KUALA LUMPUR – Pharmaniaga Bhd shares fell 43% after the company’s RM552.3 million provision for “slow-moving inventories of Covid-19 vaccines” dragged it into the Practice Note 17, or financially distressed, category.
At 10am, the counter shaved 19 sen to 25 sen compared to its closing price of 44 sen yesterday, with 26.74 million shares changing hands. It opened at 22 sen, a drop of 50%.
Yesterday, Pharmaniaga reported a net loss of RM607.32 million for the financial year ended December 31, 2022 (FY2022) against a net profit of RM172.15 million in the previous year.
Revenue shrank 27.1% to RM3.51 billion from RM4.82 billion due to lower demand from the government for the purchase of Covid-19 vaccines.
In consideration of the below-than-expected FY2022 results, MIDF Research said it had revised its earnings estimates for the company for FY2023 and FY2024 downwards by 79% and 87%, respectively.
Concurrently, it also slashed the target price for Pharmaniaga shares to 48 sen from 77 sen previously.
“All in all, we downgrade our recommendation from ‘buy’ to ‘neutral’. Nevertheless, we maintain a positive view of the group on the basis of its large portfolio of pharmaceutical products in line with growing demand, halal market penetration, and long-term marketing plan for international sales,” it said in a note.
Meanwhile, Hong Leong Investment Bank cut its FY2023 and FY2024 earnings forecasts by 51% as it raised the operating expense and finance cost assumption on Pharmaniaga while downgrading the counter to a “sell”.
However, it noted a potential reversal in the impairment provision should Pharmaniaga be able to sell more of its existing Covid-19 stockpile.
Currently, the group is engaging with various parties, including the Islamic Development Bank and the Health Ministry, to sell its stockpile. – Bernama, February 28, 2023
