New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<ul><li>Following a weak update three weeks ago, AFT Pharmaceuticals' (AFT) 1H25 result had few surprises and we have again materially downgraded our forecasts.</li><li>This hurts. That said, we don't view any of the recent issues as structural, and we think the growth story remains well intact.</li><li>AFT has set a FY27 revenue target of NZ$300m (~+17% CAGR from FY24), which we view as achievable in light of its track record. ​​​​​​​Placing AFT's defensive and strong performing ANZ business on ~11x EV/EBIT (~-30% discount to the NZ market median), implies investors are paying nothing for International and SE Asia, despite FY25E revenue of ~NZ$30m, and significant optionality through multiple growth drivers. OUTPERFORM.</li></ul>

Following a weak update three weeks ago, AFT Pharmaceuticals' (AFT) 1H25 result had few surprises and we have again materially downgraded our forecasts.This hurts. That said, we don't view any of the recent issues as structural, and we think the growth story remains well intact.AFT has set a FY27 revenue target of NZ$300m (~+17% CAGR from FY24), which we view as achievable in light of its track record. ​​​​​​​Placing AFT's defensive and strong performing ANZ business on ~11x EV/EBIT (~-30% discount to the NZ market median), implies investors are paying nothing for International and SE Asia, despite FY25E revenue of ~NZ$30m, and significant optionality through multiple growth drivers. OUTPERFORM.

AFT Pharmaceuticals - 1H25 Result; No Pain, No Gain

<ul><li>Over the past twelve months, AFT Pharmaceuticals (AFT) has launched its Maxigesic tablet into the UK (branded as Combogesic).</li><li>The product is stocked in Boots stores (~40% of the market by value), but expansion plans are forming.</li><li>We recently visited nine Boots stores across the UK to understand the market and receive early feedback from pharmacists. </li></ul>

Over the past twelve months, AFT Pharmaceuticals (AFT) has launched its Maxigesic tablet into the UK (branded as Combogesic).The product is stocked in Boots stores (~40% of the market by value), but expansion plans are forming.We recently visited nine Boots stores across the UK to understand the market and receive early feedback from pharmacists. 

AFT Pharmaceuticals. - Postcard From the UK

<ul><li>We remain positive on AFT Pharmaceuticals (AFT) after its FY24 result. (1) Revenue momentum continues to be a standout feature with +20% growth in FY24 versus FY23 ex licensing, and importantly +70% ex ANZ, and (2) after a soggy 1H24, gross margins in 2H24 rebounded ahead of our expectations. FY25 EBIT ex licensing guidance is for ~+45% growth at the midpoint — our lowered forecast (we think cost growth will remain elevated to support the strong revenue growth) is at the top-end of guidance.</li><li>Investors will require patience given the dents to market confidence over multiple years, but all in all, the growth story remains intact and the result reaffirmed the growth runway.</li><li>AFT trades on ~19x FY25 PE and ~12x EV/EBIT, and we expect NPAT to nearly double between FY25 and FY27. </li></ul>

We remain positive on AFT Pharmaceuticals (AFT) after its FY24 result. (1) Revenue momentum continues to be a standout feature with +20% growth in FY24 versus FY23 ex licensing, and importantly +70% ex ANZ, and (2) after a soggy 1H24, gross margins in 2H24 rebounded ahead of our expectations. FY25 EBIT ex licensing guidance is for ~+45% growth at the midpoint — our lowered forecast (we think cost growth will remain elevated to support the strong revenue growth) is at the top-end of guidance.Investors will require patience given the dents to market confidence over multiple years, but all in all, the growth story remains intact and the result reaffirmed the growth runway.AFT trades on ~19x FY25 PE and ~12x EV/EBIT, and we expect NPAT to nearly double between FY25 and FY27. 

AFT Pharmaceuticals - FY24 Result — Roaring Revenue

<ul><li>AFT Pharmaceuticals (AFT) downgraded its FY24 underlying EBIT (ex. licensing income) guidance by -25%.</li><li>While it stated this was due to weaker-than-expected Australasian sales, relative to our expectations it was gross margins remaining soft.</li><li>This margin weakness has continued from 1H24 and is due to product mix and higher costs. </li></ul>

AFT Pharmaceuticals (AFT) downgraded its FY24 underlying EBIT (ex. licensing income) guidance by -25%.While it stated this was due to weaker-than-expected Australasian sales, relative to our expectations it was gross margins remaining soft.This margin weakness has continued from 1H24 and is due to product mix and higher costs. 

<ul><li>On balance we viewed AFT Pharmaceuticals (AFT's) 1H24 result positively.</li><li>The key positive was underlying non-ANZ sales growth of +95% versus 1H23, which, coupled with ongoing solid ANZ performance, more than offset gross margin weakness.</li><li>The key question for investors is the degree of operating leverage AFT can generate from its continued strong revenue growth trajectory.</li></ul>

On balance we viewed AFT Pharmaceuticals (AFT's) 1H24 result positively.The key positive was underlying non-ANZ sales growth of +95% versus 1H23, which, coupled with ongoing solid ANZ performance, more than offset gross margin weakness.The key question for investors is the degree of operating leverage AFT can generate from its continued strong revenue growth trajectory.

AFT Pharmaceuticals -  1H24 Result — Not Without Some Pain

Australia

Aft Pharmaceuticals Limited focuses on the Pharmaceutical Rx and OTC market. The company also undertakes drug development activities including clinical trials. AFT Pharmaceuticals distributes pharmaceuticals for a number of overseas principals with a sales from pharmacies and hospitals.

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Aft Pharmaceuticals (AFP AU)

AFT Pharmaceuticals - 1H25 Result; No Pain, No Gain

Following a weak update three weeks ago, AFT Pharmaceuticals' (AFT) 1H25 result had few surprises and we have again materially downgraded our...

Forsyth Barr

AFT Pharmaceuticals. - Postcard From the UK

Over the past twelve months, AFT Pharmaceuticals (AFT) has launched its Maxigesic tablet into the UK (branded as Combogesic).

Forsyth Barr

AFT Pharmaceuticals - FY24 Result — Roaring Revenue

We retain our OUTPERFORM rating with an unchanged target price of NZ$4.60 (roll forward and peers re-rate offsets earnings downgrades).

Forsyth Barr

AFT Pharmaceuticals - A Bumpy Road

While it stated this was due to weaker-than-expected Australasian sales, relative to our expectations it was gross margins remaining soft.

Forsyth Barr

AFT Pharmaceuticals - 1H24 Result — Not Without Some Pain

The key positive was underlying non-ANZ sales growth of +95% versus 1H23, which, coupled with ongoing solid ANZ performance, more than offset gross...

Forsyth Barr

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