Home ›› 23 Oct 2022 ›› Stock
Drug maker Square Pharmaceuticals Limited put a hefty investment of Tk 1,050 crore in BMRE (balancing, modernisation, rehabilitation, and expansion) to materialise the procurement, setting up new machinery, and land purchase for further expansion in four years.
The investment in Square Group’s flagship company, which is also the top drug manufacturer in Bangladesh, began in 2019 and will continue until this year.
As part of the move, the company’s board of directors approved a plan to set aside Tk300 crore for investment in BMRE to set up new machinery for further expansion on Thursday.
The capital was sourced from the company’s profits which had been declared as stock dividends.
The publicly traded company said its investment figure was Tk 200 crore in 2019, Tk 250 crore in 2020, Tk 300 crore in 2021, and Tk300 crore slated for this year.
A top official at Square Pharma told The Business Post, “Investment is a part of our regular operations and expansion plan. We allocate a substantial slice of our profit for investment plan because old machinery needs to be upgraded while new equipment is also needed for further advancement.”
Meanwhile, the drug maker posted substantial growth in its business, riding on the unveiling of new drugs as well as its strong marketing strategy.
Its net profit jumped by 14 per cent to Tk1, 818 crore in the fiscal year 2021-22 on a year-on-year basis.
The company’s earnings per share (EPS) stood at Tk 20.51 at the end of FY22 versus Tk 17.99 in the previous fiscal.
On Thursday, the board of directors of Square Pharma recommended a 100 per cent cash dividend for the year ended on June 2022, which is the highest in the company’s history.
The final approval of dividends is expected to come from its annual general meeting (AGM) scheduled to be held on December 24 through a virtual platform.
The company reported a consolidated net asset value (NAV) per share of Tk 116.7 and a consolidated net operating cash flow per share (NOCFPS) of Tk 14.52 for FY22 against Tk 102.54 and Tk 12.38 respectively in the previous year.
In fiscal 2020-21, the pharma company disbursed a 60 per cent cash dividend for its shareholders, and it paid a cash dividend of 47 per cent and a stock dividend of per cent for the fiscal year 2019-20.
Square Pharma is the biggest drug manufacturer in Bangladesh with a market share of 17.2 per cent in the country’s $3.2 billion pharmaceuticals market.
The company is currently maintaining a strong balance sheet with no leverage and a cash balance to the tune of Tk 483 crore.
According to a City Brokerage equity note, the drug maker’s strong financial foothold would allow it to grab new opportunities quickly and sustain even in any possible adverse situation.
Square Pharma has a significant growth potential from its subsidiary in Kenya, which is being established to cater to the growing East African common market with a pharmaceuticals market size roughly equal to that of Bangladesh, it commented.
The company has a supply of 150 of its products in the African market which are already familiar there, City Brokerage said.
The building of a formulation plant there would help the company cater to the market demand in a more efficient manner and avail of the 15 per cent price benefit available to local manufacturers there, it added.
Listed in 1995, the company’s shares closed at Tk 209.8 per share on the trading floor of the Dhaka Stock Exchange (DSE) on Thursday.
With an authorised capital of Tk 1000 crore, the drug maker has a paid-up capital base of Tk 886 crore, while its total number of securities stands at 685.95 million.
The sponsor-directors own a 34.67 per cent stake in the company, while institutional investors hold 14.87 per cent, foreign investors 13.43 per cent, and the general public 37.03 per cent till September 30 this year, according to the DSE.
The strength the company has is its stable product portfolio, a nationwide distribution network, economies of scale in manufacturing and operations, strong brand equity, and prudent investment in foreign subsidiaries.
The company has a presence in pharmaceuticals, AgroVet, pesticide, herbal, pellet, and basic chemical segments with a portfolio comprising 882 products.
