PETALING JAYA: Recent developments are looking promising for Duopharma Biotech Bhd , according to UOB Kay Hian (UOBKH) Research.
The securing of government contracts on improved terms and concession renewal as well as the potential growth in consumer healthcare sales are auguring well for the company, said the research house.
“Duopharma has priced in a foreign exchange rate of US$4.70 for its approved product purchase list (APPL) contracts to reflect prevailing market rates.
“Given the improved terms, the APPL revenue which accounts for 60% of Duopharma’s public sector sales could marginally enhance margins in the third quarter ending Sept 30, 2024 (3Q24) as there are between six and seven months of outstanding inventory,” it said in a report.
While the recent Covid-19 wave might have aided consumer healthcare sales, it expects a year-on-year decline given the high base effect.
“The wave was short-lived (two months) anf it may have culminated in efforts to boost personal immunity and thereby catalysing Duopharma’s personal healthcare sales,” it added.
Meanwhile, Pharmaniaga Bhd ’s concession renewal with the Health Ministry to undertake the procurement, storage, supply and delivery of medical products to the ministry’s offices and facilities would be a boon to the industry.
The contract is a seven-year extension up to June 30, 2030.
“We gather that deliverables by Duopharma to Pharmaniaga amount to between RM20mil and RM30mil a month,” the research outfit said.
On its soon to be released 4Q23 results, UOBKH Research, it expects a seasonally soft quarter due to lower public sector sales, which could see a sequential earnings improvement due to a boost by a guided reinvestment tax allowance.