Erste Bank Estimates a 12-Month Target Price of 14.6 EUR/GDR for A&D Pharma

Erste Bank"s valuation - using a DCF model - indicates a fair equity value of A&D Pharma of around EUR 408mn, translating into a 12-month target price of around EUR 14.6 per GDR (global depositary receipt). Comparing A&D pharma with its sector peers shows a price range of EUR 24.1 to 48.6 per GDR with an average price of EUR 35.9 per GDR.

On an earnings and cash earnings CAGR basis (CAGR 2005-2009e), A&D Pharma is undoubtedly the regional leader, providing further confirmation that its valuation is very appealing at current pricelevels. However, the selected period (2005-2009) is likely the period of the most dynamic growth in A&D Pharma"s history, driven by favorable internal and external favorable circumstances, and over time the tempo will inevitably slow down, closer to industry average rates.

Since its London listing in October 2006, A&D pharma, a Dutch holding company that owns the largest integrated pharma wholesale and retail operations in Romania, has delivered steady good news flow to its investors. In 2006, A&D Pharma"s consolidated sales advanced by 34.1% y/y to EUR 331.6mn, with a high tempo shared by wholesale arm Mediplus (up 37.2% y/y to EUR 287.6mn) and pharmacy chain Sensiblu (up 42.2% y/y to EUR 89.8mn). A&D Pharma also managed to strengthen its leadership, with its wholesale market share rising to 19% in December 2006.

Erste Bank analysts project A&D Pharma posting a net profit of EUR 24.3mn (up 36.5% y/y) on sales of EUR 440.1mn (up 32.7% y/y) for 2007 and target another 26.7% y/y growth in sales and 33.1% y/y rise on the bottom line for 2008. Based on their estimates, analysts kave an Accumulate recommendation on the A&D Pharma stock.