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:
- broadens Hyphens Pharma’s reach to the public sector. Hyphens’ strengths lie in consumer products sold mainly through retail channels; and
- adds principals and portfolio of drugs for diseases and therapeutic areas such as musculoskeletal, cardiology, ophthalmology and general surgery; and
- enables cross-selling between Hyphens Pharma’s and Novem’s products and among the doctors.
Maintain BUY.
- The lockdown in 3Q affected 25% of sales in Vietnam, its second largest market (37% of revenue). With significantly lower government grants this year (FY21E: S$0.3m, FY20: S$2m), we expect Hyphens Pharma's earnings to grow by 4.2% in FY21E, but a stronger 30.7% in FY22E.
- Raised our target price for Hyphens Pharma to S$0.40.
- See
Peggy Mak
SAC Capital Research
|
https://www.saccapital.com.sg/
2021-11-18
SGX Stock
Analyst Report
0.40
u
0.370
