PETALING JAYA: Pharmaniaga Bhd’s earnings forecast for the financial year 2020 and 2021 remains unchanged, pending further disclosure from the management on the earnings impact resulting from the fill-and-finish agreement, said MIDF Research.
The research house also reiterated its earlier view that the potential upside from the fill-and-finish as well as vaccine distribution will more or less be rather minimal on the company’s earnings.
“The procurement and bottling of Covid-19 vaccine from Sinovac by Pharmaniaga is expected to begin in the immediate future whilst the distribution is expected to take place at the end of March 2021, ” it said.
“In addition to being a more economical alternative to its peers, we opine that the Sinovac vaccine was chosen given that it requires only 4°C of cold storage which is within Pharmaniaga’s current capacity of 2°C to 8°C, ” MIDF Research added.
It noted that the overall cost of the vaccine will be reduced since this one does not require an ultra-cooler-box for storage and transportation.
MIDF Research said the final bottling process and end-distribution will be handled by Pharmaniaga via its small volume injectable plant located in Puchong, Selangor.
The plant, which will undergo a month of retrofitting exercise at the cost of RM2.0mil will have the capacity to produce two million doses per month.
“In-line with its growth strategy going forward, Pharmaniaga is also expected to enter into two other agreements with Sinovac for a locally manufactured Covid-19 vaccine in the near future.
“What the agreements would entail among others is the right to manufacture and distribute Sinovac’s Covid-19 vaccine in Malaysia, ” the research house said.
MIDF said that it is maintaining its neutral recommendation on Pharmaniaga with a positive bias at this juncture.
“We are of the opinion that the stock remains attractive in terms of sentiment to accumulate given its positive industry-wide growth prospect and it is currently trading at a forward price-to-earnings ratio (PER) of 17.9 times (lower than its similar-sized regional peers which typically average at more than 20 times forward PER), ” it said.
“The stock price has overpriced the vaccine story which will cap its share price appreciation going forward. That said, its forecast FY21 dividend yield remains decent at 3.4%, ” it added.