Rating: Buy
Current Market Price: N3.42

Latest Dividend: N0.15
Year High: N3.63
Year Low: N2.21
Fair Value: N4.00
Equity Analyst:  Tunde Segun Jeariogbe

Key Investment Ratios

• This report observed the half-year statistics of Fidson Healthcare for the period ended 30^thJune, 2020, compared same with the released numbers for the corresponding period of last year, so as to establish a trend.
• We upgraded our valuation for Fidson from the previous N3.90 in the full-year to N4.00, our valuation carefully considered the improvements in the company’s performance indices, as well as the sustainability of the performance, at least, over the next two financial years ahead.
• As noted above, the management of Fidson Healthcare built its half-year numbers in line with several analysts’ expectations. It is noteworthy that a better performance is expected in the coming quarters due to favourable government policies in recent times.

FIDSON HEALTHCARE
Bourse	Nigerian Stock Exchange
Code Name	FIDSON
Sector	HEALTHCARE
Market Classification	PHARMACEUTICAL
Nature of Business	Manufacturing and Distributin of Pharmaceutical Products
Date of Incorporation	March 13th 1995
Date Listed	April 6th 2008
End of Accounting Year	31ST DECEMBER
Website	www.fidson.com
Registrar	Meristem Registrars Limited
Auditor	Deloitte & Touche
Share Price@Relsd (N)	3.42
Earnings per Share	0.24
Intrinsic Value(N)	1.56
Share Outstanding	2,086,360,250
Market Capitalisation	7,135,352,055

Company figures

• Turnover reported for the period is valued at N8.20 billion, higher than the N7.37 billion posted at the end of the comparable quarter of 2019.
• Cost of Sales equally stemmed above comparable quarter by 14.30% to N4.63 billion, as against the previous N4.05 billion.
• Operating Profit is estimated at N1.42 billion, same as an 11.72% increase over the N1.27 billion in the corresponding quarter.
• Finance Cost dropped by 23.01% to N690.51 million, versus N896.86 million in the similar quarter.
• Profit before Tax is estimated at N736.22 million, far above N405.78 million in the corresponding quarter.
• Tax Expense allowance made was valued at N235.59 million, higher than the N129.85 million in the similar quarter.
• Thus, a total of N500.63 million was reported as profit for the period, this is against the N275.93 million posted at the end of 2019 half year business session.

FIDSON HEALTHCARE
Statement of Comprehensive Income
	2020(000)	2019(000)	%CHG
Turnover	8,204,741	7,371,152	11.31
Cost of Sales	4,634,600	4,054,745	14.30
Operating Profit	1,421,796	1,272,662	11.72
OPEX	2,288,496	2,173,247	5.30
DEPRECIATION	155,617	429,739	-63.79
AMORTISATION	–	31,879	-100.00
FINANCE COST	690,510	896,867	-23.01
NET FINANCE INCOME	685,568	866,873	-20.91
PBT	736,229	405,789	81.43
TAX	235,593	129,852	81.43
PAT	500,635	275,937	81.43
TOTAL COMP INCOME	500,635	275,937	81.43
Statement of Financial Position
Current Assets	11,058,742	10,739,085	2.98
Non Current Assets	13,210,817	13,089,015	0.93
Total Assets	24,269,559	23,828,100	1.85
Current Liabilities	6,679,529	9,408,647	-29.01
Non Current Liabilities	7,469,587	4,736,317	57.71
Total Liabilities	14,149,116	14,144,964	0.03
Net Assets	10,120,444	9,683,137	4.52
Retained Earnings	4,144,556	3,706,510	11.82
Shares Outstanding	2,086,360,250	2,086,360,250

• Current Assets is currently valued at N11.05 billion, which is same as 2.98% above the N10.73 billion estimated at the end of 2019half-year.
• Non-Current Assets held by the leading indigenous healthcare firm is currently valued at N13.21 billion, as against N13.09 billion in 2019half year report.
• Current-Liabilities stood at N6.69 billion, same as 29.01% below the N9.40 billion stated in its 2019 second quarter result.
• Non-Current Liabilities grew by 57.71% to N7.46 billion, as against N4.73 billion in 2019.
• Net Assets posted for the period was valued at N10.12 billion, compared to the N9.68billion in 2019.
• Retained Earnings on the other hand moved north by 11.82% to N4.14 billion, versus N3.70 billion in 2019.

