KUALA LUMPUR (Jan 27): Pharmaniaga Bhd’s share price opened up more than 5% today after the company said yesterday its wholly-owned subsidiary Pharmaniaga Lifescience Sdn Bhd (PLS) had entered into a term sheet agreement with the government of Malaysia for the purchase and distribution of the Covid-19 vaccine developed by China-based Sinovac Biotech Ltd’s subsidiary Sinovac Life Sciences Co Ltd.
On Bursa Malaysia today, Pharmaniaga’s share price opened 25 sen or 5.02% higher at RM5.23.
Yesterday, Pharmaniaga said the agreement is to enable PLS to supply 12 million doses of the vaccine under a fill-and-finished scheme with PLS to hospitals, clinics and any other facilities nationwide as instructed by the Ministry of Health (MoH).
"The agreement and collaboration contemplated therein will serve as a platform for Pharmaniaga to further strengthen its vaccine business and grow the sector in Malaysia.
"It will also provide Pharmaniaga another income stream, which will contribute to the profitability of the company in the future,” Pharmaniaga said.
Today, Hong Leong Investment Bank Bhd (HLIB) analyst Farah Diyana Kamaludin wrote in a note that HLIB retained its Pharmaniaga earnings forecasts, pending more details of the vaccine agreement.
Farah, however, said HLIB upgraded its Pharmaniaga share call to "buy" from "hold" but maintained its target price (TP) for the stock at RM5.70.
"With the hype of vaccines and positive news flow, we feel this is an opportunity to accumulate Pharmaniaga in light of recent share price weakness,” she said.
Meanwhile, MIDF Amanah Investment Bank Bhd analyst Noor Athila Mohd Razali wrote in a note today the signing of the agreement between the MoH and PLS finally put to rest months of ongoing talks with regard to the supply of the Covid-19 vaccine in Malaysia.
Noor Athila said the agreement also provides some form of clarity in terms of the trajectory of the nation’s Covid-19 immunisation plan which includes, among others, the number of doses procured as well as the timeline of the expected immunisation.
"Hence, we are maintaining our 'neutral' recommendation on Pharmaniaga with a positive bias at this juncture given that, as we mentioned earlier, the information on the financial impact of this agreement remains scarce considering that the company is bound by its non-disclosure agreement with both the MoH and Sinovac.
"We are also maintaining our view that the fill-and-finish [process], coupled with end-distribution of the Covid-19 vaccine, will contribute marginally to the group’s earnings.
"We are making no changes to our FY20-21 earnings estimates (for the financial years ended Dec 31, 2020 and ending Dec 31, 2021) at this juncture given that as disclosed in its announcement on Bursa yesterday, the agreement will not result in material change to Pharmaniaga’s earnings and earnings per share (EPS) for FY21. We are maintaining our TP at RM4.74 per share for now,” she said.