Hikma Pharmaceuticals PLC
HIK.L
| Sector |
Pharmaceuticals & Biotechnology |
Last closing price
(27/09/2010) (p) |
719 |
| 52 week High/Low (p) |
813.0/445.0 |
| Market Cap (£bn) |
1.35 |
Sector weight age by
Market Cap (%) |
1.06 |
| Average Volume (k) |
219.6 |
| P/E ratio (TTM) |
27.42 |
Sector P/E
ration (TTM) |
28.35 |
TTM: Trailing Twelve Month
Daily chart (HIK.L)
Business background and investment rationale
Hikma Pharmaceuticals PLC is a specialist pharmaceutical company with operations in Europe, the US, the Middle East and North Africa (MENA) region. The company is engaged in the development, manufacture and marketing of a range of generic and in-licensed pharmaceutical products in solid, semi-solid, liquid and injectable final dosage forms.
Improvement in sales
In the interim result for the first half of 2010 announced last month, Hikma’s revenue increased by 11.3% to $357.7m, which compared to $321.5m in the first half of 2009. Hikma’s gross margin was 49.9% in 2010; a gain on the 47% in 2009. This growth reflects the increase in gross profit for the Generics business, as well as higher sales and profitability in the Injectables business. Operating margin also increased to 20.5%, up from 18.9% in first half of 2009. The group’s continuing focus on working capital management and driving quality sales delivered a notable improvement in cash flows from operations across all regions. Hikma’s net debt position was stable at $123.6m compared to $116.9m at the end of December 2009. Hikma continued new product delivery across all countries and markets. The group launched 70 products and received 33 product approvals in first half of 2010.
Expansion in MENA region
In April 2010 Hikma’s subsidiary Arab Pharmaceutical Manufacturing Company (APM) signed an agreement to acquire a 50% stake in the Algerian company Al Dar Al Arabia Pharmaceutical Manufacturing Company for $18.5m. The company owns a 6000m2 manufacturing facility which has been constructed to the highest international standards, as well as approximately 21,000 m2 of land in an industrial zone in Algiers. The Al Dar Al Arabia plant will double Hikma’s manufacturing capacity in Algeria and provide significant scope for further expansion. In the same month, Hikma signed an agreement with South Korea-based Celltrion Inc. and Celltrion Healthcare Inc. (Celltrion). Under this agreement Hikma has the exclusive rights for the distribution and marketing of nine biosimilar products throughout the MENA region under its own brand. The company estimates the total biologics market in the MENA region will reach $500m in 2010. In March 2010, Hikma paid $5m to increase its interest in Industries Pharmaceutiques Ibn Al Baytar, a Tunisian pharmaceutical manufacturing and marketing company, to 66%. Ibn Al Baytar and its subsidiary Medicef have a combined sales force of 23 representatives covering the Tunisian market, which sells 41 products in 78 dosage strengths and forms. The Tunisian pharmaceutical market grew by 15.6% in 2009 to reach $655m and continues to offer excellent growth opportunities.
Technical analysis
On the daily chart, Hikma is oversold after making a low of 658.0p last week and stabilising around strong support of 700.0p from where it climbed to a 52-week high of 813.0p. The stock still is above 200 day EMA (exponential moving average) indicating the long-term trend is intact. MACD (moving average convergence/divergence) is negative and 12 day EMA is below 26 day EMA, which indicates a recent fall in the stock. 14 day RSI (relative strength index) is moving above and below 30 suggesting that the stock is oversold and needs consolidation before it can move in a positive direction. 14 day negative DMI (directional moving index) is above 14 day positive DMI, while 14 day ADX (average directional index) is near 42 showing a downtrend. For a higher move the stock has to consolidate above 700.0p.
Trading strategy
The stock can be bought around 700.0p with a profit target 780.7p and stop loss of 665.0p.
Stocks Update
Fidessa Group PLC
On the daily chart, Fidessa is in an uptrend after the stock recovered from its low of 1345.0p. MACD is positive and 12 day EMA is above 26 day EMA, indicating an uptrend in the stock. 14 day RSI is near 60 indicating strength in the stock. 14 day positive DMI is above 14 day negative and ADX is near 20 indicating a positive trend. Looking at the positive trend in the stock it should be a hold with the new reduced profit target of 1440.0p.
