A WEE DRAM
CHRIS GILMOUR: Numbers look healthy, but Ascendis is bleeding
With its share price more than doubling since listing in late 2013, pharmaceutical company Ascendis Health, and its charismatic CEO Karsten Wellner, are firm favourites on the investment presentations calendar. Ascendis manufactures a wide range of health and related products, locally and overseas, with 50% of profit now coming from outside SA, making it a good rand hedge. The four-year compound annual growth rate in normalised headline earnings per share is about 90%. At Ascendis presentations, the upwards sloping graphs are always impressive. So, what’s not to like? Despite all these positives, something niggles and gnaws. A key issue is the share price decline. Since hitting R29 a year ago, it has fallen almost 30%, but the pharmaceuticals index on the JSE has largely gone sideways during that time. Even with this fall, the price:earnings ratio using regular headline earnings per share is still elevated, at around 25 times. And the return on equity metric is a modest 14%. Frankly...
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