KUALA LUMPUR (Feb 19): Shares of Duopharma Biotech Bhd (KL:DPHARMA) have climbed to their highest in about three years after the group's latest contract wins for the supply of insulin products and injections with the Ministry of Health (MOH).
The stock rose five sen or 3.38% to RM1.53 with about 2.3 million shares changing hands in early trading on Thursday. At the end of the trading day, the counter closed up seven sen or 4.73% at RM1.55, valuing the group at RM1.49 billion.
Analysts shared a positive stance on the counter by reiterating ‘buy’ calls on Duopharma, noting that the two insulin-related contracts from the MOH were largely within expectations and were factored into earnings forecasts.
One of the contracts, worth RM65.1 million, entails the supply of recombinant human insulin formulations until May 15, 2026, while the other, worth RM52.5 million, is for the supply of insulin injections until Feb 5, 2028.
RHB Investment Bank maintained its “buy” rating and raised its target price to RM1.65 from RM1.60. It said the RM65.1 million contract effectively formalises an extension of the existing three-way insulin supply arrangement between the government, Duopharma Marketing Sdn Bhd and Biocon Sdn Bhd, which had continued via local purchase orders after the prior contract expired.
RHB noted that while the duration of the first contract is relatively short, its value is comparable to that of a typical six-month contract. The second contract, which is separate from the Biocon partnership, may carry higher margins as it is not structured as a distributor-led project.
The research house added that near-term profitability could benefit from normalising active pharmaceutical ingredient prices and a weaker US dollar. However, it flagged risks including lower-than-expected sales volume, a stronger US dollar and the possibility of the MOH appointing dual suppliers instead of a single supplier for future insulin contracts.
Kenanga Investment Bank said Duopharma plans to undertake fill-and-finish activities for human insulin on behalf of Biocon for the Malaysian market at its K2 plant, with the new facility expected to take about three years to complete, enhancing domestic supply security. Duopharma is Kenanga’s top pick for the healthcare sector as it reiterated its ‘outperform’ rating on the stock.
The consensus is unanimously bullish as Bloomberg data shows all six research houses covering Duopharma’s stock have ‘buy’ recommendations. The average 12-month target price is RM1.73.
“We are encouraged by the government’s allocation of RM46.5 billion to the MOH, 2.7% higher than the allocation under Budget 2025, and encouraging domestic pharmaceutical manufacturing to increase the use of generic medicines in both public and private [hospitals,] which augurs well for Duopharma,” said Kenanga.
According to AskEdge data, Duopharma is currently trading at a price-to-earnings (PE) ratio of 17.1 times, which is higher than most peers where the ratio is applicable (not including those loss-making or with insufficient data).
This PE ratio is the lowest compared to its historical valuation in recent years, partly caused by an increase in earnings in the trailing 12 months.