DPHARMA 7148 DUOPHARMA BIOTECH BERHAD | Revenue and Profit Record High (Q1FY2023)

  DPHARMA 7148 DUOPHARMA BIOTECH BERHAD | Revenue and Profit Record High (Q1FY2023)

The pharmaceutical industry plays a crucial role as an integral part of the global healthcare system. With the increasing global population and longer life expectancy, the demand for medications is also on the rise. Particularly in developing countries, improvements in healthcare standards and an aging population are driving the demand and reliance on pharmaceuticals. According to a survey conducted by the Pharmaceutical Association of Malaysia (PhAMA), the pharmaceutical industry contributed RM6.00 billion to Malaysia's Gross Domestic Product (GDP), and it is expected to contribute another RM10.00 billion by 2024.


A few days ago, Duopharma Biotech Berhad (DPHARMA, 7148), a renowned Malaysian pharmaceutical company, announced impressive performance results with record-high revenue and profit for the first quarter.



As a reference, DPHARMA is a pharmaceutical company equipped with advanced medical technology. It was established in 1978 and went public in 2002. The company operates three research and manufacturing facilities in the Klang Valley of Malaysia, located in Bangi, Klang, and Glenmarie, Shah Alam. Additionally, DPHARMA has subsidiaries in Singapore, the Philippines, and Indonesia. Not to mention that the company also collaborates with the Indian pharmaceutical company Biocon Limited.


DPHARMA's main business involves the research, development, and manufacturing of generic drugs and healthcare products, which are then sold to private and government healthcare centres. Based on the 2022 annual report, approximately 57.29% of the revenue comes from private healthcare centres, while the remaining 42.71% comes from government or public healthcare centres. The company has a broad market presence and has exported its products to 31 countries. However, Malaysia remains DPHARMA's primary sales market, accounting for approximately 93.99% of the revenue in the fiscal year 2022.


Now, let's delve into the latest performance announced by DPHARMA for Q1FY2023.


Revenue Comparison (YoY +7.81%, QoQ +31.92%)


As of March 31, 2023, the company achieved approximately RM200.47 million in revenue, representing an increase of approximately RM14.54 million or 7.81% compared to the same period last year, when revenue was RM185.94 million. This growth is primarily attributed to an increase in sales volume of prescription drugs.


Out of the RM200.47 million revenue, approximately RM188.73 million came from Malaysian customers, while the remaining RM11.74 million came from overseas sales.


Compared to the previous quarter, the company's revenue significantly rose by approximately RM48.52 million or 31.92%, primarily driven by increased demand for medications from the Ministry of Health. It is worth noting that the previous quarter (4QFY22) usually experiences lower purchases from the Ministry of Health due to the year-end accounting period. Therefore, the orders from the Ministry of Health witnessed a significant increase this quarter.


Net Profit Comparison (YoY +11.53%, QoQ +31.87%)


Driven by the overall robust revenue performance, DPHARMA achieved a net profit of approximately RM22.63 million this quarter, representing a year-on-year and quarter-on-quarter growth of approximately 11.53% and 31.87%, respectively.


However, the increase in electricity costs and labor expenses has affected the company's profitability to some extent. It is anticipated that the company may offset the rising operating costs by increasing product selling prices in the future.


Outlook


The company is poised to benefit from patients returning to hospitals, increased government allocations to the Ministry of Health, and a gradual stabilization of active pharmaceutical ingredient prices. Additionally, DPHARMA's introduction of pure plant-based healthcare products such as Champs and Flavettes will be advantageous for the company's future profit growth.


It is worth mentioning that the company currently holds a three-year contract valued at RM375.00 million, which involves supplying reconstituted insulin formulations (Insugen-Insulin Recombinant Human Formulations) to the Ministry of Health until April 2025. Furthermore, the contracts with government hospitals and clinics for the supply of both pharmaceutical and non-pharmaceutical products have been extended until June 30, 2023.


In addition, Malaysia plans to open five public hospitals and 19 private hospitals in the next three years, further enhancing the company's growth potential.

Given the high growth potential and the current price-to-earnings ratio (P/E) of 19.52 times, what are your thoughts on DPHARMA?


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