CGSI Research said FY25 will be a year for DBB to optimise, execute, and plan for the future.
PETALING JAYA: CGS International (CGSI) Research remains positive on Duopharma Biotech Bhd
’s (DBB) earnings trajectory in financial year 2025 (FY25).
The research house said DBB’s earnings have been bottoming in FY23 and rebounding in FY24, and it projects the company to post further earnings growth with a three-year core earnings per share (EPS) compounded annual growth rate of 19.4% over FY24 to FY27.
“We expect earnings growth in FY25 to be driven by a full-year’s contribution from the approved products purchase list contracts secured in April last year, a stronger ringgit versus the US dollar, as well as lower application programming interface prices.
“Our minor adjustments to our revenue, depreciation and interest expense assumptions see our FY25 and FY26 forecasts core EPS estimates adjusted downwards by 1.1% and 0.2%,” the research house added.
CGSI Research said FY25 will be a year for DBB to optimise, execute, and plan for the future.
“With the manufacturing of most of its products now shifted from its K1 facility to its new K3 facility, DBB intends to further optimise its manufacturing processes in its facilities to cater to the growth in demand from the public healthcare space.
“Further, it is also evaluating and finalising plans to build further manufacturing capabilities in its K2 and K5 facilities.
“This plan is done with the intention to bring in products that could allow DBB to gain knowledge in developing and manufacturing biologicals, which we think could pave the way for stronger growth in the longer term,” it said.
Given that these plans would be firmed up in 2025, with most of the capital expenditure investments coming in 2026 onwards, the research house is maintaining the company’s dividend payout ratio at 38% between FY25 and FY27, providing yields of 3%.
That said, CGSI said it has not factored in the earnings upside from these in its forecasts.
DBB also believes that it can secure a similar contract value as its current insulin supply contract with the Health Ministry in the upcoming tender to be held in the second half of the year.
The Health Ministry needs more than one supplier and its partner Biocon’s Johor facility with the full drug manufacturing process provides more security in supply over Pharmaniaga Bhd’s new fill and finish facility, it noted.
The research house is retaining its “add” rating on the company with an unchanged Gordon growth model-based target price of RM1.55.
