Aspen share price breaks out post interim results news

Key takeaways:

1. Robust Revenue Growth Amid Challenges: Aspen's first half ending December 2023, saw a 10% revenue increase despite procurement and transactional cost difficulties.
2. Manufacturing Segment’s Stellar Performance: The Manufacturing segment emerged as a strong growth driver, registering a 33% revenue increase, primarily fueled by a shift toward toll manufacturing for heparin.
3. Strategic Realignment in Commercial Pharmaceuticals: The reorganization of the Commercial Pharmaceuticals segment into Prescription, Over-the-counter (OTC), and Injectables has achieved a 3% revenue increase.
4. Operational Efficiency Boosts Cash Flow: A notable 44% increment in operating cash flow per share was achieved, primarily through improved operational efficiency and strategic inventory management.
5. Optimistic Future Outlook with Strategic Focus: Looking ahead to the second half of 2024, Aspen is optimistic about continued growth.

Aspen's performance in the first half ending December 2023 surpassed the company’s projections with 10% revenue growth (to R21,141 million) and despite facing Volume-Based Procurement challenges in China and accruing increased transaction costs. The Manufacturing segment managed a 33% revenue increase, significantly bolstering the Group.

While normalised EBITDA saw a modest 2% rise to R5,194 million, efforts to manage net financing costs paid off, even as earnings per share figures faced declines due to increased costs and asset impairments. A noteworthy 44% increase in operating cash flow per share underscored improved operational efficiency and inventory management.

Segment-wise, the restructured Commercial Pharmaceuticals segment reported a 3% increase in revenue, driven by growth in Prescription and OTC categories amidst a decline in Injectables, whereas the Manufacturing division experienced robust growth, benefitting from strategic shifts like toll manufacturing for heparin.

Looking forward, Aspen expects mid-single-digit growth in normalised EBITDA and forecasts revenue growth spurred by sterile manufacturing investments, expanded Commercial Pharmaceuticals operations, and contributions from strategic acquisitions. This optimism is further supported by an expected increase in manufacturing segment revenue.

Aspen – technical view

The share price of Aspen is breaking out of a triangle consolidation pattern. The breakout suggests that the preceding uptrend is now being continued. 21930 provides the next upside resistance target. Breakout traders not already long might hope for a pullback towards the 19960 level for entry, whilst targeting a move towards the 21930 level. A move below support of the triangle would consider the breakout to have instead failed.