KUALA LUMPUR: MIDF Research has upgraded Pharmaniaga Bhd to buy as it expects the pharmaceutical company to post strong sales growth which could contribute to improve earnings and cash position going forward.
In November 2019, the government had extended Pharmaniaga’s services for the provision of medicines and medical supplies to the Health Ministry until the end of 2021.
It provided them with a new contract to continue providing logistics and distribution services for the ministry to over 148 government hospitals and 1,700 clinics nationwide until the end of 2024.
“Nonetheless, with the new contract arrangement, the group was significantly impacted by the recognition of the remaining unamortised pharmacy information system of RM247 mil which caused the group to report a loss in the fourth quarter of 2019,” the research house said in a note.
MIDF expects strong sales growth from concession and non-concession businesses to contribute to an improvement in Pharmaniaga’s earnings and cash position going forward.
It revised Pharmaniaga’s price to RM2.35 from RM2.27.
At 10.55 am, shares of Pharmaniaga declined 17 sen to RM1.87 with 2.51 million shares transacted. – Feb 21, 2020, Bernama
