Udg Healthcare Public Share Discussion Threads

[slasher16] 15/10/2007 08:27

I dont know what to make of this article mate. saw it myself in post. Surely it is over the top?

[liarspoker] 14/10/2007 13:59

Should we stay or should we go ?

[liarspoker] 09/10/2007 12:47

Yep, I agree with your post JohnnyAD. :O)

[johnnyad] 09/10/2007 12:38

I suppose that will depend on UDG maintaining their discount % to the standard/new rate liars.

UDG's figures speak for themselves and I hope they maintain their margins at the same level.

It's about time this share got recognised for the quality and potential it clearly has for the long term investor.

AIMHO of course.

[liarspoker] 08/10/2007 11:57

OK, this is what I found ( there is more but I will have a look later ):

Currently, the wholesale margin ( on all sales to retailers ) in Ireland is fixed at 15% of the trade price ( this is the price at which the wholesaler sells to the retailer ) but United Drug give a discount to retailers of between 8%-9% leaving United Drug with a gross margin of 6-7% and an EBIT margin of c.3%.

[liarspoker] 08/10/2007 11:38

This is the Independents view:

United Drug's margin squeeze

Sunday October 07 2007


THE market responded positively to pharmaceutical distributor United Drug's upbeat trading statement with the shares ending the week up almost 8 per cent at €3.57.


That's the good news. The bad news is that the United Drug share price has been absolutely hammered this year, falling by 25 per cent from its May peak before this week's partial recovery.

United Drug's problem is that as a distributor it produces nothing. This means that, as governments seek to reduce the drugs costs of their public health systems companies such as United Drug increasingly find themselves being squeezed between the big pharmaceutical companies and governments.

Ireland is no exception to this rule. Last year the HSE did a deal with the drug companies under which they cut the prices of drugs coming off patent by 35 per cent. The drug companies also agreed that the prices they charged in Ireland would be no more than the average price charged in nine other EU countries.

Last month the HSE took the axe to the lush mark-ups it pays to wholesalers. Up to now it has been paying a 17.6 per cent mark up on drugs sold through pharmacists and 5 per cent on medicines sold through hospitals. These mark-ups were amongst the highest int the EU.

Not any more. From the beginning of next year the wholesale mark-up on drugs sold through pharmacists will fall to 8 per cent while the hospitals' mark-up will drop to only 3 per cent.

In the face of such an apparently massive reduction in its margins the only surprise about the recent drop in the United Drug share price is that it didn't fall even further. In fact it was the retail pharmacists who protested most loudly about the cuts in wholesalers' margins. This was because in practice the wholesalers were already passing on about half of the mark-up which they received from the HSE to the chemists.

The fact that most of the initial pain will be felt by the pharmacists means that profits at United Drug will probably rise this year to about €60m, an increase of about 15 per cent with some optimists predicting pre-tax profits of €70m in 2008.

This combination of rising profits and shrinking profits is unsustainable, It can't last. Sooner rather than later the retail pharmacists will seek to recover some of their lost margin at the wholesalers' expense. At the same time, stuck between monopoly producers, the drug companies, and monopoly purchasers, governments, the wholesalers margins are going to remain under pressure.

At the current share price United Drug is capitalised at just over €800m. Add in debt and the total enterprise value rises to just under €850m. That's over 17 times likely 2007's after-tax profits of about €49m.

Still way, way too dear.

[culchi] 08/10/2007 10:38

United Drug was main feature in sharewatch column in yesterdays sunday times. Two analysts both gave it buy ratings. Kevin McConnell head of research at Bloxams and Orla Hartford analyst with NCB. Their main points were, forward pe 14 to 15,low debt level, well placed to pursue acquisitions in drug packaging sector,the distribution of medical and surgical devices and in provision of home care services. They trade at a discount to their peers,and can spend up to £150 million on bolt on acquisitions. The latest hse initiatives announced may have a modest but manageable impact on margins. Uk and Irelands ageing population makes it a long term play on increased health spending. It has underperformed the european wholesale sector by 20% but boasts one of the best track records on the Irish stock exchange delivering 21 years of double digit earnings, profit, and dividend growth. They can be in for strong upgrades if they buy wisely.

[liarspoker] 04/10/2007 15:02

United Drug profits to be better
Thursday, 4 October 2007 07:33
Healthcare services and drug wholesale company United Drug has said its profits for the year to the end of September should be ahead of market expectations.

In a trading statement, it said operating profits and earnings should show double-digit percentage growth compared with the same period last year.

[liarspoker] 04/10/2007 15:01

Profit at Irish group United Drug, which provides services to healthcare manufacturers and pharmacies in the UK, Ireland and continental Europe, should be ahead of forecast for the year to 30 September...........

[liarspoker] 04/10/2007 08:08

No problem foxman.

Nice T/S this AM - I was expecting something worse due to the Celesio debacle.

Ahead of expectations - double digit EPS growth still on track.All divisions performing well. All acquisitions trading in line or ahead. Positive outlook.

No mention about the UK Dept of Health decisions though. Worth watching the results for that.

In short - it looks like business as usual. :O)

[foxman14] 03/10/2007 15:30

Liarspoker, thank you for the time and effort you put into your informative posts

[liarspoker] 01/10/2007 08:56

So it looks like Celesio is taking a 30m Euro hit in Qtr 4.

