Ph.D. Andrei RDULESCU

Senior Investment Analyst

15th of March 2013

ATB

Market price: RON 0.46

Outstanding shares: 568 007 100

Market cap: RON 261 283 266

Target price (12 M): RON 0.566

Recommendation: BUY

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52 Week Min: RON 0.340

52 Week Max: RON 0.464

PER: 9.54

P/BV: 0.75

With almost 6 decades of tradition in the Romanian pharma

sector, ATB manufactures over 150 medicines, used for the

treatment of several diseases (infectious, dermatology,

cardiovascular, digestive and musculoskeletal);

At the same time, ATB is an important producer of Nystatin,

with a global market share of 35%;

Listed on Bucharest Stock Exchange since 1997, the main

shareholder is the Romanian Government (53%);

The turnover rose at CAGR 10% during the period 2003-

2012, to RON 297mn;

Over the past years ATB focused on the internationalisation:

the volume of exports rose from USD 13.2mn in 2009 to USD

20mn in 2012 and the management expects an increase to

USD 23.5mn in 2013.

2

During 2012 the turnover rose by 7.9% yoy to RON

297mn;

The operating revenue increased by 6.4% yoy to RON

327.5mn, while the operating expenses rose by 4%

yoy to RON 292.7mn, due to the evolution of the raw

materials expenses (up 17.4% yoy) and of the

depreciation & amortisation (up 17.2% yoy);

Consequently, the operating result increased by 32.1%

yoy to RON 34.8mn;

From the financial operations ATB had a loss of RON

2.3mn in 2012;

The net profit rose by 33.2% yoy to RON 27.4mn.

3

In 2012 the current assets rose by 13.4% yoy to RON

311mn, mainly due to the evolution of trade

receivables (up 13.3% yoy to RON 257mn), in the

context of the financing problems of the domestic

healthcare system;

The current liabilities increased by 9% yoy to RON

157.8mn;

On the other hand, the non-current assets decreased

by 4.4% yoy, to RON 206.2mn, as the tangible assets

declined by 6% yoy;

The non-current liabilities diminished by 35.2% yoy to

RON 10.3mn;

The equity rose by 6.1% yoy to RON 349mn.

4

Pharma is a defensive sector, presenting resilience to the

macroeconomic evolutions;

According to the CEGEDIM data, the domestic pharma

market rose at CAGR 16% (in EUR) during 2002-2012, to

EUR 2.6bn;

However, the waves of the macro-financial crisis negatively

impacted this sector (a growth pace of 8.3% yoy (in RON

terms) during 2012);

On the short-run the domestic pharma industry continues to

be confronted with the financing problems, as well as the

persistence of a difficult macroeconomic climate;

On the medium-long term the pharma industry is supported

by the convergence of the medicine consumption (to the EU

levels) and by the aging of the population.

5

For the peer-group analysis I selected listed companies

from the pharma industry, with exposure to Central and

Eastern Europe;

ATB is undervalued according to the PER indicator (a

level of 9.5 below the average of the companies

included in the analysis);

At the same time, ATB is undervalued in terms of the

P/BV indicator (level of 0.8 lower than the average of

the selected companies);

The Romanian company is also undervalued in what

regards the P/Sales indicator (level of 0.9 lower than

the average of the companies in this analysis);

Concluding, ATB is undervalued according to the peer-

group analysis.

6

The table on the right presents the central scenario of

financial forecasting for the period 2013-2017;

The main hypotheses of this scenario are:

The turnover increases by 10% yoy in 2013 and at CAGR

9.4% afterwards, evolution to be determined, mainly, by

the exports pace;

An average annual EBIT margin of 11.9%;

A long-term profit growth rate of 3%;

An average annual discount factor of 13.2% over the

period;

According to the DCF analysis there resulted a possible

12M target price of RON 0.531.

7

ATB is undervalued according to the results of the fundamental analysis;

From the short-run point of view, the upside potential is supported by the undervaluation of the company in terms of

the peer-group analysis;

At the same time, from the medium-long term point of view the upside potential is supported by the favorable

perspectives for the evolution of the exports (to offset the challenges of the Romanian pharma sector);

In this context the investment recommendation for ATB is BUY; the 12M target price is RON 0.566, being

established by weighting the results of the DCF valuation and of the peer-group analysis.

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