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Hyphens Pharma International - SAC Capital 2021-11-18: Strategic Acquisition Of Novem Group

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

Hyphens Pharma International - Strategic Acquisition Of Novem Group

  • Hyphens Pharma announced a S$16.3m acquisition of Novem group, S$13.8m paid in cash and remaining in shares. We estimate this could add S$12m to sales and S$1.3m to net profit in FY22E.
  • The deployment of cash on hand will lift ROE to 14.0% in FY22E. Our FY22E earnings estimates is raised by 20%, and we introduced our FY23E forecast. Our revised target price for Hyphens Pharma (SGX:1J5) is 8.1% higher at S$0.40 based on DCF (WACC 14.8%).



A 20-year track record.

  • Novem distributes pharmaceutical, nutraceutical products and medical devices, representing more than 40 brand principals in Europe and Asia. It has > 150 products including branded generics and in-house developed nutraceutical products, which are usually dispensed by doctors. Novem is entrenched in the public sector - 60% of sales are to government hospitals and polyclinics – and serves more than 1,000 customers. It enjoys higher gross margin of 40% from B2B sales.
  • On a blended basis, Hyphens Pharma’ FY22E margin will rise by 1.5 ppt to 37.6%.
  • The acquisition adds value to Hyphens Pharma through:
    1. broadens Hyphens Pharma’s reach to the public sector. Hyphens’ strengths lie in consumer products sold mainly through retail channels; and
    2. adds principals and portfolio of drugs for diseases and therapeutic areas such as musculoskeletal, cardiology, ophthalmology and general surgery; and
    3. enables cross-selling between Hyphens Pharma’s and Novem’s products and among the doctors.

Maintain BUY.






Peggy Mak SAC Capital Research | https://www.saccapital.com.sg/ 2021-11-18
SGX Stock Analyst Report BUY MAINTAIN BUY 0.40 u 0.370



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