Neimeth Plc Q4 2020: Profit Rises as Industry Outlook Remains Positive

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Thursday, November 18, 2020, / 11:00 AM / by Proshare Research/Header Image Credit: Neimeth International Pharmaceuticals Plc


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Neimeth International Pharmaceuticals Plc recorded an improvement in its financial statement in Q4 2020 when compared to previous years. It recorded its highest profit and revenue generated since Q4 2015 in Q4 2020. Its PBT rose by +20.32% to N366.31m in Q4 2020 while its revenue rose by +26.84% in Q4 2020.

 

Despite an impressive financial performance, the pill maker recorded an increase in its net debt-to-equity ratio of 107.56% in Q4 2020 up from 80.07% in Q4 2019 which suggests that the company had financed its growth by way of added debt.  

 

Highlights

  • Revenue rose by +26.84% to N3.01bn in Q4 2020.
  • PBT increased by +20.32% to N366.31m in Q4 2020.
  • Administrative and Marketing expenses rose by +9.24% and +36.10% in Q4 2020, respectively.
  • Equity rose by +33.25% to N1.43bn in Q4 2020.
  • A net debt-to-equity ratio of 107.56% in Q4 2020.

 

Peeling Back the Profit Numbers

 

Profit

Neimeth International Pharmaceuticals Plc profit rose by +20.32% in Q4 2020. Its profit before tax increased from N304.4m in Q4 2019 to N366.31m in Q4 2020, the highest in the past five years. The rise in profit could be attributed to a significant increase in the company's revenue +26.84% and its other incomes +858.16% (see Chart 1 below).

 

Chart 1: Neimeth Plc PBT (N'm)

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Source: Neimeth Plc, Proshare Research

 

Revenue

The company posted its highest revenue in the last five years in Q4 2020. Its revenue grew by +26.84% from N2.37bn in Q4 2019  to N3.01bn in Q4 2019 (see Chart 2 below).

 

Chart 2: Neimeth Plc Revenue (N'm)

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Source: Neimeth Plc, Proshare Research

 

Climbing A Cliff at a Rising Cost Angle

 

Administrative Expenses and Marketing Expenses

The Pharma recorded increases in both its administrative and marketing expenses in Q4 2020, as they grew by +9.24% and +36.10% respectively. Its administrative expenses increased from N375.21m in Q4 2019 to N409.88m in Q4 2020, while its marketing expenses jumped from N377.23m in Q4 2019 to N513.42m in Q4 2020 (see Chart 3 below).

 

Chart 3: Administrative Expenses and Marketing Expenses (N'm)

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Source: Neimeth Plc, Proshare Research

 

Keeping the Equity Chest Filled

 

Neimeth's shareholder's funds went up by +33.25% in Q4 2020. Its equity increased from N1.07bn in Q4 2019 to N1.43bn in Q4 2020 (see Chart 4 below).

 

Chart 4: Neimeth Plc Equity (N'm)

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Source: Neimeth Plc, Proshare Research

 

Doing Crunches with Liquidity

 

Current Ratio

 

Its current ratio increased from 1.39 in Q4 2019 to 2.3 in Q4 2020, the highest current ratio in the last five years. This implies that for every N1.00 of its current liabilities, its current assets can cover with N2.30 (see Chart 5 below).

 

Chart 5: Neimeth Plc Current Ratio

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Source: Neimeth Plc, Proshare Research

 

Acid Test Ratio

Its acid test ratio improved from 0.85 in Q4 2019 to 1.72 in Q4 2020, the highest in the past five years. The rise in its acid-test ratio implies that its liquid assets can cover with N1.72 every N1.00 of current liabilities (see Chart 6 below).

 

Chart 6: Neimeth Plc Acid Test Ratio

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Source: Neimeth Plc, Proshare Research

 

Net Debt to Equity Ratio

 

Neimeth International Pharmaceuticals Plc's net debt to equity ratio increased from 80.07% in Q4 2019 to 107.55% in Q4 2020. Its high net debt to equity ratio implies that the company has financed its growth with debt and it may require more equity to create stability for its capital structure (see Chart 7 below).

 

Chart 7: Neimeth Plc Net Debt to Equity Ratio (%)

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Source: Neimeth Plc, Proshare Research

 

The Sunny Side of Tomorrow

The Pharmaceutical Industry is one of the sectors that have gained more prominence and attention since the emergence of the COVID-19 pandemic, as there has been a surge in the demand for pharmaceutical products.


Since the emergence of the COVID-19 pandemic the pharma has recorded an improvement in its financial statements i.e., it recorded its highest recent profit and revenue in 2020. As the quest to prevent the further spread of the virus and treatment of those infected with the virus continues, it has been forecasted by industry experts that the outlook for the pharmaceutical industry remains bright.



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