All data is delayed
See More

Worth the wait…

Jul 21 2011 00:00
Andile Makholwa
Litha Healthcare – the former AltX-listed counter that merged with Myriad Medical last year and subsequently moved to the JSE’s main board – spends a significant chunk of its 138-page annual report explaining itself and strategic plans for its three divisions for the next couple of years. Understandably, as an AltX player, few investors paid attention to it. Now that it plays in the big league it has to be understood better.

On the face of it, Litha Healthcare Group [JSE:LHG] doesn’t offer much to investors. It’s largely dependent on its biotech business, which supplies paediatric vaccines to South Africa’s Department of Health through a private public partnership (PPP) in The Biovac Institute and, to a limited extent, the private sector. It’s said it’s not about to declare a dividend (maybe in three years’ time), which makes it less attractive to short-term investors.

Nevertheless, we think investors should consider the counter. It’s not yet in the league of Aspen Pharmacare or Adcock Ingram and it certainly can’t be compared to Cipla Medpro. Aside from the obvious fact that pharmaceutical and private hospital groups are defensive stocks, Litha has the making of a potentially successful small cap.

While its PPP with Government gives it a guaranteed income, it’s developing capacity to start manufacturing its own vaccines in 2013 to export it to the rest of southern Africa, venturing into a largely untapped market. Having your own manufacturing division takes it out of just being a distributor and will boost its margins. Equally, there’s potential in its pharma business, especially the focus on generic medicines, while its higher margin medical devices division is poised to increase its sales to the public sector.

As a company emerging from a merger its 2010 financial figures aren’t comparable. However, you can bet on its long-term potential.



Read Fin24’s Comments Policy publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

We're talking about:


With infrastructure spending having been identified as one of the key focus areas of the National Development Plan, tradesmen will continue to play a critical role in growing the South African economy through their skills..

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

A 30% a month return on investment is:

Previous results · Suggest a vote