Rating: Hold
Current Market Price: N2.32

Latest Dividend: N0.065
Year High: N2.91
Year Low: N0.40
Fair Value: N1.02
Equity Analyst:  Tunde Segun Jeariogbe

Key Investment Ratios

• In this report, we considered the financials of Neimeth International Pharmaceutical Plc for the full-year ended 30^th September, 2020, and compared same with numbers for the similar period 2019 to establish growth and make projections for valuation purposes.
• Although details have not been published as at the time this report was compiled, the full year financial report shows that the board of Neimeth is paying a cash dividend of N0.065 for the period.
• The said dividend is slightly above 50% of its full year N0.11 earnings per share.
• Generally, the result is unimpressive, compared to the previous year’s numbers, the Turnover only improved marginally, while profit dropped slightly, when compared to previous year.
• See below for other analysis and ratio comparison.

NEIMETH INT’L
Bourse	Nigerian Stock Exchange
Code Name	NEIMETH
Sector	HEALTHCARE
Market Classification	MAIN BOARD
Nature of Business	Manufacturing & Marketing of Pharmaceuticals, Animal Health Products and general healthcare products.
Date of Incorporation	August 13th 1957
Date Listed	September 21st 1979
End of Accounting Year	30th September
Website	www.neimethplc.com.ng
Registrar	Meristem Registrars Limited
Auditor	PKF Professional Services
Share Price@Relsd (N)	2.23
Earnings per Share	0.11
Intrinsic Value(N)	1.02
Share Outstanding	1,899,157,108
Market Capitalisation	4,235,120,351

Company figures

• At the end of the 2020 full-year, Neimeth reported a N2.83 billion Turnover, 19.73% above the N2.37 billion achieved at the end of 2019.
• Cost of Sales for the period stood at N1.32billion as against N1.17 billion in the corresponding year.
• Meanwhile. Operating Profit is estimated at N393.26 million, same as a marginal 4.87% below the N413.38 million estimated at the end of 2019 business session.
• Finance Cost used through the year was valued at N95.87 million, 12.00% below the N108.94 million used through 2019.
• Profit before Tax stood at N297.38 million, versus the N220.14 million posted in the corresponding year. It is noteworthy that Profit before Tax dropped by a marginal 2.32% against comparable year.
• Similarly, Profit for the year was estimated at N212.47 million same as 3.48% below the N220.14 million in the comparable year.

NEIMETH INT’L
Statement of Comprehensive Income
	2020	2019	%CHG
Turnover	2,839,119,000	2,371,311,000	19.73
Cost of Sales	1,329,701,000	1,175,581,000	13.11
Operating Profit	393,261,000	413,381,000	-4.87
OPEX	957,390,000	752,432,000	27.24
DEPRECIATION	0	105,868,000	-100.00
AMORTISATION	0	0	#DIV/0!
FINANCE COST	95,873,000	108,942,000	-12.00
NET FINANCE INCOME	0	108,942,000	-100.00
PBT	297,388,000	304,438,000	-2.32
TAX	84,912,000	84,292,000	0.74
PAT	212,476,000	220,147,000	-3.48
TOTAL COMP INCOME	212,476,000	220,147,000	-3.48
Statement of Financial Position
Current Assets	5,191,284,000	1,995,922,000	160.09
Non Current Assets	1,250,076,000	757,878,000	64.94
Total Assets	6,441,360,000	2,753,800,000	133.91
Current Liabilities	2,220,864,000	1,435,085,000	54.75
Non Current Liabilities	2,945,835,000	246,697,000	1,094.11
Total Liabilities	5,166,699,000	1,681,782,000	207.22
Net Assets	1,274,661,000	1,072,018,000	18.90
Retained Earnings	212,476,000	(898,164,000)	-123.66
Shares Outstanding	1,899,157,108	1,899,157,108

• Neimeth’s Current Assets was valued at N5.19 billion, a 160.09% improvement over the N1.99 billion Assets Valuation figure in prior full-year.
• Similarly, Non-Current Assets stood at N1.25 billion, same as 64.94% above the N757.87 million posted in its 2019 full year report.
• Thus, Total Assets at the end of the year was valued at N6.44 billion, as against N2.75 billion in 2019.
• Current Liabilities, on the other hand, moved 54.75% north to N2.22 billion, as against the N1.43 billion reported in 2019.
• Non-Current Liabilities soared significantly to N2.94 billion from just N246.69 million in the comparable year.
• Thus, Total Liabilities at the end of the year was valued at N5.16 billion as against N1.68 billion in the corresponding year.
• Neimeth Net Assets at the end of the year was estimated at N1.27 billion, this is 18.90% growth above the N1.07 billion stated at the end of 2019.
• Meanwhile, as against the accumulated losses posted in the comparable year, the company reported Retained Earnings of N212.47 million.

