KUALA LUMPUR, Aug 22 — MIDF Research has maintained its “Buy” call on Pharmaniaga Bhd with a revised target price (TP) of 87 sen supported by positive trajectory of its operations as well as its future planning.
In a note today, MIDF said the integrated pharmaceutical group is also planning to tender for at least 40 new products with the Ministry of Health, which will be finalised by year-end.
“Vaccine-wise, most of its fill-finish vaccines have an expiry date of up to the second half (2H) of Calender Year 2024, hence sales on the vaccines can proceed to carry value in the group’s orderbook,” it added.
Pharmaniaga reportedly said it will be discussing further distribution plans to Africa for its vaccines and other consumables, while its in-house over-the-counter (OTC) and supplement products have yet to touch five per cent of local consumers as these products have a small market presence, which is less than one per cent.
“As such, the group is aggressively hiring new marketing staff while pushing for more initiatives to make its brands more known while demand for the said products are high,” MIDF said.
The research house also said that marketing strategies are expected to continue for another three to five years, with an estimated investment budget of between RM10 million and RM15 million per annum.
Pharmaniaga’s net profit plunged 94.7 per cent to RM722,000 in the second quarter ended June 30, 2022 (Q2), from the RM13.7 million posted in the same quarter last year.
The pharmaceutical group saw its revenue fall 35.3 per cent to RM761.1 million from RM1.18 billion previously, while earnings per share for the quarter dropped to 0.06 sen against 1.05 sen a year ago.
Meanwhile, Hong Leong Investment Bank (HLIB) said Pharmaniaga’s results were due higher-than-expected costs as the group mainly incurred additional advertising and promotion (A&P) costs to boost brand recognition of its OTC and consumer healthcare products.
“While we acknowledge that additional spend on A&P is essential to grow Pharmaniaga’s private sector sales, we also opine that this will adversely impact margins in the short to medium term. With that, we downgrade Pharmaniaga to ‘Hold’,” HLIB added.
HLIB has also lowered its earnings forecast for FY2022 to FY2024 by between 15 per cent to 26 per cent as it imputed higher A&P and staff cost into its assumptions.
“Following our earnings cut and rolling over of valuation base year, our TP is lowered to 63 sen from 83 sen previously,” it added.
At 10.58 am, Pharmaniaga’s shares fell one sen to 59.5 sen, with 2.12 million shares changing hands. — Bernama
