Monumentalist

Investment Analysis: Aspen Pharmacare Holdings Limited (APN)

Date: 12 January 2026 Analyst Role: Senior Equity Analyst, JSE Desk Subject: Turnaround / Corporate Action Play

Step 1: Data Gathering & Source Verification

The analysis utilizes the most recent "Reviewed Condensed Group Financial Results" for the year ended 30 June 2025 and subsequent strategic announcements up to January 2026.

Reporting Period 1 (Annual): Reviewed Condensed Group Financial Results for the year ended 30 June 2025 (Released September 2025).
Source: Aspen FY2025 Results SENS
Key SENS Announcements (Strategic):
October 2025: "Proposed divestment of Aspen Asia Pacific (excluding China) for R26.5 billion."
December 2025: "Aspen Secures SAHPRA Approval for MounjaroÂ® (Tirzepatide) as a Chronic Weight Management Treatment."
September 2025: Dividend Declaration (Final Dividend).

Step 2: Metric Extraction

Note: Metrics are calculated based on the closing price of ~11,750 cents (R117.50) as of 12 January 2026.

| Metric | Value | Notes | | --- | --- | --- | | Market Cap | ~R52.4 Billion | Significant contraction from previous highs of >R80bn. | | Dividend Yield (L12M) | ~1.8% | Low. The total dividend for FY2025 was declared at 211 cents, a sharp reduction from the 359 cents declared in 2024, reflecting the earnings pressure. | | Liquidity Check | High (Safe) | Consistently one of the Top 20 traded stocks on the JSE by value. No liquidity risk for retail or institutional investors. | | P/E Ratio | ~11.1x | Based on FY2025 Headline Earnings Per Share (HEPS) of 1,055.8 cents. This is historically cheap for Aspen (typically trades 14x-18x), but justified by negative earnings growth. | | Net Asset Value | N/A | P/E and EV/EBITDA are the primary valuation metrics for pharmaceutical manufacturers. |

Step 3: Operational & Strategic Analysis

Business Overview

Aspen is a global specialty and branded pharmaceutical company with a presence in both emerging and developed markets.

Commercial Pharmaceuticals: Branded prescription and OTC medicines (e.g., Mybulen, Solpadeine).
Manufacturing (Steriles): A massive strategic pivot to become a global contract manufacturer (CDMO) for sterile injectables (vaccines, anesthetics, and insulin).

Performance Trend: Contraction & Pain

The FY2025 results were disappointing, confirming the bear thesis of the last 18 months:

Revenue: Declined to R43.4 billion (down from R44.7bn in 2024).
Margins: Crushed. Gross profit margins fell to 53.2% (from 58.2%), driven by the "Volume-Based Procurement" (VBP) policy in China which slashed pricing, and significant inventory write-offs.
Earnings: HEPS collapsed by ~29% to 1,055 cents. The "Sterile Manufacturing" thesis has been slower to yield cash than the market anticipated.

Sector Context: The "GLP-1" Gold Rush

Macro Factor: The global pharmaceutical focus has shifted entirely to GLP-1 agonists (weight-loss drugs like Ozempic/Wegovy/Mounjaro).
Aspen's Play: Aspen has secured the rights to distribute Eli Lilly's MounjaroÂ® in South Africa. This is a potential game-changer for their Commercial division, tapping into the massive local demand for obesity treatments.

Step 4: The Verdict

Bull Case (The "Break-Up" Value)

Reason to Buy: The Asia Pacific Divestment. The announced sale of the Asia Pacific business for R26.5 billion is transformative. This single transaction is worth roughly 50% of the current market cap. If proceeds are used to pay down the debt pile (reducing interest costs) or buy back shares at these depressed levels (R117), the remaining "Steriles + Africa" business is effectively being bought for next to nothing.

Bear Case (The "Execution Gap")

Reason to Sell: Management Credibility. Management has promised for years that the "Sterile Capacity" (investments in Gqeberha and France) would fill up and drive high margins. Instead, we have seen delays and lower utilization. If the Mounjaro rollout faces supply constraints (globally common) and the Steriles contracts don't materialize, the stock could de-rate further to a 8x P/E.

Fair Value Estimate

Range: R145.00 â R160.00
Logic: Sum-of-the-parts analysis suggests the current price (R117) is deeply discounted. The cash from the Asia sale alone provides a floor. A normalized 13x P/E on recovering earnings puts the stock back above R150.

Final Rating: BUY (High Conviction)

Analysis: The bad news (China VBP, earnings drop) is fully priced in. The market is ignoring the massive influx of cash coming from the Asia sale and the potential of the Mounjaro launch.
Strategy: This is a classic "bad news bottom." You are buying a high-quality asset during a temporary earnings trough with a massive cash event on the horizon.

ASPEN PHARMACARE HOLDINGS LIMITED