Financial Strength/Solvency Ratios

• Debt Ratio is currently estimated at 58.30%, same as 1.79% below the 59.36% estimated in 2019. This implies that, Total Liabilities is same as 58.30% of Total Assets.
• Total Debt to Equity was equally estimated at 139.81%, as against 146.08% estimated in the comparable quarter. This simply implies that more debt was used to service the company’s assets through the quarter.
• It was established that Equity is same as 41.70% of Fidson’s Assets Value. Meanwhile, estimates from the 2019 half-year performance indices yielded 40.64%.
• Nevertheless, we can conclude that Fidson’s shares are fairly liquid, although the estimated Beta value stood below market Beta.

Financial Strength/Solvency Ratio
TICKERS	2020	2019	%CHG
Debt Ratio	58.30%	59.36%	-1.79
Total Debt to Equity Ratio (MRQ)	139.81%	146.08%	-4.29
Equity Ratio	41.70%	40.64%	2.62
TICKERS	2020	Industrial Average	%CHG
Beta Value	0.80	1.00	-20.00

Profitability Ratios

• EBITDA margin estimated for the period stood at 17.33%, same as 0.37% above the 17.27% estimated from 2019half year earnings numbers.
• Pre-Tax Margin grew by 63.00% to 8.97%, as against the 5.51% estimated at the end of 2019 second quarter performance indices.
• Cost of Sales is 56.49% of the Turnover figure, which is only 2.69% above the 55.01% estimated in 2019. This is a confirmation of the management’s efforts at controlling its direct costs.
• See below for other profitability ratios

PROFITABILITY RATIOS
TICKERS	2020	2019	%CHG
EBITDA MARGIN	17.33%	17.27%	0.37
PRE-TAX MARGIN	8.97%	5.51%	63.00
EFFECTIVE TAX RATE	47.06%	47.06%	0.00
CS TO TO	56.49%	55.01%	2.69
ROE	4.95%	2.85%	73.59
ROA	2.06%	1.16%	78.13

Efficiency Ratios

• Operating Expenses is estimated as 27.89% of the Turnover value reported at the end of 2020 half-year, this is a marginal improvement in efficiency of about 5.40% when compared to 2019 estimate.
• Meanwhile, efficiency growth of 9.28% was observed when Turnover to Total Asset was tested. It was established that Turnover is 33.81% of the Asset in the just concluded quarter versus 30.93% in 2019
• Working Capital Ratio, a ratio that  indicates a company’s effectiveness in deploying its working capital was estimated at 1.87x at the end of the quarter
• Further testing the management efficiency, we tested the Working Capital Ratio, which confirmed that Current Assets is higher than the current liabilities at the end of the period.

EFFICIENCY RATIOS
	2020	2019	%Chg
OPEX toTO	27.89%	29.48%	-5.40
TO to TA	33.81%	30.93%	9.28
Working Capital Turnover	1.87	5.54	-66.18
Working Capital Ratio	1.66	1.14	45.05

Investment/Valuation Ratios

• When compared with the 2019 half-year earnings performance, the amount earned per share improved outstandingly over the comparable quarter to N0.24 against N0.13 in 2019.
• P/E-Ratio is now estimated at 14.25x as against 31.30x in the corresponding quarter.
• The said earnings represented a yield of 7.02% of the price of Fidson Healthcare on the exchange as at the time this result was made available to the investing public.
• The Book Value of Fidson shares is currently estimated at N4.85, which is above the market value of its shares on the floor of the exchange.
• Confirming and under-priced status of Fidson’s shares on the exchange is the Price to Book Value which stood below unity (0.71x).

Investment/Valuation Ratios
Tickers	2020	2019	%Chg
Price at Released	3.42	4.14	-17.39
EPS	0.24	0.13	81.43
TCIP/SHARE	0.24	0.13	81.43
P/E-Ratio	14.25	31.30	-54.47
Earnings Yield	7.02%	3.19%	119.63
BV/Share	4.85	4.64	4.52
PBV	0.71	0.89	-20.96

Valuation

The high probability of consistent investors’ reward (dividend payment) is a major factor considered while valuing the share price of Fidson Healthcare. Having considered all necessary factors, not leaving out government policy that favoured the healthcare sector due to the sector’s vital role in fighting the novel Corona Virus, we have fairly priced each unit of Fidson Healthcare shares at N4.00and Rated it a Buy.