BATS PLC
BATS is in a breakout mode after the stock made a new 52-week high of 2439.0p indicating a positive trend in the stock. MACD is positive and 12 day EMA is above 26 day EMA indicating a positive trend in the stock. 14 day RSI is trading near 70 suggesting strength in the positive trend. Positive 14 day DMI is above negative 14 day DMI and 14 day ADX is at 29 indicting a positive trend. Looking at the strong movement in the stock, it requires consolidation, so it should be hold with a reduced profit target of 2450.0p.
Autonomy Corp PLC
Autonomy is still in a positive trend after a small dip in share prices. MACD is positive and 12 day EMA is just above 26 day EMA indicting a positive trend in the stock. 14 day RSI is trading near 60 in an uptrend movement suggesting strength in the positive trend. Positive 14 day DMI is above negative 14 day DMI and 14 day ADX is at 27 indicting a positive trend. The stock is still above 20 day and 200 day EMA indicating a short-term uptrend in the share prices. Looking at the dip in prices and the consolidation in the market, the stock should be a hold with a reduced profit target of 1825.0p.
Tullow Oil PLC
Tullow is in a consolidation phase between 1000.0p and 1330.0p and trading at the top of the channel indicating a positive trend in the stock. MACD is positive and 12 day EMA is above 26 day EMA supporting a positive trend in the stock. 14 day RSI is trading near 60 with a breakout from a negative trendline suggesting strength in the formation of a positive trend. The stock is also above 20 day and 50 day EMA, which supports a positive trend. 14 day positive DMI is above 14 day negative DMI indicating a positive trend, while 14 day ADX is near 13 supporting a consolidation. The stock should be a hold with the same profit target.
Fenner PLC
On the daily chart, Fenner is still waiting to break out from the channel between 180.0p and 237.6.0p, although the stock made two whipsaws above 240.0p, but still has to close above 240.0p to confirm a breakout in trend. MACD is positive and 12 day EMA is above 26 day EMA, indicating an uptrend with some consolidation at the top of the channel. 14 day RSI is above 60 and both the indicators are making higher lows supporting an uptrend. 14 day positive DMI is above 14 day negative DMI and 14 day ADX is near 22 indicating an uptrend. The stock should be a hold with the same profit target.
Afren PLC
On the daily chart, the stock has broken out from a channel between 80.0p and 106.5p equalling the 52-week high of 111.0p and indicating an uptrend in the stock. Momentum oscillator MACD is positive and 12 day EMA is above 26 day EMA indicating an uptrend. RSI is above 60 indicating an uptrend which is supported with a positive trend in both the indicators. 14 day positive DMI is above 14 day negative DMI, while 14 day ADX is near 22 indicating an uptrend in prices. Stock has immediate resistance at 123.0p and support near 100.0p. The stock should be a hold with the same profit target.
Compass Group PLC
On the daily chart, Compass is trading in the middle of a channel between 502.0p and 575.0p indicating the stock is in a consolidation phase. 20 day EMA is still above 50 day EMA indicating a positive trend is forming in the stock. MACD is positive and 12 day EMA is below 26 day EMA, indicating a consolidation in the stock. 14 day RSI is above 50 showing some strength in the trend. Positive 14 day DMI is slightly below negative 14 day DMI showing a consolidation in share prices. The stock has strong resistance near 575.0p with strong support near 500.0p and has to cross above 545.0p level for a higher move. The stock should be a hold with the same profit target.
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Risk Factors
There is no certainty that the recommendations will be successful or that they will make money for investors.
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Regulatory disclosures
In accordance with the Conduct of Business Rules COBS12.4.7R (i) in the preparation of the report the analyst used price and volume charts provided by independent data suppliers and applied technical analysis tools of investment and trading evaluation in arriving at his recommendations, ii) all recommendations made by the analyst are followed up in subsequent reports until the closure of a position, iii) there is no certainty that any recommendation will be successful or that technical analysis should be used exclusively to arrive at investment decisions.
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CSS, CSS Partners and their respective officers, directors, shareholders and /or partners may have a shareholding in the companies reviewed in this report. They will not have access to this report until it is published, except those responsible for compliance issues concerning this report.
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Distribution of recommendations for the period 1st April to 30th June 2010:
| |
% Distribution of recommendations |
No of recommendation |
| Buy |
88.5% |
23 |
| Hold |
0 |
0 |
| Sell |
11.5% |
3 |
The first column displays the % distribution of recommendations made by CSS Partners in this Technical Analysis Trading programme and the second column shows the numbers of such recommendation. Neither CSS nor CSS Partners has any investment banking relationships with any of the companies covered in the Technical Analysis Trading Programme, namely the companies in the FTSE 350 index.
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