The Australian Pharmaceutical Industries Ltd (ASX: API) share price could rally following a promising half-year report released to the market today.
Here are the key takeaways from the API half year report:
- Net profit rose 27% to $29.1 million
- The Priceline store network increased to 450 stores
- A fully franked dividend of 3.5 cents per share is payable, up 40% on the same period last year
Australian Pharmaceutical Industries is the name behind brands like Priceline Pharmacy, Soul Pattinson Chemist, Pharmacist Advice and Club Premium.
During the half, API said a 25-store rollout buoyed returns in what was a challenging consumer environment.
"We have increased NPAT and returns to shareholders through organic growth in our Priceline Pharmacy network, despite the slower retail conditions in 2017, while generating cash and sustainable returns through our pharmacy distribution business," API CEO Richard Vincent said. "The strength of the Priceline Pharmacy brand continues to attract independent pharmacists to our network and the pipeline of potential partners remains robust."
Pleasingly, the company's board resolved to declare a dividend of 3.5 cents per share, fully franked, which is payable June 2nd.
Looking ahead, the company expects to expand its pharmacy network by a further 20 stores, and generate operational improvements, offering an expected net profit uplift of 10%.
Buy, Hold or Sell
The API share price has rallied strongly over the past five years, up over 550%. The company's gains have come from new store rollouts and ongoing distribution and retail growth.
Despite its strong gains to date, however, I think low-risk investors could get a superior exposure to API and other popular ASX shares by buying Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), which is a diversified holding company. Indeed, while API could go on to beat the market from today's prices, I'd prefer to get exposure through Soul Patts.
