will need to pay into the national drugs fund.
As for Richter, the profit could go down by 11-14% in 2007, according to our calculations.
