KUALA LUMPUR (Nov 16): CIMB IB Research has maintained its “Add” rating on Pharmaniaga Holdings Bhd at RM3.86 with  lower target price (TP) of RM4.55 (from RM4.90) and said Pharmaniaga’s 9M17 net profit of RM32 million was below expectations, at 60% of house FY17F estimates.

In a note Nov 15, the research house said this was due to weaker-than-expected 3Q17 net profit of RM3.6 million (-72.6 y-o-y) owing to: i) a spike in tax rates, and ii) lower contribution from the manufacturing segment.

It said 9M17 net profit fell 31% y-o-y as a result of: i) lower than expected production in manufacturing segment, ii) a spike in tax rates, and iii) higher overall operating costs.

“We lower our FY17-19F EPS estimates by 7.2-9.6% to account for: i) lower profit margin from the manufacturing segment, and ii) higher tax rates.

“Maintain Add, with a lower TP of RM4.55. A near term re-rating catalyst would be the announcement of an extension to the concession agreement with the Health Ministry,” it said.