Stock With Momentum: YSP Southeast Asia Holding

This article first appeared in The Edge Financial Daily, on July 20, 2018.
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YSP Southeast Asia Holding Bhd (-ve)

TRADING of the shares in YSP Southeast Asia Holding Bhd (fundamental: 2.5/3, valuation: 1.4/3), which saw 407,400 shares traded yesterday, triggered our momentum for the first time this year. Its 200-day average stood at 53,159 shares.

The stock rose four sen or 1.49% to close at RM2.73, leaving it with a market capitalisation of RM372.54 million. YSP currently trades at 1.28 times its book value.

The pharmaceutical company stated on Wednesday that it had won more tenders during last year’s ministry of health (MoH) tender cycle to supply to government healthcare facilities.

CIMB Research said that it believes this could boost sales from the hospital segment (MoH and private) beyond 18% of total revenue (in financial year 2017).

YSP has also indicated that it is constructing a new research and development (R&D) lab, involving capital expenditure of RM3 million in Bangi, Selangor. With the new lab slated for completion by the end of the fourth quarter of 2018, YSP aims to increase its R&D activities, which could allow it to develop and register more generic drugs for local and overseas markets.

Although YSP has no plans to build a new production facility in Malaysia, it is making an effort to automate its production lines. This should lead to a higher production capacity and improvement in overall efficiencies.