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HYPHENS PHARMA: IS THIS PHARMA COMPANY UNDERVALUED? (Guest Post)

HYPHENS PHARMA: IS THIS PHARMA COMPANY UNDERVALUED? (Guest Post)

The company was founded in 1998 and was listed on the Singapore Exchange’s Catalist board back in 2018. Hyphens’ share price performance was rather lackluster since its listing, hovering significantly below its IPO price of S$0.26 and hit a low of S$0.18 during the recent March COVID-19 pandemic driven sell-down.

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Hyphens Pharma revs up digital push amid Covid-19, Companies ...

This post was originally posted here. The writer, Royston Tan is a veteran community member and blogger on InvestingNote, with username known as Royston_Tan.

However, following a strong set of 1Q20 results, the company’s share price subsequently rebounded to hit an all-time high of S$0.39 in June 2020. Is there potentially more share price upside for the company? Let’s take a closer look.

Hyphens Pharma (Hyphens) is Singapore’s leading specialty pharmaceutical and consumer healthcare group. The company operates in three business segments:

Specialty Pharma Principals which is the largest contributor of both revenue and earnings to the Group. The company boasts more than 30 products in its portfolio and this figure is consistently increasing.

Proprietary Brands currently comprise of dermocosmetic products marketed under Ceradan® and TDF® brands as well as health supplement products marketed under their Ocean Health® brand. While this segment generates the lowest profitability among the three segments due to heavy investments in brand building, it has the highest revenue growth potential as well as earnings longevity.

Medical Hypermart and Digital is a B2B model where the company engages in the wholesale of pharmaceuticals and medical supplies in Singapore through Pan-Malayan. This segment is the second-largest revenue and earnings contributor to the Group but we note the potential lumpiness in revenue/earnings from one-off large tenders.

STEADY FINANCIAL PERFORMANCES OVER THE PAST 3 YEARS
INCOME STATEMENT

The company’s past 3-years financials painted a picture of earnings stability but not one that is truly exciting. While its reported net profit declined from S$6.1m in 2017 to S$5.4m in 2018, this was due to one-off IPO expenses amounting to c.S$0.9m. Its adjusted net profit was S$6.3m in 2018, representing a 3.6% YoY growth. In 2019, earnings grew by a similar 3.5%, a rate likely deemed too low by the market to justify a share price re-rating.

However, despite widespread business standstill in 1Q20 due to COVID-19, the company reported a strong set of 1Q20 financial results with Group revenue growing by 16.4% YoY, spearheaded by its proprietary brand segment. Coupled with slower growth in expenses, Hyphens’ 1Q20 operating margins improved by 1.6ppt and consequently grew its net profit by 48.6% YoY to hit S$2.1m.

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Hyphens Pharma: 5 Things I like about the company (Guest Post)

Hyphens Pharma: 5 Things I like about the company (Guest Post)

Hyphens Pharma recently announced its 1st quarter 2020 results ended 31 March 2020.

This post was originally posted here. The writer, James Yeo is a veteran community member and blogger on InvestingNote, with username known as Smallcapasia and has 853 followers.

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I have to say that its results are pretty impressive. Compared to the previous year, 1Q 2020 revenue came in at 16.1% higher to $31.4 mil and net profits surged 48.6% to $2.12 mil.

Dividends were also hiked up to $0.01 from $0.0055 last year, which translates to a 4% dividend yield based on its share price of $0.25.

There are much more things to cover but let’s check out the company’s profile first.

About Hyphens Pharma

For a quick background, Hyphens Pharma International Limited (SGX: 1J5) is Singapore’s leading specialty pharmaceutical and consumer healthcare group.

With a long history dating back to 1998, Hyphens has a direct presence in 5 ASEAN countries – Singapore (HQ), Indonesia, Malaysia, the Philippines and Vietnam, and is supplemented by a marketing and distribution network covering 6 other markets – Bangladesh, Brunei, Cambodia, Hong Kong, Myanmar and Oman.

The group operates in 3 main segments:

  1. Specialty Pharma Principals – premium quality specialty pharmaceutical products including Stérimar® nasal sprays, Bausch+Lomb eye drops, Vivomixx™, Fenosup® Lidose® and Piascledine®.
  2. Proprietary Brands – Hyphens’ own proprietary range of dermatological products (Ceradan® and TDF® brands) and health supplement products (Ocean Health® brand).
  3. Medical Hypermart & Digital – wholesale of pharmaceuticals and medical supplies in Singapore through Pan-Malayan Pharmaceuticals – a medical hypermart that many healthcare professionals (i.e. doctors) are familiar with.

Next up, I will also share 5 things I like about the company.

#1 Simple and Scalable Business Model

First of all, Hyphens Pharma business model is easy to understand – selling of derma and supplement products. Once you can get things up and running, it’s pretty much a recurring stream of revenue for each product line.

To add on, I like how they acquired Health Supplementbrand –Ocean Health which gives them a strong retail distribution channel.

With that, they can also sell their higher profit margin, proprietary range of dermatological products – Ceradan® in Guardian, Watsons, Unity etc. and TDF® in pharmacies located in hospitals.

Throughexclusive distributorship or licensing and supply agreements with brand principals mainly from Europe and the United States, the group also sells products likeStérimar® nasal sprays, Bausch+Lomb eye drops, in selected markets in the ASEAN region.

#2 Strong Financial Track Record

Apart from the superb 1st quarter 2020 results, the group has been steadily increasing its revenue and profits over the past 5 years as seen below.

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[Event Recap] Exclusive Corporate Visit To Hyphens Pharma (SGX:1J5)

[Event Recap] Exclusive Corporate Visit To Hyphens Pharma (SGX:1J5)

Last Saturday, we just had an exclusive corporate visit to Hyphens Pharma International Limited and the turn-out was great!

We were given the opportunity to have the C-Suite management, Mr Lim See Wah (CEO) and Ms Fang Lee Wei (CFO) of Hyphens Group to showcase the company to our community members.

The visit started off with an opening speech by Hyphens Group CEO, Mr Lim See Wah, which included a brief introduction of the company.

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The audience watching a short corporate video.

After the introduction, we went on to tour the newly integrated facility of Hyphens company grounds.

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