KUALA LUMPUR (May 2): Shares of Duopharma Biotech Bhd surged more than 9% during early trade on Thursday following news of the pharmaceutical company securing supply contracts worth RM578.09 million in total.
Duopharma climbed to as high as RM1.29 and was set for its best day since July 19, 2022.
At market close, the stock pared some of its gains but was still up eight sen or 6.78% at RM1.26, with more than six million shares traded. Its market capitalisation stood at RM1.21 billion.
On Tuesday, Duopharma said it has accepted 11 letters of offers from a subsidiary of Pharmaniaga Bhd to supply 86 pharmaceutical and/or non-pharmaceutical products worth RM578.09 million in total, to government offices and facilities that Pharmaniaga operates.
The contracts will be valid and binding until Dec 31, 2026, or until otherwise directed by the Malaysian government.
In a note following the news, TA Securities said the new contracts will contribute an additional RM37.7 million to the company's sales in the financial year 2024 (FY2024), RM56.7 million in FY2025 and RM56.7 million in FY2026, compared to the previous approved products purchase list (APPL) contract.
"We are not surprised about the new APPL contract, as management shared that price negotiations concluded in February 2024. We believe that the 86 stock-keeping units (SKUs) won (versus 50 SKUs previously) will bode well for the group," it said.
"We expect the group to return to its growth trajectory in 2024, boosted by the new APPL contract," TA Securities added.
The research house reiterated its 'buy' call on the stock and maintained the target price at RM1.47 per share.
In FY2023, Duopharma's net profit declined 24.91% to RM52.65 million from RM70.11 million, impacted by lower margins and higher finance costs. Revenue rose 1.1% to RM704.73 million from RM696.72 million in FY2022.