HYPHENS PHARMA INTL LIMITED (SGX:1J5)
Hyphen Pharma International - Moving In The Right Direction
- Hyphens Pharma International (SGX:1J5)’s FY21 revenue was up 4.1% to S$125.9m boosted by increase in sales from all business segment and 1-month contribution from Novem group. Gross margin improved to 38.2% due to lower contribution from the lower margin Vietnam operations (-5.2% y-o-y) as a result of COVID lockdown.
- Overall, Hyphens Pharma's net profit improved by 11.1% to S$6.8m. Excluding government grants from both periods, net profit would have grown 52.3% from S$4.4m to S$6.7m.
Novem to contribute to growth.
- We estimated that Novem will contribute ~S$13m in sales and ~S$1.5m to Hyphens Pharma's bottom line for FY22E. The amortisation of goodwill is expected to kick in from FY23 onwards, offsetting the gain by ~S$1.2m annually over the next 10 years. Novem is entrenched in the public sector with 60% of sales are to government hospitals and polyclinics. The return of elective surgeries as restrictions eased could further lift business sales.
- Hyphens Pharma’s Vietnam operation is also expected to improve as the country return to normalcy, however gross margin is likely to dip as a result.
- Indonesia saw ~S$1m revenue growth last year despite facing products shortage. E-commerce effort only began in 2H21 in Indonesia as the Management noted that there is still room for growth in the market. We believe the Indonesian market could provide Hyphens Pharma with significant room for growth going forward.
Building for the future.
- Through WellAway, Hyphens Pharma has obtained Singapore’s 1st HSA-registered e-pharmacy license. One distinct see Hyphens Pharma gaining an edge over its potential competitors when telemedicine takes off.
Maintain BUY with an unchanged target price of S$0.40.
- We forecasted a 18.3% and 8.0% topline for Hyphens Pharma translates into a FY22E P/E of 14.5x.
- See
Lam Wang Kwan
SAC Capital Research
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https://www.saccapital.com.sg/
2022-03-16
SGX Stock
Analyst Report
0.400
SAME
0.400
