Pharmaniaga: 4Q net profit plunges 80%, declares lower dividend. Pharmaniaga 4Q net profit plunged 80% to RM4.44m, from RM21.7m a year ago, mainly due to lower demand coupled with higher finance costs. EPS for the quarter ended Dec 31, 2018 fell to 1.71sen from 8.36sen previously. Revenue was also lower by 3% at RM596.64m compared with RM613.2m a year ago. (The Edge)

FY18 core PATAMI of RM57.4m (+3.6% YoY) came in below expectations at 84%/89% of our/consensus full-year forecasts. The negative variance from our forecast was due to lower-than-expected volumes sales, which prompted us downgrade our FY19E/FY20E forecasts by 18%/22%. TP is cut from RM2.90 to RM2.50 based on an unchanged 11.5x FY19E EPS (-1.5SD below 5-year historical forward mean). Reiterate MP

FY18 core PATAMI of RM57.4m (+3.6% YoY) came in below expectations at 84%/89% of our/consensus full-year forecasts. The negative variance from our forecast was due to lower-thanexpected volumes sales. A fourth interim DPS of 2.0 sen was declared, bringing 12M18 DPS to 16.0 sen, below our expectations. As such we cut our FY19E/FY20E DPS to 14.0 sen from 19.0 sen.

Results’ highlights. QoQ, 4Q18 Core PATAMI fell 72%, excluding the provision for, and write-back and write-off of: (i) receivables (RM6.1m) and (ii) inventories (RM6.6m), respectively, in 4QFY18 and provision for write-off of: (i) receivables (RM1.4m) and (ii) inventories (RM2.2m) in 3QFY18; dragged down by losses at the Logistics and Manufacturing divisions, and exacerbated by a higher effective tax rate of 62% compared to 13% in 3Q18. The Logistics and Distribution Division recorded a pre-tax loss of RM0.4m compared to a pre-tax profit of RM3.7m in 3Q18 due to higher operating expenses, including selling and distribution. Similarly, the manufacturing division’s pre-tax profit fell 29% to RM11m.

YoY, FY18 revenue rose 3% due to increased orders from concession business and government hospitals. Correspondingly, FY18 core PATAMI rose 3.6%, excluding the provision for writeback and write-off of: (i) receivables (RM2.1m) and (ii) inventories (RM17.1m) in FY18 and excluding one-off gains from of RM8m as compensation received in relation to a previously owned JV in China and provisions for receivables and inventories (RM9.5m) in FY17; thanks to better performance from the Logistics and Distribution division and more than offset lower contribution from manufacturing. The Logistics and Distribution division’s FY18 PBT rose two-fold to RM12m attributable to stronger contributions from Government and concession businesses notwithstanding the impact from lower operating expenses. The Manufacturing Division posted a lower PBT, by 19%, due to lower orders from the concession business.

Outlook. The stock has been de-rated on concerns of Government reviewing all medical supplies concession agreements of which Pharmaniaga has a 10-year contract ending in November 2019. We are unsure of the renewability of the contract but Pharmaniaga has the track record, platform and systems already in place for the distributions of such medical supplies. Overseas, the Indonesian operation remains a key area of growth, while further progress is being made in the European Union as the Group seeks to expand its global presence. Over the longer term, we expect its manufacturing division to propel earnings growth. The group aims to add about 200 new products over the next 10 years to its existing portfolio of around 500 products.

Downgrade FY19E/FY20E net profit by 18%/22% to take into account the lower-than-expected sales.

Maintain MP. TP is cut from RM2.90 to RM2.50 based on an unchanged 11.5x FY19E EPS (-1.5SD below 5-year historical forward mean). Key downside risk is the uncertainty regarding the renewal of the government concession which is expected to expire in 2019.

FY18 earnings dropped by -21.2%yoy to RM42.5m. Pharmaniaga’s full financial year FY18 earnings came in at RM42.5m which is below ours and consensus earnings estimates at 70.4% and 65.8% respectively. The FY18 revenue for the rose modestly by +2.6%yoy while earnings dropped by -21.2%yoy.

Commendable revenue growth. Pharmaniaga’s FY18 higher revenue of RM2,385.0m (from RM2,324.0m in FY17) was mainly due to the higher revenue contribution coming from the logistics and distribution (L&D) division. The L&D segment revenue contribution rose by +6.3%yoy mainly attributable to the contribution from the concession business. This was partially mitigated by lower revenue from its Indonesian division which dipped by -5.4%yoy in view of the depreciation of the Malaysian Ringgit against the Indonesian Rupiah.

Earnings dropped due to a higher finance and tax costs. Pharmaniaga recorded a dropped in FY18 earnings of -42.5%yoy mainly driven by a higher cost incurred in relation to: (i) finance costs (+25.3%yoy) and; (ii) tax costs (+49.1%yoy). The latter was caused by a drawdown of about RM200.0m in borrowing (+51.8%yoy) while the latter was due to the underprovision of tax for prior years of about RM5.6m. In addition, a one-off compensation of about RM7.0m in relation to a previous joint venture company in China was also included in FY17. Nonetheless, these were mitigated by the fall in operating expenses of -10.2%yoy driven by the L&D division which reflects its efficiency in distributing pharmaceutical products to public hospitals in clinics in Malaysia.

Final dividend declared. Pharmaniaga declared a final dividend of 2.0sen per share for the quarter under review. This brings its accumulated dividend for the year to 16.0sen (vs FY17 of 19.0sen).

PHARMA (7081) - Technical & Fundamental Analysis

February 27, 2019 | HONG WEI GIET

Technical Analysis

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- PHARMA hit highest shares price RM6.490 on April 23, 2015. Ironically, it dropped by 63% and reached RM2.530 on Feb 26,2016.

- After PHARMA announced further reduction of net profit with 80% (YoY) on 21.2.2019, significant selling pressure with high volume which further pushed PHARMA share price to lowest and hit RM2.610 (Closing price on 22.2.2019)

- There is no sign of recovery in shares price movement.

- PHARMA completed symmetric triangle 

More: https://www.fundamental-technical-analysis.com/malaysia/author/HONG-WEI-GIET

What happened to this counter? Besides unsatisfied QR, no bad news but keep dropping...Why? So dissapdisapp..

PHARMA (7081) - Technical Analysis Follow Up

March 4, 2019 | HONG WEI GIET

This chart pattern I may have experience.Pharmaniaga downturn not over.Government either wanted to break-up the monopoly of Wht pharma business hold or reduction in price before any new agreement being agree.May put target price rm 1.30-rm 1.45(best case scenario) or cancel the whole license to put pharma below rm 1.00(worst case scenario.

Day 73 of Fundamental Daily, YAPSS will be covering Pharmaniaga Berhad's fundamental via a short animated video. I hope it helps and please enjoy the video, see ya! #YAPSS #FundamentalDaily #PharmaniagaBerhad

Click the on the link to find out more: https://youtu.be/P5VYqO5M59Q

sign of recovery, Last close $2.49