If we annualise this for UDG then Profits could be down by 1.6% - 2.4% for the year ( that's using last nights figures ). So we could assume 8% growth perhaps.

If we do 8% growth then we should get Adj EPS of around 21.9c. However this is the first day of the 2008 year so if we look forward to the end of this year we should get EPS of around 23.65c on 8% growth.

Unfortunately this does not make the share look cheap but I am willing to hold on to take advantage of the compounding effects in about 20 years time. :O)

Irelands population is an aging one which bodes very well imo.

Let's see what UDG says in it's trading statement due Thursday and in it's Full Year results.

Edit: Of course if you put the 2008 EPS on a historic multiple then we get an share price north of 400c but can such a multiple be justified ?

[liarspoker] 30/9/2007 22:46

Celesio is expecting a 30m Euro negative impact due to UK dept of health decisions.

However they also lost a UK manufacturer whom switched its distribution to direct sales. How much of the 30m Euro he contributed I do not know.

But it is not only the UK gov't/public decisions which have impacted Celesio. It is also Germany and France.

Anyhow for ease of calculations let's say that the total falls due in the UK.

Of total UK turnover the 30m Euro represents 1.32% of 2006 figures.

If we transfer the 1.32% to UDG then .4% ( that is point 4% ) of total turnover is affected.

If 2% of UK is affected then only .6% of total turnover is affected.

The drop could well be overdone especially if we fall more tomorrow.

It's time for bed now but I'll have a better look into it tomorrow.

[liarspoker] 30/9/2007 22:28

OK I found the reason for the weakness in UDG's share price of late.

Celesio has cut its full-year guidance:

[liarspoker] 04/9/2007 12:37

Interesting 2 X 9m+ late trades in ANGL this AM and now 2 X 1.2m late trades in UDG. Perhaps someone buying in/topping up before the trading statements ( Anglo's is tomorrow ).

[liarspoker] 21/8/2007 09:57

Galenica Ag Galenica H1 net up sharply; FY net seen rising 20-25 pct UPDATE
Date : 21/08/2007 @ 09:52
Source : TFN


Galenica Ag Galenica H1 net up sharply; FY net seen rising 20-25 pct UPDATE


(Updating with more details on outlook)
BERN (Thomson Financial) - Galenica Holding AG reported a 27.7 pct rise in
first-half net profit to 69.1 mln sfr, beating analysts' forecasts amid
across-the-board growth, while guiding for a 20-25 pct increase in full-year net
profit.
As late as April, the Bern-based group had indicated that net profit growth
of 10 pct would be outstanding.
Galenica said it is confident it can lift its consolidated full-year net
profit by a two-digit margin for a twelfth consecutive time.
The pharmaceutical company's first-half EBIT rose 31.6 pct to 78.7 mln sfr,
on sales of 1.236 bln sfr, an increase of 18.2 pct year-on-year.
Analysts had forecast net profit to reach an average of 58.4 mln sfr, EBIT
of 69.9 mln and sales of 1.182 bln.
Galenica said that operating profit in its pharma division rose by 16.8 pct
to 62.3 mln sfr, while at its retail division operating profit increased 46.6
pct to 7.4 mln sfr.
The group's logistics division reported a 38.6 pct rise in operating profit
to 8.3 mln sfr, while healthcare's operating result swung to a profit of 0.8 mln
sfr, after a loss of 7.6 mln one year ago.
[e-mail]
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[liarspoker] 19/8/2007 17:34

Celesio interims:

T/O for the Wholesale division in Ireland up 12.3% ( which bodes well for UDG ) but UDG's margins are higher ( which obviously bodes even better for UDG ). :O)

Celesio UK Wholesale T/O down though:

[liarspoker] 19/8/2007 17:03

I have added another good summary which I found whilst cruising the net. It's the last link in the header. It gives a SWOT view.

[johnnyad] 14/8/2007 16:55

Hi Liarspoker.
You are being listened to, probably more than you realise, but not a lot to add other than frustration with share price performance.
General market doldrums obviously, with more than a hint of manipulation to suit hedgefund managers etc.
I have enough of these already and am patiently taking divi and waiting for rerating.
Will I buy more?
Would be silly not to I suppose!
But at what price.....we'll see.

Keep up the interesting posts

Cheers

[liarspoker] 10/8/2007 08:13

Something else I like about UDG - it isn't dependant on property prices. Have a look at the amount of property held as part of fixed assets. Negligable imo.

UDG being forced down for some reason though. I reckon the company is doing OK and will add a few more if we see a one year low.

[liarspoker] 25/7/2007 10:41

Chart indicators say this is a buy at this level - I was looking at MACD, RSI & Simple Moving Average.

MACD both lines near bottom, red line looks to turn up to cut through blue line.

RSI = less then 40

Share price below SMA line.

As you can tell I am not a chartist but these are the indicators I use to time my buys or sells.

Also I am having a UDG morning as I am comparing last years report with criteria set down by Benjamin Graham, Warren Buffett & Robert Rodriguez etc etc.

It's a lot of work but shows UDG to be a good long term hold. :O)