Pharmaniaga falls on profit taking, downgrade

KUALA LUMPUR: Pharmaniaga’s share price fell to a new low of RM6.93 on Wednesday as investors locked in gains after the all-time high last week and downgrade by CIMB Equities Research.

At 11.15am, it was down 19 sen to RM7.01. There were 27,200 shares done at prices ranging from 6.93 to RM7.02.

The FBM KLCI fell 8.33 points or 0.46% to 1,819.09. Turnover was 801.62 million shares valued at RM478.59mil. Decliners led losers 336 to 260 while 272 counters were unchanged.

CIMB Research downgraded Pharmaniaga to Reduce from Hold as its valuation is rich relative to its peers in the region.

The research house said Pharmaniaga’s share price has risen 60% in the year to date and 21% in the past one month despite the absence of any apparent re-rating catalyst. Its current valuation, allows very limited room for earnings disappointment.   

Pharmaniaga is now the most expensive listed drug maker in Malaysia. It was last traded at itsall-time high of RM7.47 while CIMB Research’s sum-of-parts target price is RM6.20.

“Its CY16 P/E of 19.7 times is also at only a slight discount to the average 21 times P/E of the Indian pharmaceutical sector. 

“We think the discount is overly narrow as the latter has a bigger operating scale, stronger earnings growth, a wider product portfolio and better technology. Pharmaniaga’s valuation looks rich,” CIMB Research said.