SINGAPORE (May 15): Net profit of catalist-listed pharmaceutical distributor Hyphens Pharma soared 48.6% to $2.1 million in 1Q20 ended March, from the $1.4 million logged a year ago.
On a fully diluted basis, this translates to earnings per share (EPS) of 71 cents, from 48 cents before. At this level, Hyphens Pharma’s net asset value was 15.26 cents a share, against 14.67 cents as at Dec 31.
The board says it will reclassify its proposed final dividend announced for FY19, as an interim dividend following a delay in payout due to Covid-19. Shareholders can expect to receive a payout of 1 cent a share on Jun 8, the company said in a regulatory filing on May 11.
The increased profits come on the back of growth in sales across the company’s three business segments of: specialty pharma principals (+11.2%), proprietary brands (+35.9%) and medical hypermart and digital (+17.0%).
Hyphens Pharma’s specialty pharma principals segment sees the company selling and marketing specialised pharmaceutical brands such as namesake products from Guerbet and Bausch+Lomb.
Meanwhile, the company also develops and sells its own range of dermatological products and health supplements, under the “Ceradan”, “TDF” and “Ocean Health” labels. These are sold in local pharmacies and constitute its proprietary brands segment. Lastly, its medical hypermart and digital segment provides wholesale medicine to clinics in Singapore.
Collectively, these segments racked up revenue of $31.4 million, up 16.4% from 1Q19’s $27.0 million.
“We are seeing good growth in our proprietary brands segment and our virtual medical hypermart,” notes executive chairman and CEO Lim See Wah.
As such, the group is looking to drive the growth of its in-house brands Ceradan and TDF and Ocean Health in the coming months. It will also strengthen its portfolio of specialty pharma principals by levering on its understanding of market needs and dynamics.
Aside from this, Lim says the company will pick up the pace for its digital engagements across all business segments, as the pandemic sees a shift away from face-to-face contact.
“COVID-19 has created a challenging operating environment, however, we remain agile and to adapt to a different operating environment, in particular accelerating on digital adoption in the execution of our strategy,” he stresses.
With a net cash position of $21.1 million as at end March, and a net operating cash inflow of $2.0 million in 1Q20, Lim believes the company has the ammunition to execute these investments.
RHB analysts Lee Cai Ling and Jarick Seet agree, saying “with a war chest of $27.1m, Hyphens Pharma is in an excellent position to seize any opportunities as and when they arise”.
The duo say the company’s 1Q20 revenue and earnings come up to some 25% and 32% of their full-year forecasts. This stems from the company’s medium to long-term strategy of growing its skin health portfolio of Ceradan and TDF products, despite the pandemic.
“While we see resilience in its business, we believe that the group will experience some impact in 2Q20 due to the Government-mandated “circuit breaker”, and remain cautious on how the COVID-19 situation will pan out,” they observe in a May 15 note.
Even so, Lee and Seet are maintaining their “buy” call on the company at a target price of 27 cents.
This is up 5 cents or 2.08% from Hyphens Pharma’s 24 cent price as at 5.04pm on Friday.
