We had seen with our eyes how a pandemic create chances that are unthinkable in normal circumstances. The primary beneficiaries for this is gloves industry and their related companies.
By now, a lot of gloves companies already saw share price appreciated much, some with still room to go, some maybe priced in. But we do not know what will continue on, however, the near term can be seen as this pandemic will continue to be here for a little more while as the world enter into the 2nd wave.
Gloves companies such as Topglove, Supermax, Hartalega, Kossan, Careplus, Comfort, Rubberex, HLT had saw share price went up by many fold.
Other related industry are Hexza, Luxchem, Samchem, LKL, Ocncash also saw share price booming up.
Pharmaceutical company are catching up. Among them are PHARMA, DPHARMA, KOTRA, YSPSAH, AHEALTH.
Today focus is - PHARMA GETTING TO RM 20, PRACTICAL? REASONABLE ? DOABLE ?
We calculate here 1 by 1
Total share is 261.7 million, if RM 20 per share, means total market capitalization is just RM 5.23 billion. Only 5.23 Billion.
So can the coming future of Pharma earning able to justify PHARMA worth RM 5.23 billion, or RM 20 per share ?
1st, the usual normal operation is profit making, around 9 cents per quarter.
Hence, the valuation for this company at PE x 15 = RM 5.40
Secondly, Pharma is a good candidate for bottling of covid-19 vaccine with facilities ready.
Malaysia put it as 40 million people (citizen + foreigner combine)
Vaccine if selling RM 150 per dose and each person needing 2 dose.
40 million x RM 150 x 2 = RM 12 billion business opportunity annually
But Pharma got some established Indonesia operation, and can get exposure to more than 300 million people.
Got coverage in all the main indonesia island
And MPI is listing and 75% owned by PHARMA, hence can capture the large growth rate
Indonesia listed Millennium PI also can see share price increasing
So if PHARMA also can capture 15% of the 300 million people from INDONESIA market
45million people x RM 150 x 2 = RM 13.5 billion market business opportunity
So if PHARMA potential future business opportunity increased by 25.5 billion annually, profit margin 10%, and lets say only take 40% from the pie
So potential earning is RM 1 billion a year !!!!!!!
EPS will become RM 3.90 a year potentially !!!
If value PE x 20 will become RM 78 !!!!!
RM 78 hard to believe right? So we take 30% from it, reasonable ? That is RM 23.40
So future can PHARMA share price go to RM 20 ? Now RM 4 better act fast