PhillipCapital analyst Paul Chew has maintained a “buy” rating on Hyphens Pharma International with an unchanged target price of 34.5 cents.
For the 9MFY2021 ended September, Hyphens Pharma reported PATMI of $1.09 million, 28.8% higher y-o-y. The figure stood above Chew’s expectations at 88% of his FY2021 forecast.
To this end, Chew has raised his PATMI estimates for the FY2021 by 6% due to higher margins as the group’s mix of proprietary brands increases as well.
Additionally, the new acquisition of healthcare distributor Novem for $16.3 million has the potential to raise earnings per share by 25% to 30%. The new shares issued is 2.7% of the enlarged share capital, with around 2/3 or 5.56 million of the consideration shares under a three-year moratorium.
Novem is a distributor of pharmaceutical products for over 20 years, where the majority of its customer base are government hospitals and polyclinics.
“Hyphens is undertaking a long-term investment and journey to build a leading portfolio of proprietary skin health products and brands across Asia,” says the analyst.
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See: Hyphens Pharma acquires Novem group of companies for $16.3 mil
On how proprietary brands have enjoyed robust growth, skin healthcare products namely Ceradan and TDF likely performed better in Singapore due to border closure and branding efforts, according to Chew. “Ocean Health supplements are faring well in corporate sales but retail remains competitive due to the presence of multiple brands,” he adds.
However, Hyphens Pharma’s business was affected by the severe lockdown in Vietnam due to the Covid-19 pandemic. “Hyphen’s main products in Vietnam are specialty pharma products. Due to the tight movement controls and lockdown, non-essential medical tests and procedures such as X-rays, CT scans and cardiac stents were delayed,” explains Chew. “For instance, contrast media, a dye used in X-rays and CT scans, will face lower demand due to the reduced amount of medical tests conducted.”
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The analyst believes that specialty pharma is a stable cash-flow generator for Hyphens Pharma. “Lockdowns in Vietnam will stifle sales momentum into 4QFY2021… [but] the longer-term journey for Hyphens is to grow, invest and expand their portfolio of proprietary products namely Ceradan, TDF and Ocean Health,” says Chew.
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In August 2020, Hyphens introduced scalp care products under the CG 210 brand, with its broader range of products extended with a new range of sunscreen products as well.
As at 5:02pm shares in Hyphens Pharma are trading flat at 30 cents.
Photo: Hyphens Pharma
