PETALING JAYA: Pharmaniaga Bhd
is poised to post solid earnings for the first quarter of financial year 2026 (1Q26), which is expected to be well above market expectations, BIMB Research says.
The group’s 1Q26 results are scheduled for release on May 18.
In its results preview, the research house noted this will be a solid quarter to start off 2026, with revenue projected to grow by 10% to 11% year-on-year, supported by resilient government procurement and gradual private market expansion.
“We estimate the pre-tax profit at about RM33mil,” BIMB Research said.
The research house added that the 1Q typically tends to be among the group’s seasonally stronger quarters due to procurement timing.
However, Pharmaniaga’s profit after tax and minority interest (Patami) could surprise slightly on the upside at around RM35mil to RM36mil, driven by the potential recognition of its deferred tax assets (DTA) which was not embedded in the research house’s earlier forecasts.
BIMB Research said, “In our view, improving visibility from the manufacturing segment has now increased the likelihood of Pharmaniaga progressively unlocking its DTA over the next two years.”
Operationally, the research house noted that 1Q26 still shapes up as a transition quarter in which structural drivers are emerging, but not yet fully translating into earnings.
Insulin commercialisation and the vaccine push are key positives, although utilisation is still below optimal scale.
Meanwhile, BIMB Research said cost pressures remain manageable for now, supported by existing raw material inventories.
The near-term impact from higher diesel prices should also stay relatively contained, given the concession segment’s fixed delivery structure and subsidised diesel arrangements, although some cost pass- through could emerge within the private segment.
However, should the Iran conflict drag on, BIMB Research estimates that the potential impact could rise to around 3% of the cost of goods sold, with fuller effects likely becoming visible only from 2Q26 onwards.
The key risk now lies within the Approved Product Purchase List procurement cycle, where tender finalisation could be delayed and potentially spill into next year amid ongoing negotiations – following average tender price hikes of around 20% among suppliers.
BIMB Research maintained a “buy” call on the stock with an unchanged target price of 37 sen.
Following its Practice Note 17 uplift, the return of Pharmaniaga’s dividends could emerge as a key re-rating catalyst.
“We estimate a potential 2026 dividend per share of 75 sen (70% payout), implying a decent 3% yield, with further upside from higher Patami post-DTA recognition,” the research house added.
While a special dividend is less certain, given ongoing capital expenditure and balance sheet normalisation, BIMB Research said it does not rule it out once the cashflows stabilise.
Moreover, the proposed five-to-one share consolidation appears primarily optics-driven to improve marketability and institutional appeal, implying a post-consolidation equivalent target price of RM1.85 per share.
Pharmaniaga shares closed at 25 sen yesterday, giving it a market capitalisation of RM1.64bil.
