KUALA LUMPUR (Nov 30): Shares in Pharmaniaga Bhd fell in early trade on Thursday, after the pharmaceutical group proposed a regularisation plan that consists of a capital reduction exercise, renounceable rights issue of news shares plus private placement, to raise up to RM654.61 million to pare down debts.
At 11.30am, Pharmaniaga had fallen 9.88% or four sen to 36.5 sen, with 4.01 million shares traded.
The group reported a net loss of RM49.34 million for the third quarter ended Sept 30, 2023 (3QFY2023), more than double the RM13.99 million quarterly net loss it logged a year earlier.
The wider net loss was due to a one-off provision of RM65.2 million stock obsolescence from its expiring pandemic-related consumables inventory, such as personal protective equipment and needles.
Quarterly revenue was marginally lower at RM885.49 million, against RM894.94 million last year, mainly due to lower sales within its non-concession business, stemming from the loss of a tender exercise for a blood cancer product.
Kenanga Research in a note on Thursday said Pharmaniaga’s results for the cumulative nine months ended Sept 30, 2023 (9MFY2023) disappointed, registering a net loss of RM45 million on inventory write-off.
"We now forecast a net loss of RM41 million for FY2023 (from a profit previously), but keep our target price of 31 sen and 'underperform' call," it said.
The research house said it remains cautious on Pharmaniaga due to: i) its negative shareholders’ equity of RM264 million as at Sept 30, 2023 impeding its ability to give out dividends; and ii) the government seeking better value-for-money contracts, and Pharmaniaga might have to offer new rates that are more competitive (which Kenanga had reflected in its forecasts).
Meanwhile, Hong Leong Investment Bank (HLIB) in a note on Thursday said the regularisation plan is anticipated to lead to a substantial dilution for existing shareholders.
HLIB has ceased coverage of Pharmaniaga due to the reallocation of its resources.