AFT Pharmaceuticals — Setting the stage for sustained long-term growth

AFT Pharmaceuticals reported FY25 revenues of N Z$208m, posting a strong recovery in H2, with dissipating headwinds and traditional H2 seasonality offsetting the softer H1 performance. H225 revenues (N Z$121.3m) grew 40% over H125 and 9% y-o-y, driven by sustained domestic market momentum and international market recovery. The FY25 operating margin of 8.5% (12.4% in FY24) was affected by lower licensing income and investments in marketing, R&D and international expansion, but these investments should deliver upside opportunities in the longer term. The balance sheet remains strong (net debt reduced to N Z$14.5m, 0.7x EBITDA), supporting the announcement of a 1.8c per share dividend (c 17% payout ratio). Management aims to achieve N Z$300m in revenues by end-FY27 and has guided for operating profit of N Z$20–24m in FY26, with increased operating leverage in the medium term. We update our valuation for AFT to N Z$691.4m or N Z$6.59/share, from N Z$697.4m or N Z$6.65/share previously.