It’s been a relief to see my Stock in Focus screen fill out with highly-ranked companies again over the last few weeks. The stock market shock wave caused by the referendum left the screen almost empty of stocks during the summer. I was beginning to wonder how easy it would be to continue building the SIF portfolio.

However, discipline is essential for investing, especially if following a rules-based system. That’s why this week I am going to venture into a sector that’s taboo for many investors.

Beximco Pharmaceuticals is an AIM-listed Bangladeshi company specialising in generic drugs. Although this stock’s overseas status will trigger an automatic bargepole for some investors, Beximco is no fly-by-night stock.

The company was incorporated in 1976 and has been listed on AIM since 2005. It’s consistently profitable and has very little debt. Sales rose by 15% last year to £111.95m. This figure included a 68% rise in export sales compared to 2014, suggesting that the group’s focus on overseas markets is paying off.

Beximco exports to a growing number of markets, including the USA, Australia, Western Europe and Brazil. The company’s manufacturing facilities in Bangladesh produce both own-branded products and licensed products from major Western pharmas, such as Roche. Past licence partners have also included German group Bayer.

Beximco also meets all the financial criteria for the SIF portfolio and helps satisfy my need for more defensive stocks. One caveat is that daily volume is often quite low and the share is traded as a GDR on the London market. The spread can rise above my 4% threshold on quiet days, so care and patience would be needed if buying the shares for a real money portfolio.

Currency questions

Another concern is that Beximco’s reporting currency is the Bangladeshi Taka (BDT). This isn’t exactly a well-understood currency for most investors, but it appears to have been fairly stable against major currencies such as the US dollar in recent years.

The current exchange rate is around 96BDT/1GBP. Sterling’s decline has pushed this rate down from about 120BDT/1GBP over the last year. This means that Beximco’s earnings are worth around 25% more than they were one year ago.

A reversal of these currency gains is a potential risk, but one I think may be worth taking. Although I expect sterling will recover some lost ground, I don’t think it’s logical to expect a rapid recovery to pre-referendum levels.

This is one of those…

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