Hyphens Pharma - RHB Invest 2020-03-04: Near-Term Outlook Uncertain Due To COVID-19

HYPHENS PHARMA INTL LIMITED (SGX:1J5) | SGinvestors.io HYPHENS PHARMA INTL LIMITED (SGX:1J5)

Hyphens Pharma - Near-Term Outlook Uncertain Due To COVID-19

  • Hyphens Pharma (SGX:1J5)’s 4Q19 NPAT of SGD1.7m (+104.5% y-o-y) took FY19 NPAT to SGD6.5m (+20.7% y-o-y), which exceeded our full-year forecast by 6.5%.
  • DPS of SGD0.01 was also better than its guidance of SG0.0055.
  • We cut FY20-21F earnings by 7% and 9% on near-term uncertainties brought upon by the COVID-19 outbreak, but maintain FY22 estimates, as we remain positive on the medium to long-term outlook of the company.
  • Maintain BUY, new DCF-based SGD0.27 Target Price from SGD0.25, 17% upside plus c.5% FY20F yield.



All segments achieved growth in 4Q19.

  • Hyphens Pharma registered a record revenue of SGD32.7m in 4Q19 (+9.2% y-o-y). All segments (specialty pharma principals, proprietary brands, medical hypermart and digital) recorded higher sales. In line with revenue growth, 4Q19 gross profit rose 14.9% y-o-y to SGD12.2m.
  • GPM widened by 1.8ppt to 37.2% due to the higher revenue mix generated from proprietary brands (which yielded a higher margin) and lower purchase cost due to weakness in the EUR. As a result of the bigger GPM (FY19: 35.7%, FY18:33.7%) in FY19, gross profit grew 4.6% y-o-y despite a 1.2% drop in revenue to SGD120.9m.
  • Full-year NPAT increased by 20.7% to SGD6.5m.


Impact of COVID-19.

  • It is hard to ascertain the impact the COVID-19 outbreak has had on the business at this juncture, given the uncertainty surrounding the development of the outbreak. However, we understand from management that the business is not impacted as of now, and the company has actively engaged its suppliers.
  • So far, it is business as usual, and there is no visibility of supply chain disruption.


Focus still on proprietary brands.

  • Hyphens Pharma will continue to focus on growing its proprietary brands – Ceradan and TDF – in the skin health portfolio and Ocean Health under its nutritional supplements portfolio.
  • In FY19, Hyphens Pharma launched two major products, Ceradan Advanced and Fairence T- Complex. It also introduced Ceradan products to retail pharmacies on top of the rebranding exercise for Ocean Health. As a result, revenue grew by 9.9% y-o-y to SGD14.5m.
  • Hyphens Pharma intends to grow this segment in FY20 through introducing new products under its Ocean Health brand and gaining market share for Ceradan and TDF brand products locally and regionally.


We lower our earnings forecasts by 7-9% for FY20-21F and keep FY22F forecasts unchanged.






Jarick Seet RHB Securities Research | https://www.rhbinvest.com.sg/ 2020-03-04
SGX Stock Analyst Report BUY MAINTAIN BUY 0.27 UP 0.250



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