As the whole world is 7 to 8 months into the virus, the chase for vaccine development had been speeding up globally. R&D had been pouring out in US, Europe and China in search for the suitable vaccine candidate for this coronavirus.
How should this relate to Pharmaniaga (Pharma - 7081)
As you may see, our Malaysian minister had shortlisted 2 candidate to be the vaccine bottling process - Dpharma and Pharma. Subsequent on this new, the share price of this 2 companies had rocketed much, but is this fully valued?
Pharma still have a lot of potential to rise based on the company prospect and shareholding.
Pharma only have 261.7 million shares outstanding, at the current price range of RM 4, the market capitalization of Pharma is only RM 1.04 billion.
As you can see, BOUSTEAD already hold 56%.
LTAT holding 11.5%
Hence, majority of the shares (70% of the shares) are already being held by strategic investor that are not going to sell out, leaving the market with just 30% of the shares.
This means, just 78 million of shares are left floating in the market for the public.
This is not discounting investment fund, unit trust fund investing into it and holding for longer term tenure, hence probably the market is only left with 30 million share for the retailer only.
A lot of you might be concerned on Pharma FYE 2019 loss of 57 cents per share. This is due to impairment of a system development, which is not going to be recurring, but a ONE OFF EVENT impairment.
Subsequent proof of result is PHARMA delivering 8.57 cent in earning per share with a 6 cent dividend.
Hence, based on this average result, ANNUAL EPS PROJETION is 36 cents
At PE x 15, PHARMA should be valued RM 5.40 based on existing performance.
So PHARMA is still a good buy, because it had not yet factor in VACCINE reselling and also potential in INDONESIA operation for vaccine reseller.
Keep you updated in next post.
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