Financial Strength/Solvency Ratios

• Debt Ratio is currently estimated at 80.21%, same as 31.34% above the 61.07% estimated in the similar year. This indicates that the company Assets Value is ahead of the total liability at the end of the year.
• Total Debt to Equity ratio was estimated at 405.34% as against 156.88% estimated in the comparable year.
• It was established that Equity is same as 19.79% of Neimeth’s Assets Value, this is a 49.17% drop when compared to the 38.93% achieved in 2019.
• Going by the beta value at below unity (0.90), we can safely conclude that shares of Neimeth are less liquid against the market liquidity.

Financial Strength/Solvency Ratio
TICKERS	2020	2019	%CHG
Debt Ratio	80.21%	61.07%	31.34
Total Debt to Equity Ratio (MRQ)	405.34%	156.88%	158.38
Equity Ratio	19.79%	38.93%	-49.17
TICKERS	2020	Industry Average	%CHG
Beta Value	0.90	1.17	-23.08

Profitability Ratios

• EBITDA margin was estimated at 13.85%, same as a 20.54% drop for the 17.43% achieved in the corresponding year.
• Pre-Tax Margin stood at 10.47%, a drop when compared to the 12.84% achieved at the end of 2019 financial year.
• Cost of Sales is same as 46.83% of the Turnover, below the 49.58% estimated in 2019. This is a confirmation of the management’s effort at controlling direct cost through the year.
• Return on Equity stood at 16.67%, which is 20.54% in the corresponding year, although this is a lower return when compared to 2019, in our opinion, it is still commendable
• See below for details:

PROFITABILITY RATIOS
TICKERS	2020	2019	%CHG
EBITDA MARGIN	13.85%	17.43%	-20.54
PRE-TAX MARGIN	10.47%	12.84%	-18.41
EFFECTIVE TAX RATE	39.96%	38.29%	4.37
CS TO TO	46.83%	49.58%	-5.53
ROE	16.67%	20.54%	-18.83
ROA	3.30%	7.99%	-58.74

Efficiency Ratios

• Operating Expenses to Turnover value is same as 33.72%, which is a 6.27% improvement in efficiency over the 31.73% estimated from 2019full year financial indices.
• Turnover to Total Assets Ratios stood at 44.08% against 86.11% in the comparable year.
• Working Capital Ratio, which indicates a company’s effectiveness in using working capital was estimated at 0.96x as against the 4.23x estimated in similar period of 2019.
• See below for details:

EFFICIENCY RATIOS
	2020	2019	%Chg.
OPEX toTO	33.72%	31.73%	6.27
TO to TA	44.08%	86.11%	-48.81
Working Capital Turnover	0.96	4.23	-77.39
Working Capital Ratio	2.34	1.39	68.07

Investment/Valuation Ratios

• As observed in the company’s figures above, the amount earned per units of Neimeth’s shares is estimated at N0.11 almost same as the N0.12 earned at the end of 2019 business session.
• The share price of Neimeth as at the time this financial numbers were released to the public was found to have replicated earnings per share in 19.93 times, as against 4.92 replicate estimated at the end of the 2019 business session.
• The said estimated Earnings per Share is same as 5.02% of the share price of Neimeth on the exchange when the result was released.
• The Book Value of Neimeth at the end of the year betrayed the over-valued status of its shares on the exchange. Observe that the current worth of each unit in the book is N0.67.
• Further confirming this position is the Price to Book value which is far above unity at the current estimate, at 3.32x, versus 1.01x in the corresponding period of last year. Note the high public sentiments that favoured its shares through the period, which accounted for the huge difference in the Price to Book Value estimate.

Investment/Valuation Ratios
Tickers	2020	2019	%Chg.
Price at Released	2.23	0.57	291.23
EPS	0.11	0.12	-3.48
TCIP/SHARE	0.11	0.12	-3.48
P/E-Ratio	19.93	4.92	305.35
Earnings Yield	5.02%	20.34%	-75.33
BV/Share	0.67	0.56	18.90
PBV	3.32	1.01	229.03

Valuation

Supporting the valuation of Neimeth is the cash dividend offered. Nevertheless, we are careful not to overblow our expectations, Thus, we conservatively valued each unit of Neimeth Shares at N1.02, and considering the fact that it is currently growing its performances indices, we Rated it a Hold, despite the large differences between our valuation and the current market price.