KUALA LUMPUR (Aug 17): CIMB IB Research has upgraded Pharmaniaga Holdings Bhd to “Add” at RM4.19 with an unchanged target price of RM4.90 and said Pharmaniaga’ 1H17 net profit of RM29 million was in line with house expectations at 55% of CIMB Research’s FY17F estimate but below consensus at 46%.

In a note Aug 16, the research said Pharmaniaga’s 1Q is typically the strongest quarter.

CIMB Research said despite 1H17 PBT declining by 21% from lower contributions from the manufacturing segment, this was offset by lower tax of RM8.7 million (-37.3% y-o-y).

“A dividend of 4 sen/share was declared in 2Q. This is in line with our estimates.

“A potential rerating catalyst would be the extension of the concession agreement with Malaysia’s Ministry of Health (MOH) beyond 2019.

“We upgrade our rating to Add from Hold, with an unchanged TP of RM4.90 (18.7x CY18 P/E). We like the attractive yields at 4.5-6.6% for FY17-19F,” it said.