Pharmaniaga

Re: Pharmaniaga

Postby winston » Wed Apr 17, 2019 9:35 am

not vested

Trading Buy: PHARMA - 7081
(Last price: RM2.02, Potential upside +26.7%)

Company Profile
Pharmaniaga is the sole concessionaire to the Ministry of Health (MoH) of Malaysia.

Trading Catalyst

PHARMA slid 52% post GE14 due to worries of a non-renewal of the 10Y concession agreement (ending end Nov 2019) as the group is viewed to be having monopolistic position.

We remain optimistic that PHARMA would still able to clinch the contract (albeit with modifications) premised on:
(i) impeccable track record in L&D following huge amount of investment in its supply chain management to ensure efficient deliveries to public hospitals and clinics;
(ii) the unattractive thin margins (~1.0-2.0%) from the concession business will discourage participation from other distributors due to high barriers of entry;
(iii) highly unlikely that with PH’s financial position would undertake huge investments to emulate PHARMA’s model to ensure operational effectiveness and timely deliveries;
(iv) increasing non-concession contributions from Indonesia’s market due to huge population over 270m people
(v) attractive risk-reward profile at 9.6x FY19E P/E and 1.2x P/B, which are 37% and 38% lower compared to its peers, supported by an attractive FY19-20 DYs of 7.4%.

Technical View
Resistance: RM2.13 / RM2.24 / RM2.56
Support: RM1.93 / RM1.86
Cut loss: RM1.83

Key Financial Stats
Trading at 9.6x FY19E P/E and 1.2x P/B (37% and 38% below its peers), respectively.

Source: HLIB
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Re: Pharmaniaga

Postby winston » Fri May 03, 2019 11:07 am

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CIMB Research downgrades Pharmaniaga, lowers target price to RM2.70

March 21, 2019

KUALA LUMPUR (March 21): CIMB IB Research has downgraded Pharmaniaga Bhd to “Hold” to RM2.35 with a lower target price (TP) of RM2.70 (from RM3.30) and said it was slightly negative about the group’s position in the short term, as interest expense may stay high unless it is able to cut receivables.

In a note March 20, the research house however said its long-term outlook remains positive as it grows its manufacturing segment.

“The group remains optimistic that its concession will be renewed.

Source: The Edge

https://www.theedgemarkets.com/article/ ... rice-rm270
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Re: Pharmaniaga

Postby winston » Fri May 03, 2019 11:13 am

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No life is without its challenges

Pharmaniaga’s FY18 core net profit of RM58m was 7% lower than our forecast and 10% below consensus.

This variance was due to lower manufacturing earnings and various one-off factors.

Maintain Add with a lower TP of RM3.30 (still pegged to its 10-year historical mean of 12x CY20F P/E) as we reduce our FY19-20F EPS forecasts.

Source: CIMB

https://brokingrfs.cimb.com/x9HmZ6Eiar6 ... 7Nsiw2.pdf
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Re: Pharmaniaga

Postby winston » Fri May 03, 2019 11:13 am

not vested

No life is without its challenges

Pharmaniaga’s FY18 core net profit of RM58m was 7% lower than our forecast and 10% below consensus.

This variance was due to lower manufacturing earnings and various one-off factors.

Maintain Add with a lower TP of RM3.30 (still pegged to its 10-year historical mean of 12x CY20F P/E) as we reduce our FY19-20F EPS forecasts.

Source: CIMB

https://brokingrfs.cimb.com/x9HmZ6Eiar6 ... 7Nsiw2.pdf
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Re: Pharmaniaga

Postby winston » Fri May 03, 2019 11:16 am

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Pharmaniaga falls 5.80% after plunge in 4Q earnings

by Surin Murugiah

February 22, 2019

KUALA LUMPUR (Feb 22): Pharmaniaga Bhd shares fell 5.80% this morning after its fourth quarter net profit plunged 80% to RM4.44 million, from RM21.7 million a year ago, mainly due to lower demand coupled with higher finance costs.

At 9.40am, Pharmaniaga lost 16 sen to RM2.60 with 251,000 shares traded.

Revenue was also lower by 3% at RM596.64 million compared with RM613.2 million a year ago.

