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PhillipCapital keeps ‘buy’ call on Hyphens Pharma as franchise expands with acquisitions

Chloe Lim
Chloe Lim8/30/2022 10:14 AM GMT+08  • 3 min read
PhillipCapital keeps ‘buy’ call on Hyphens Pharma as franchise expands with acquisitions
Hyphens Pharma’s revenue and patmi for the 1HFY2022 ended June stood at 54% and 67% of Chew’s FY2022 forecast respectively.
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PhillipCapital Research analyst Paul Chew has kept a “buy” rating on Hyphens Pharma with an unchanged target price of 43 cents.

Hyphens Pharma’s revenue and patmi for the 1HFY2022 ended June stood at 54% and 67% of Chew’s FY2022 forecast respectively. Earnings were also above the analyst’s expectations due to a then higher-than-expected earnings contribution from the newly acquired Novem and Associates.

“With Novem, Hyphens can profitably develop the public sector channel for its specialty products to complement its strength in private sector clinics,” says Chew.


See: Analysts positive on Hyphens Pharma with Novem acquisition to boost growth

Additionally, underlying organic growth was observed in an 11% y-o-y rise in patmi to $4.8 million, where growth was broad-based across specialty pharma and proprietary brands.

Revenue growth was observed across key segments, where specialty pharma revenue surged 45% y-o-y in 1HFY2022 to $48 million. Excluding Novem, organic growth was 18% y-o-y to $39 million. The return of more elective surgeries and other visits postponed during Covid-19 were some drivers of demand.

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Proprietary brands growth of 16% y-o-y was led by key brands in dermatological (Ceradan and TDF) and health supplements (Ocean Health).

However, Hyphens Pharma also announced that it has amicably ceased the distribution of Biosensor by the end of 2022. All related costs and inventories will be wound down as the distribution agreement ends. Biosensor contributed 6% of revenue in 1HFY2022 catering to the Vietnam market.

Chew nevertheless maintains his FY2022 earnings, while expecting some upfront staff and technology costs in 2HFY2022 for Hyphens Pharma with the establishment of DocMed to develop a healthcare platform for doctors, drug companies and other medical vendors.

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Moving forward, Hyphens Pharma continues to take steps in expanding its proprietary brands in the region. New Ocean Health products (Omega 3, Vitamin D3) are to be launched in Malaysia and Vietnam. In addition, an exclusive license and supply agreement with Lederlon for the treatment of osteoarthritis has been set in stone.

On a whole, Chew is positive on Hyphens Pharma, as the group continues to build up a long-term franchise of its three key segments– specialty pharma’s scale and distribution network has taken a huge leap with Novem; proprietary brands are expanding its product range and presence regionally; and a medical hypermart developing a digital platform for doctors and medical vendors.

Hyphens Pharma presently has a net cash balance sheet of $25 million and is trading at a P/E ratio of 10x.

As at 10.05am, shares in Hyphens Pharma are trading at 0.5 cents up or 1.61% higher at 32 cents at a FY2022 P/B ratio of 1.5x and dividend yield of 2.3%.

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