One of the best performing shares on the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) this morning has been Australian Pharmaceutical Industries Ltd (ASX: API). In morning trade its shares have surged 6% higher to $2.01.
Although the owner and operator of the Priceline pharmacy brand announced that its CEO and managing director Stephen Roche will step down from the role in February 2017, the market has looked beyond this disappointing news and focused on its full year underlying net profit after tax guidance.
In July the company provided full-year underlying net profit after tax guidance of $49.5 million, representing annual growth of 15%. The company has now upgraded this to at least $51 million, equal to 17% growth year on year.
Furthermore, the company was aiming to grow its store network by 20 stores to a total of 440. Management revealed today that at the end of August the store network had actually grown to a total of 442 stores.
Taking a bit of the gloss off this impressive performance is, of course, the news of the change at the top.
Whilst it is disappointing to see Stephen Roche step down from his role after 10 years in charge, I believe the company has chosen his replacement well. The current general manager of business development, operations and strategy, Richard Vincent, has been chosen to replace Mr Roche.
Mr Vincent has been with the company since 2005 and chairman Peter Robinson believes he is the right person to take Australian Pharmaceutical Industries forward. He stated that:
"Richard has the most relevant experience for this unique role that combines mainstream retailing and pharmaceutical distribution. He has been responsible for major programs across the total business, gaining a thorough understanding of the business drivers. To that end he has the right attributes to lead our strategy with a highly experienced retail team to execute on it."
Mr Roche will still remain on the board of the Priceline Sisterhood Foundation.
All in all, I've been very impressed with Australian Pharmaceutical Industries this year and I'm not at all surprised to see its share price surge today. After all, at 18x estimated FY 2017 earnings it certainly looks to be a better option than rival Sigma Pharmaceutical Limited (ASX: SIP), which trades at 21x forward earnings.