The group declared a fourth interim dividend of two sen per share, lower than the six sen declared in the previous year. It will be paid on April 10, 2019.

Full-year net profit also came in lower as a result, falling 21% to RM42.47 million from RM53.82 million in the previous year, though revenue rose slightly by 3% to RM2.38 billion from RM2.32 billion.

Source: The Edge

https://www.theedgemarkets.com/article/ ... q-earnings
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Re: Pharmaniaga

Postby winston » Fri Nov 01, 2019 7:52 am

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Mixed views over medicine prices

By LOH FOON FONG

KUALA LUMPUR: Fomca welcomed the move by the government to drop the sole concessionaire system for the distribution of drugs and medical supplies to the Health Ministry’s facilities.

While it said consumers are expected to get cheaper supplies with the dismantling of the distribution monopoly held by Pharmaniaga, an international research and advocacy organisation said the prices are not likely to go down as Pharmaniaga does not determine the prices of the supplies.

Fomca CEO Datuk Paul Selvaraj (pic) said while the Health Ministry had denied claims of Pharmaniaga monopolising the supplies of drugs and explained that the concessionaire was only for handling the logistics and distribution for the ministry, the move from a single supplier of services to an open tender system was a positive move.

“With open tender, prices are likely to go down as it is expected to have more competitors, ” he said.

Health Minister Datuk Seri Dr Dzulkefly Ahmad had announced that Pharmaniaga’s concession to distribute drugs and medical supplies for the ministry will end and there will be no concessionaire for logistics and distribution services any more.

Instead, an open tender system will be introduced, he said.

Paul said the government should monitor the prices of medicines as they were quite high in Malaysia.

“Whether encouraging the manufacturing of generics or greater competition or price controls, medicine has to be made accessible and affordable to people.

“Big pharmaceutical companies are pushing back on these but the government should put the health of the people over the profits of pharmaceutical companies, ” he said.

Paul also urged the government to look at the Malaysia Competition Commission’s recommendations on lowering the prices of drug and medical supplies.

International research and advocacy organisation Third World Network director Chee Yoke Ling said prices of drugs and medical supplies are not likely to go down because Pharmaniaga handles only the logistics and distribution of the supplies to the ministry’s facilities and does not determine the prices of the supplies.

With Pharmaniaga, the ministry calls for a tender and decides on who wins the bid and when the contract is awarded, Pharmaniaga will liaise with suppliers to obtain the products and the contract payment is done through the company, she said.

Negotiations with single supplier is also conducted by the ministry, she added.

“It’s unfortunate that the function and role of Pharmaniaga under the ministry’s concession for logistics and distribution continues to be misunderstood, ” she said.

Chee said the concession holder has obligations to ensure medicines and other medical products are delivered to almost 2,500 hospitals and clinics throughout the country within seven working days in Peninsular Malaysia and 10 days in Sabah and Sarawak.

“If a remote clinic needs even a small amount of medicine, Pharmaniaga has to deliver, ” she said.

It should not compare the mark-up for the usual distribution services of other companies with the concession payment that covers a much bigger range of services, she added.

Chee said that Pharmaniaga had to maintain several warehouses and almost all staff of Pharmaniaga Logistics were dedicated to the ministry’s concession.

“If the ministry had not privatised the Government Medical Stores, it would need to have hundreds of workers, warehouses, transport vehicles (including special refrigerated vehicles), ” she said.

Pharmaniaga also developed an entire Pharmacy Information System for all government health facilities and the facilities only need to order through the system.

Source: The Star

https://www.thestar.com.my/news/nation/ ... 62RrvWd.99
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Re: Pharmaniaga

Postby winston » Fri Nov 01, 2019 8:00 am

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Pharmaniaga's share price falls on concession worries

KUALA LUMPUR: Pharmaniaga Bhd, whose share price took a hit on Thursday on news that its concession to distribute drugs and medical supplies would end on Nov 30, was confident its performance would be the key determining factor.

"As the government believes in meritocracy, the company is confident that its performance will be the key factor to continue its services either through extension of concession or open tender contract, ” it said in a statement.

Shares of Pharmaniaga Bhd fell to a low of RM2.02 on Thursday. At 2.33pm, it was down 30 sen to RM2.20. There were 226,700 shares done at prices ranging from RM2.20 to RM2.53.

