PETALING JAYA: Duopharma Biotech Bhd
, which released the company’s fourth quarter ended Dec 31, 2024 (4Q24) and full-year financial results on Wednesday, is expected to see further earnings growth in FY25 on higher government healthcare allocation and lower active pharmaceutical ingredient (API) prices.
Analysts expect stronger earnings growth from 1Q25 onwards, with TA Securities Research pointing out that the performance would be driven by higher public sector demand from the renewal of the approved products list (APPL) from last May, a new government contract to supply insulin and lower API prices.
The brokerage, which has a “buy” recommendation on the stock with an unchanged target price of RM1.62 per share, believes FY25 would be a record profit year for the company with earnings expected to grow by 41.1% to RM88.4mil. For FY24, Duopharma posted a net profit of RM62.65mil, up from RM52.65mil in FY23.
RHB Research lifted earnings estimates by 7% for FY25 and 4% for FY26 while expecting net margin to sustain within 10% in 2025 from 8% in 2024. The research house upgraded the stock to a “buy” with a new target price of RM1.45 on better earnings visibility from higher government healthcare spending and the finalisation of an insulin supply contract by April.
It said Duopharma would only start to benefit from the lower API prices in one to two quarters on a lagged effect as it would require time to exhaust the raw material in its inventory. It added that based on the 4Q24 results, gross profit margin expanded 2.2 percentage points quarter-on-quarter due to API prices normalising.
CGS International Securities Malaysia Sdn Bhd said after earnings bottomed in FY23 and rebounded in FY24, the company would see further earnings growth with a three-year CNP compound average growth rate of 22.2% over FY23 to FY26, with earnings growth in FY25 to be driven from the APPL contract, lower API prices and stronger ringgit versus US dollar.
The brokerage has retained its “add” rating on the stock with a target price of RM1.55 per share, which would see it trading at 15 times FY25 price-to-earnings (PE) or higher than the average 13 times FY25 PE of other domestic pharmaceutical stocks.
Duopharma fell one sen, or 0.78% to RM1.27 at 11.49 am.
