PETALING JAYA: Pharmaniaga Bhd is poised for continued improvement as it rides on vaccine sales in the near term while leveraging a potential renewal of its concession agreement for longer-term growth.
Analysts remained upbeat on the group’s prospects, following its fourth-quarter (Q4) results briefing on Monday.
The group posted RM85.5mil in net profit for its Q4 ended Dec 31, 2021, compared with a net loss of RM6.3mil in the previous corresponding quarter.
Revenue jumped 12% to RM711.7mil from RM634.6mil previously.
For the full year, Pharmaniaga’s net profit soared five-fold to RM172.2mil while revenue nearly doubled to RM4.8bil from RM2.7bil in financial year 2020 (FY20).
In Q4 of FY21, Pharmaniaga delivered about 2.5 million doses of vaccine to the private sector and export market.
In FY22, the group targets to supply another 10 million doses of Sinovac vaccine to the private sector and export market.
“The group targets the delivery of vaccine to be in the second half of 2022 as negotiations for vaccine supplies are currently underway between Pharmaniaga and other Asean and African countries.
“However, there is no indicative timeline as to when the decision would be made,” Hong Leong Investment Bank Research (HLIB) said.
Meanwhile, the research house gathered that Pharmaniaga recently completed an engagement session with the Health Ministry (MoH) to look into its overall concession agreement.
Pharmaniaga previously had received a conditional letter for continuation of medical supplies to MoH’s facilities for a period of 10 years and the extension would only begin after the terms have been mutually agreed.
“Management targets to conclude discussions with MoH by April and have the new concession agreement signed before May,” it said.
The group also has plans in place for the commercialisation of products that are coming off patent in the next 10 years.
This would help to ensure Pharmaniaga’s timely introduction of off-patent products to the market.
HLIB has retained its “buy” call on Pharmaniaga with a target price of RM1.13, noting that near-term growth for the group would be supported by its vaccine sales to the private sector as well as export market, while its longer-term growth would be underpinned by the potential renewal of the concession agreement, as well as its venture into the manufacturing of halal vaccine and insulin.
CGS-CIMB is, likewise, positive on developments within the company, maintaining its “add” rating on the stock with a target price of RM0.90.
“Pharmaniaga’s FY21 dividend payout ratio was 71%, lower versus the more than 90% recorded in FY16-FY18, as it is reinvesting its earnings and cash flows into capex for its ongoing expansion plans. “These include the development of its halal vaccine manufacturing and insulin fill-and-finish facilities (both targetted to start operations in 2024) and research and development for a generic drug that is coming off-patent in the next 10 years.
“Nonetheless, Pharmaniaga said it will adhere to a minimum payout ratio guideline of 70% and remains committed to declaring quarterly dividend payments.”