Morningstar

Morningstar, Inc.

Equity Bottom-Up

The negative 10-month trading update provided by no-moat Mayne Pharma follows a challenging half-year result reported in February, and was largely factored into our base case for fiscal 2019. However, continued competitive forces in generic pharmaceuticals in the U.S. results in a reduction in our fair value estimate to AUD 1.00 from AUD 1.05. Revenue in the key generic products segment is down 15% year to date primarily as result of increased competition and the negative effect on pricing. We…

Through a series of acquisitions, Mayne Pharma has transformed into a vertically integrated specialty drug manufacturer with proprietary drug delivery expertise and a substantial product portfolio. The company’s stated strategy is heavily geared towards the timely introduction of enhanced generic formulations targeting niche markets, primarily in the U.S., which has been significantly expanded with the Teva generic portfolio acquisition. In the medium term, the company aims to win significant…

No-moat-rated Mayne reported a first-half result below our expectations, despite improvement on the previous corresponding period, or pcp, across key metrics. This included a 13% increase in revenue on the pcp to AUD 274.4 million, a 16% increase in underlying EBITDA to AUD 81.2 million, and a 35% increase in underlying net profit after tax to AUD 21.1 million, with all slightly under our full-year expectations. Except for the highly competitive generic products division, or GPD, all segments…

No-moat Mayne Pharma’s reported sales for the first four months of fiscal 2019 put the firm on track to meet our fullyear forecast. Revenue increased 21% to AUD 183 million versus the previous corresponding period, or pcp, driven by steady performance in the core generic drug division, rising contribution from specialty products, and solid gains in contract services and international sales. While the performance suggests a full-year run rate of about AUD 550 million, 4% below our AUD 570 million…

We maintain our AUD 1.30 per share fair value estimate for no-moat Mayne Pharma, and our very high uncertainty rating, after transferring coverage to a new analyst.
Analyst: Adam Fleck, CFA

Australia

Mayne Pharma Group Ltd. develops and manufactures oral pharmaceuticals.  The Company produces branded generics, specialty generics, and active pharmaceutical ingredients.

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