The latest addition to our JSE portfolio

April 17, 2024

Analysis of the 4th stock added to our FinMeUp JSE portfolio


Aspen Pharmacare Holdings Limited is a multinational South African pharmaceutical company and the largest drug company in Africa.  The company has approximately 9 100 employees at 69 established offices in over 50 countries.

Aspen focuses on marketing and manufacturing a broad range of post-patent, branded medicines, covering both hospital and consumer markets through their key business segments.  Their key business segments are Commercial Pharmaceuticals, comprising Regional Brands and Sterile Focus Brands, and Manufacturing.

Business segments

Commercial Pharmaceuticals: Regional Brands. Aspen Regional brands comprise a portfolio of global and domestically recognised brands across OTC, consumer, branded and generic prescription products. Across its key territories, in-country marketing and sales teams promote and support the organic growth of these brands.

Commercial Pharmaceuticals: Sterile Focus Brands: Aspens Sterile Focus Brands include a range of sterile pharmaceutical preparations of niche medicines across both anaesthetics and thrombosis therapies. These established brands are predominantly used in an acute hospital setting.

Manufacturing: Although Aspen started out as a distributor of post-patent, branded medicines, it has expanded its operations to become a manufacturer in the space as well. The manufacturing leg compiles internal and third-party supply of chemical and biochemical APIs and Finished Dose Form (FDF) pharmaceuticals.


CEO Stephen Saad needs no introduction. His Wiki profile sums it up: Stephen Bradley Saad is a South African billionaire businessman, who is the founder and chief executive of Aspen Pharmacare, the largest producer of generic medicines in Africa.

The charismatic CEO co-founded the company in 1997 and built it into the R70 billion company we know today. He remains the biggest shareholder to this day, with managements overall share at around 17% of the business. Management having skin in the game is always a positive sign for investors, as it indicates conviction and personal liability should they steer off course.

Past 5 years 

2015/2016 marked the years of international acquisitions. The problem with this expansion strategy was twofold: Firstly, the company overpaid for these acquisitions, leading to an overvaluation of the Groups stock price. Secondly, these acquisitions led to severe debt problems. Once investors realized that Aspen might be in financial turmoil, the share price tanked from R440 per share to an eventual bottom at R68 per share. Since 2019, the company has recovered very well, repaying its debt and rebuilding trust in the financials. 

Aspen recently acquired the license to distribute the Johnson & Johnson vaccine through Africa. This news was received very well, and the potential for future income reflected in the share price in 2021. Unfortunately, much fewer vaccines were sold as the severity of Covid continued to decline. The lack in sales inevitably led to underperformance vs analyst expectations, which in turn caused the share price to drop from its highs in September 2021.    

Technical Analysis

Aspens share price is about to hit its medium-term support level (as indicated by the upward trending grey line). It has previously hit the level on three occasions: September 2019, April 2020, and October 2020. Coincidently, these bounces from the support have coincided with oversold RSI levels. 

Once again, in May 2022, we found ourselves at the support level with an oversold RSI. Will history repeat itself? Looking at the technicals, it might be a good time to open a position. As always, however, we must confirm with the fundamentals.


Aspen generated R37.8 billion in 2021 from its continued operations, representing a 4% year-on-year increase. Commercial Pharmaceuticals comprise 74% of the income generated 46% from the Regional Brand segment and 28% from the Sterile Focus segment. The remaining 26% was generated via the manufacturing segment.

Geographically, revenue was generated as follows: Europe 36%, Africa 25%, Australasia 14%, Asia 14%, and Americas 11%. 

Overall, revenue growth looks steady. The manufacturing segment especially looks very promising as it can become a solid growth engine for the company within the following few years as the factories become fully functional. 

Gross Profit 
Aspen generated a total gross profit of R17.8 billion, at an average of 47.1% from its three segments. Individually, the segments gross profits include 59.0% for Sterile focus, 54.3% for Regional brands, and 21.8% from the Manufacturing segment. 

EBITDA & Earnings
EBITDA has increased by 10% year-on-year. Finance costs decreased significantly due to the redemption of loans, which resulted in a 32% increase in net profit. This increase in profit led to a significant increase in EPS, from 558.4 cents in 2020 to 736.2 cents in 2021.

Debt & Cash
Aspen drastically decreased their borrowings in the 2021 financial year. Long-term debt and short-term debt decreased by 29% and 7.2% respectively. This in turn decreased the financing cost in the income statement, leading to an improved net profit. Net borrowings, which is calculated as Debt minus cash, improved by 30%.

Investment Position

All in all, Aspen is a solid company, and we believe it presents an opportunity for investors at these levels. It wont hit the lights out, but it will offer steady returns. The main reasons for investment include solid growth metrics, manufacturing segment potential, management capabilities and ownership, technical analysis support level and oversold RSI, sound financial ratios. 

We are opening a position in Aspen in our FinMeUp JSE portfolio at R156.18 per share. Our JSE portfolio now consists of Aspen, Renergen, Santova, and Sirius.

***Disclaimer: Just a friendly reminder - This is not financial advice. Always do your own research before taking a position. Content is for informational and educational purposes only***

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