KUALA LUMPUR (July 24): Shares of listed pharmaceutical companies, some of which have risen to new highs recently, pulled back by as much as 16% yesterday as investors booked in some profit.
At its closing price, Apex Healthcare Bhd was hit the worst – making it the second top loser on Bursa Malaysia. It was down 14.36% or 57 sen to RM3.40 yesterday, giving it a market capitalisation of RM1.61 billion.
Pharmaniaga Bhd plunged to an intraday low of RM3.80 or 16.48% before recovering to RM4.03 at 5pm, still down 52 sen or 11.43% from the day before. This gave the company a market capitalisation of RM1.05 billion.
Following behind Pharmaniaga was YSP Southeast Asia Holding Bhd, which fell 8.97% or 26 sen to close at RM2.64, while Duopharma Biotech Bhd slid 3.72% or 11 sen to RM2.85 and Kotra Industries Bhd was down 12 sen or 3.36% to RM3.45.
Both Pharmaniaga and YSP were also top losers on Bursa Malaysia yesterday.
Philip Capital Sdn Bhd chief investment officer Ang Kok Heng told theedgemarkets.com that the pharmaceutical stocks were down on profit-taking activities as their rise had been fuelled by speculation.
He highlighted that much uncertainty over the vaccine for COVID-19 remained, namely, how it would be brought in or if the Government would foot the bill or the public.
“There must be quantity, if no quantity, it is not worth doing it. If there are only 10,000 people who want the vaccine, then there is no point,” said Ang.
“Unless the Government says that it is compulsory for everyone to take the vaccine, which I don’t think so (will happen),” he noted, adding that these are experimental vaccines which means side effects are not known yet.
On July 14, the Government had announced that Pharmaniaga and Duopharma have been tasked with undertaking the COVID-19 vaccine packaging process once a vaccine is developed.
Following this, stocks of both companies have been soaring on hopes that a vaccine against the COVID-19 disease might be ready by year end. This could also be due to promising early data from trials of three potential vaccines – which are developed by University of Oxford and AstraZeneca Plc, Pfizer Inc and BioNTech SE, as well as China-based CanSino Biologics Inc.
Recently, the US announced that it has agreed to pay US$1.95 billion to Pfizer and BioNTech SE to secure 100 million doses of their experimental COVID-19 vaccine to provide to Americans free of charge.
Year-to-date, among the five counters mentioned earlier, Duopharma surged the most at 100.7%, followed by Pharmaniaga’s 95.63%, Kotra’s 83.51%, Apex Healthcare’s 51.79% and YSP at 13.3%.
Malacca Securities Sdn Bhd’s head of research Loui Low concurred, saying that share prices had rallied too much, and the vaccines being developed might not reach Malaysian shores that soon.
Hence, he stressed that the uptrend in these pharmaceutical stock prices could mean that it rallied without earnings visibility.
“I think generally pharma-related stocks are decent as they are in demand at least, compared with some of the other sectors. [I] would certainly look out for a pullback to look for entry for short-term trading [opportunities],” Low said.
Fundamentally, Low believes pharma stocks should be supported by the COVID-19 pandemic. “Even without [the] vaccine [hopes], Duopharma did pretty well in 1Q suggesting demand is still solid,” he added.
MIDF Research analyst Noor Athila Mohd Razali, on the other hand, said pharmaceutical stocks' fundamentals are intact and are indeed looking attractive.
“They provide stable earnings and consistent dividend payout which makes them one of our top picks based on dividend play,” she said.
Athila noted that it was not a surprise to her that Pharmaniaga and Duopharma have been tasked with the COVID-19 packaging process in Malaysia, given that both have the largest manufacturing and pharmaceutical facilities in Malaysia as well as a reliable nationwide logistic network already in place.
She added that more than 50% of Pharmaniaga and Duopharma's products are supplied to the Ministry of Health's hospitals and facilities.