Pharmaniaga has been the sole concessionaire providing these services and its concession will end on Nov 30.

However, to ensure that medical supplies and health services are not disrupted, Pharmaniaga's services will be extended until the Cabinet decides on the mechanism to manage the open tender.

"There will be no concessionaires anymore," he said after launching the SNOMED Expo 2019 on Thursday.

Dzulkefly said that it would be presenting the matter to the Cabinet for it to decide on the mechanism for open tender, which is hoped to be ready by the first quarter of next year.

In August, former Pharmaceutical Services Programme senior director Dr Salmah Bahri expressed concern that the government delay in making a decision on the logistics and distribution concession for drugs and medical supplies could lead to a drug shortage in public hospitals and clinics.

In a letter to The Star, she said that any untimely decision on the concession may disrupt the supply chain service and adversely affect the patients directly and the rakyat as a whole.

The existence of a concession company was the result of the privatisation initiative undertaken by Tun Dr Mahathir Mohamad in 1994. The privatisation involved the concessionaire taking over all the assets and manpower of the Government Medical Stores then under the Health Ministry, said Dr Salmah.

Source: The Star

https://www.thestar.com.my/business/bus ... GEXB189.99
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Re: Pharmaniaga

Postby winston » Fri Nov 01, 2019 8:31 am

No renewal to existing L&D concession

Ministry of Health (MOH) today announced that Pharmaniaga’s concession to provide it L&D services will not be renewed upon expiry on 30 Nov 2019.

We believe it could still win a large share of the logistics & distribution (L&D) contracts under the new open tender system given its competitive edge.

Retain Hold, with lower TP of RM2.22 (9.5x CY21F P/E) to reflect earnings risks.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 937B0E820A
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Re: Pharmaniaga

Postby winston » Sat Nov 02, 2019 7:27 am

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Kenanga downgrades Pharmaniaga to underperform, slashes TP to RM1.60

KUALA LUMPUR: Kenanga research has downgraded Pharmaniaga Bhd from market perform to underperform after slashing its FY20 net profit forecast by 32% on an expected 18% contraction in revenue.

The research house reduced the group's target price to RM1.60 from RM2.21 previously based on an unchanged 11x FY20E EPS (-1.5SD below 5-year historical forward mean).

It added that the group's earnings growth is expected to be propelled by its manufacturing division with a target of about 200 new products over the next 10 year, to add to its existing portfolio of about 500 products.

"Overseas, its Indonesia operation remains a key area of growth, while further progress is being made in the European Union as the Group seeks to expand its global presence," it said.


Source: The Star

https://www.thestar.com.my/business/bus ... GPb0FpZ.99
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Re: Pharmaniaga

Postby winston » Mon Nov 11, 2019 3:23 pm

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A 25-month extension on concession pushes Pharmaniaga up by 9.7%

KUALA LUMPUR (Nov 11): Pharmaniaga Bhd is hogging the limelight today.

The stock opened at RM2.62 this morning, a big gap from last Friday’s closing of RM2.26, on the news that the government has agreed to provide a 25-month interim period for procurement of drugs to Pharmaniaga after its concession ends on Nov 30.

The stock was trading at RM2.48, with a gain of 22 sen, or 9.7% as at 9.40am. However, the stock retreated to RM2.43, up 17 sen, or 7.5%.

Health Minister Datuk Seri Dr Dzulkefly Ahmad last Friday said the interim period from Dec 1, 2019 to Dec 31, 2021 was to ensure that there was no supply chain disruption in the supply and distribution of medicines to the public healthcare facilities nationwide.

"If the Ministry of Health is able to take over the role of Pharmaniaga in less than 25 months, then an open tender for procurement of medicines will be initiated early," Dr Dzulkefly told the media after his ministry's post-Cabinet meeting last Friday.

Pharmaniaga's share price plunged two weeks ago on concerns that the company will lose its medical supplies concession after Dr Dzulkefly announced that there would be no more concessionaires for logistics and distribution services for medical supplies, and an open tender system would be introduced instead.

Source: The Edge

https://www.theedgemarkets.com/article/ ... maniaga-97
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