SAC Capital is maintaining its “buy” call and target price of 37 cents on pharmaceutical distributor Hyphens Pharma.
The price translates to an FY21 Price-to-earnings (P/E) of 17.5x and is expected to give the counter a 23.3% upside from its 30 cent price, analyst Tracy Lim writes in a Aug 24 report.
Her move follows the company’s revenue for 1HFY21 ended June which was “in line with our forecasts”.
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Hyphens Pharma logged revenue of $65.4 million, up 6.1% y-o-y from the $61.6 million logged in the previous year.
A key contributor was the specialty pharma principals segment which saw a 10.9% y-o-y increase in revenue to $34.8 million thanks to higher demand in Vietnam, Singapore and Malaysia.
Revenue from its proprietary brands segment similarly edged up by 2.4% to $9.4 million while that from the medical hypermart and digital segment was up 0.4% to $21.2 million.
Against this backdrop, net profit came in at $4.3 million, up 0.8% from the year before.
“Net profit was higher at 71.1% of our forecasts, as gross margin generated from specialty pharma segment exceeded our expectations due to better product mix,” says Lim.
Gross margin rose 3.7 percentage point to 37.9% in 1HFY21, due to the higher margins from the specialty pharma segment.
Going forward, Hyphens Pharma will be focusing on proprietary brands and internationalisation efforts.
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The group adds that it will also undertake R&D initiatives. Such initiatives – which amounted to $0.2 million in 1HFY21 – have translated to the recent launch of its Ocean Health® nutritional supplement High Strength Eye Moist Omega Formula, says Lim.
As at 2.17pm, Hyphens Pharma was trading flat at 31 cents.
Cover image: Hyphens Pharma