OREANDA-NEWS. July 28, 2011. Pharmstandard published its 1H11 trading update today (28 July). In line with our expectations, revenue rose 68% YoY reaching USD 646mn mainly driven by third-party drugs sales (up 147% YoY in dollars). The latter now account for 53% of PHST sales which suggests there will be further dilution of PHST’s margins. On the positive side, we note that Pharmstandard’s own product sales were up 14% which suggests that the company will still be able to show EBITDA growth in 1H11 within 16-20%. This compares favourably with its global peers which offer a 5-6% annual EBITDA growth outlook.

Bottom line

The results are in line with our annualised expectations as well as with consensus numbers. The share looks cheap priced at discounts to its EM peers on PEG ratios. Moreover, the company has provided a disclosure of its recent corporate actions, the lack of which may have been the reason for the 11.5% stock-price decline since mid-June 2011. Consequently, we believe these disclosures coupled with strong operating figures could now lead to reasonable share-price growth.