KUALA LUMPUR (July 14): YSP Southeast Asia Holdings Bhd (YSP SAH) rose 2.14% in early trade this morning after CIMB IB Research initiated coverage on the stock with an “Add” rating at RM2.69 with a target price of RM3.50 and said YSP SAH ranks among the top KLCI-listed drug makers in Malaysia, by market cap (fourth-largest).

At 9.16am, YSP SAH rose 6 sen to RM2.86 with 277,700 shares traded.

In a note July 13, the research house said the company’s key customers are private GPs and hospitals, which contributed about 50% of total FY16 sales.

It said the group also has a diversified product portfolio, including animal drugs.

“Besides benefiting from rising local private healthcare spending, expansion into more underpenetrated and emerging markets are key earnings drivers moving forward.

“Valuations are undemanding. The stock trades at 12.7x CY18F P/E. This is at a 28% discount to CIMB’s pharmaceutical sector historical 5-year mean P/E of 17.7x.

“We initiate coverage on YSP SAH with an Add call and SOP-based target price of RM3.50,” it said.