KUALA LUMPUR (April 3): CIMB Research has downgraded Pharmaniaga Holdings Bhd to “Hold” (from Add) at RM6.23 with a higher target price of RM6.20 (from RM5.85) and said Pharmaniaga’s share price has had a good run.

In a note April 2, the research house said that in the past 12 months, higher dividend and better earnings, driven by lower non-cash charges and stronger revenue, sent its share price to record highs.
However, CIMB Research said most of the earnings’ upside, however, appeared priced in.

“We downgrade the stock from add to Hold due to less attractive risk-reward. We fine-tune our earnings for FY15-17 to reflect the numbers from its latest annual report.

“Our target price increases to RM6.20 as we change our valuation method from 15.1x CY16 P/E to SOP to better reflect Pharmaniaga’s obligations to Ministry of Health (MOH).

“We prefer IHH Healthcare Bhd for stronger earnings growth,” it said.