KUALA LUMPUR: Pharmaniaga Bhd
is expected to achieve pre-Covid earnings growth this year, driven by regular orders for medical supplies from the Health Ministry.
Kenanga Research in a report noted that the pharmaceutical company is confident of its future prospects amid a strategic plan to recover from its PN17 classification and formulating a regularisation plan.
“We project earnings growth in the financial year 2023 at levels similar to pre-Covid, averaging RM40mil to RM60mil,” it said.
Last week, Pharmaniaga announced that it had secured a contract from the Health Ministry to provide medical supply logistics services.
In a filing with Bursa Malaysia, Pharmaniaga said the ministry issued a letter dated July 12 to its wholly-owned subsidiary, Pharmaniaga Logistics Sdn Bhd (PLSB) for the seven-year contract from July 1, 2023 to June 30, 2030.
PLSB would continue to support and render its services to the ministry based on the agreed salient terms, it said. Kenanga Research said it is positive on this, adding that it is also in-line with market expectations. “However, we are mindful that the government will likely want to see better value for money and hence, Pharmaniaga will have to offer new rates that are more competitive.”
Kenanga Research has an “underperform” call on the stock.
“We keep our target price of 33 sen at a 35% discount to peers’ average due to its smaller market capitalisation.
“We are cautious due to the negative shareholders’ equity of RM143mil as at March 31, 2023 impeding its ability to declare dividends.”
With the government seeking better value-for-money contracts, the research house said Pharmaniaga might have to offer new rates that are more competitive.
Pharmaniaga was admitted to the PN17 category on Bursa Malaysia on Feb 27, after making a RM552.3mil provision for its slow-moving Covid-19 vaccine stock, resulting in a negative shareholders’ equity.
For its first quarter ended March 31, 2023, Pharmaniaga’s net profit dipped to RM2.65mil from RM27.73mil in the previous corresponding quarter last year.
Revenue declined by 8.5% to RM880.45mil from RM962.17mil previously, mainly due to lower customer demand in both the concession and Indonesia segments.
In a statement last month, Pharmaniaga executive committee chairman Ahmad Shahredzuan Mohd Shariff said the pharmaceutical company will optimise its overall business operations and costs, as well as finding synergies across all of its business units.
He said the group had placed great emphasis on expanding its capabilities in the field of biopharmaceuticals, with a focus on the establishment of state-of-the-art manufacturing facilities for vaccines and insulin to address the increasing needs in these therapeutic areas.
