Rarely is anyone completely on target, but the difference with what I say about Elite and the maniacal focus on things beyond Elite's control is that I base my discussions on business facts versus emotional suppositions.
why does no one else notice.
I dunno...you tell me!
As to the point about India, please! It should be readily apparent that, among the issues public policy looks to address are those that are related. What might they be? Generic drugs have a cost focus and, thus, the effort is to find low cost API. Where does that come from? Oh, about 70% from India and China. So, when the legislative branch of government talks about controlling the cost of drugs, only now are they mentioning the need for a more secure source (courtesy of the pandemic). It might be a reason to include drug formulations/manufacturing/API as true infrastructure costs and worthy of government investment. But, I would not bet on it.
My final point will be to offer one perspective on financials that investors would want to pay attention to upon release of the annual report. That is...Elite's return on assets (ROA).
Just so we are clear...While it's interesting to know the size of a company, ranking companies by the size of their assets is rather meaningless unless one knows how well those assets are put to work for investors. As the name implies, return on assets (ROA) measures how efficiently a company can squeeze profit from its assets, regardless of size. While I have said the following before, as we near the CC for Q4/EOY 2021, it is worth revisiting...
Businesses (at least the ones that survive) are ultimately about efficiency - that is, getting the most out of limited resources. Comparing profits to revenue is a useful operational metric but comparing them to the resources a company used to earn them cuts to the very feasibility of that company's existence. ROA is the simplest of such corporate bang-for-the-buck measures. To be certain, ROA performance ranges are based on the industry in which the company competes. So, what might pharma ROA look like?
The Return on Asset performance in pharma ranges from -18.2% to 11.6%. With that understanding, the average ROA for pharma is 6.6%. Okay, where does Elite shake out on that ratio?
Based on my math from the 3rd Q 2021, Elite’s ROA is 8.5%. Not only is it positive but it is greater than the pharma industry average…I REPEAT - GREATER THAN THE INDUSTRY AVERAGE! When wondering what Nasrat has done, this ratio is evidence of Elite's management improving its business value. Ultimately, it is such measures that will matter to investors because the business reality will catch up to the manipulated p/s.
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