Today, we feature a note on CCM Duopharma Biotech Berhad in our FundTech Radar – 29th January 2019. CCMDBIO is Malaysia’s largest generic pharmaceutical manufacturer by volume. It is also the first pharmaceutical company that was awarded the Halal Pharmaceuticals certification by JAKIM for prescriptive drugs. In FY17, its total sales were made up of 90% local market (government sector is the main contributor) vs. 10% export markets.
· A benign 3-year (FYE15-17) revenue and core PATAMI CAGR of 38.3% and 7.3% respectively.
· FY17 core PATAMI margin rose to 9.3% (vs. 8.1% in FY16)
· Net gearing stood pat at 0.26x.
· Dividend yield of 8.9% with 128.8% div. payout ratio in FY17.
· The upgrading and expansion of its manufacturing assets in Bangi, Klang and Glenmarie into state-of-the-art facilities in stages between 2017 and 2020 could potentially increase the production capacity by about 50%.
· The recent Budget 2019 announcement of increased allocation for health services to RM29bn is positive for CCMDBIO.
· Strengthening of USD against Ringgit may affect the production and other operation costs.
· The Board proposed change of the company’s name to “Duopharma Biotech Berhad”.
· Currently trading at 12.8x 12-month trailing P/E, which is 10.4% discount to its domestic peers P/E of 14.3x.
Long-term uptrend remains intact.
The above information is extracted from CIMB Research Report. For the full research reports, outlook and disclaimers, please logon to your account on www.itradecimb.com.my and click on <Research> Tab under Malaysia.
This FundTech Radar report is intended for educational purposes only. It represents a preliminary assessment of the subject company, and does not represent initiation into CIMB's coverage universe. It does not carry investment ratings and CIMB does not commit to regular updates on an ongoing basis.
29th Jan 2019
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