RHB
Research values Hovid Bhd at 46 sen, which offers a 14 per cent upside
from current price, given its strong revenue and exposure to the export
market.
“It offers investors exposure to both the pharmaceutical and healthcare industries, with non-cyclical earnings and a global market reach. Future revenue drivers include the ‘patent cliff’ phenomenon, in-house drug development and capacity expansion.
Hovid is a generic drug manufacturer based in Ipoh. It produces more than 400 kinds of drugs under one roof. Its revenue has been growing at a compound annual growth rate (CAGR) of 11.8 per cent in 2009-2013 and export sales contributed 52.5 per cent or RM90.5 million to its financial year 2013 topline.
Hovid is looking to export to emerging markets and the Middle East, which it has yet to tap. Its export contributions may increase to 56 per cent in the financial year (FY) 2016, should this expansion prove successful.
“Hovid is set for a good FY2015 ahead, given abundant opportunities in both domestic and global pharmaceutical markets. We anticipate that its net profit may grow at a CAGR of 18.5 per cent in FY2014-2016 or RM20.7 million to RM32.7 million, on the back of growing affluence, health awareness and healthcare expenditure in the markets that it operates in,” RHB said in its research notes.
RHB said it has taken into account the company’s recent disposal of a 51 per cent stake in Indian pharmaceutical company Biodeal Pharmaceutical and 381 million warrants issued in 2013.
“We like Hovid for its robust revenue pipeline, strong and wide exposure to the export market, and decent return on equity of 12-13 per cent in FY2014-2015.”
In addition, the research house sees the expansion of healthcare services nationwide by both public and private hospitals, translating into increasing demand for generic drugs.
“It offers investors exposure to both the pharmaceutical and healthcare industries, with non-cyclical earnings and a global market reach. Future revenue drivers include the ‘patent cliff’ phenomenon, in-house drug development and capacity expansion.
Hovid is a generic drug manufacturer based in Ipoh. It produces more than 400 kinds of drugs under one roof. Its revenue has been growing at a compound annual growth rate (CAGR) of 11.8 per cent in 2009-2013 and export sales contributed 52.5 per cent or RM90.5 million to its financial year 2013 topline.
Hovid is looking to export to emerging markets and the Middle East, which it has yet to tap. Its export contributions may increase to 56 per cent in the financial year (FY) 2016, should this expansion prove successful.
“Hovid is set for a good FY2015 ahead, given abundant opportunities in both domestic and global pharmaceutical markets. We anticipate that its net profit may grow at a CAGR of 18.5 per cent in FY2014-2016 or RM20.7 million to RM32.7 million, on the back of growing affluence, health awareness and healthcare expenditure in the markets that it operates in,” RHB said in its research notes.
RHB said it has taken into account the company’s recent disposal of a 51 per cent stake in Indian pharmaceutical company Biodeal Pharmaceutical and 381 million warrants issued in 2013.
“We like Hovid for its robust revenue pipeline, strong and wide exposure to the export market, and decent return on equity of 12-13 per cent in FY2014-2015.”
In addition, the research house sees the expansion of healthcare services nationwide by both public and private hospitals, translating into increasing demand for generic drugs.
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