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Wednesday, March 25, 2015

HLIB Research maintains Buy on Pharmaniaga, ups target to RM6.58

KUALA LUMPUR (March 25): Hong Leong IB Research has maintained its “Buy” rating on Pharmaniaga Holdings Bhd at RM6.19 with a higher target price of RM6.58 (from RM6.21) and said it remains positive on Pharmaniaga’s business strategy and industry outlook.

In a note Wednesday, the research house said the supply agreement with three teaching hospitals should contribute circa RM240 million to Pharmaniaga’s revenue.

It said that although margin was lesser when compared to Government concessions, volume growth should be sufficient to offset the lower margin for the concession from institutions.

HLIB Research said full impact of the higher costs from Phamarcy Information System (PhIS) implementation could be seen from FY2016 onwards.

“PT Errita Pharma is expected to breakeven in FY2015 (recorded a loss of RM2.9 million in FY2014).

“Updated model with latest pharmaceutical data and contribution from Ministry of Higher Education. As a result, FY15, FY16 and FY17 EPS were raised upwards by 1%-13%.

“Maintain Buy, with higher target price of RM6.58 based on unchanged FY16 P/E multiple of 15x, 15% discount to US peers,” it said.

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