KUALA LUMPUR: Further earnings growth for Pharmaniaga Bhd could come from the Sinovac vaccines' potential to be approved as a booster shot and for adolescent use, says Kenanga Research, although this would likely be only rolled-out in 1H22.
The research firm noted that after recording bumper profits in 3QFY21, there could be no sequential earnings growth for Pharmaniaga in the final quarter of this year, as any requirement for a Sinovac vaccine booster shot would potentially start from December onwards.
This is owing to a majority of Sinovac recipients receiving their second dose between June and September.
"We are factoring in concession extension beyond the interim extended concession period from Dec 1, 2019 to Dec 31, 2021 for procurement of drugs to ensure no supply chain disruption in the supply and distribution of medicines nationwide.
"This is in view of Pharmaniaga’s infrastructure setup via computerised system such as Pharmacy Information System (PHIS) which is an integral role in ensuring the distribution of drugs to patients and effective management of stock levels,” said Kenanga in a note.
The research firm added that there are currently about 11 million Sinovac recipients who would require the booster shot.
Meanwhile, the group is currently in talks with Sinovac Biotech to supply vaccines to neighbouring countries via their fill-and-finish facility.
Kenanga said Malaysia is one of five countries outside of China that have been authorised to conduct fill-and-finish for Sinovac.
Last week, Pharmaniaga marked its maiden entrance into the vaccine international market by successfully exporting the first batch of Sinovac filled and finished Covid-19 vaccine to Myanmar with an initial order of 200,000 doses.
Post-results, Kenanga raised its FY21-22 net profit forecasts due to better-than-expected vaccine sales and concession extension.
"Correspondingly, we raise our TP from RM 0.54 to RM0.85 based on 15x FY22E EPS (-0.5SD below its 5-year historical forward mean)," it said while upgrading the stock to "market perform" from "underperform" previously.