For the full-year, Boustead managed to keep its head above water with a RM62 million net profit for FY2022, a 63.5% decline from the RM170.1 million net profit a year ago.
Revenue for the latest quarter increased 24.7% to RM3.69 billion from RM2.96 billion in Q4 FY2021, while full-year revenue rose 33.6% to RM15.1 billion from RM11.3 billion in FY2021.
Pharmaniaga had sustained a huge net loss of RM644.4 million in Q4 ended Dec 31, 2022 from its RM552.3 million provision of slow-moving Covid-19 vaccine inventory and a write-down in goodwill of its Indonesian manufacturing cash-generating units of RM50.3 million.
Following its largest ever quarterly net loss, the pharmaceutical company announced it had fallen under the Practice Note 17 (PN17) classification for financially distressed companies.
Despite the blow to its financials, Boustead is confident of Pharmaniaga’s ability to register better performance as both the domestic and Indonesian segments are expected to maintain growth.
“Pharmaniaga will continue its effort to negotiate with various parties including overseas markets for the sale of the remaining Covid-19 vaccine inventory,” Boustead said in its filing with Bursa Malaysia.
Some of the group’s other subsidiaries include Boustead Heavy Industrial Corp Bhd (a 64.99% stake), Boustead Plantation Bhd (57.42%), Affin Bank Bhd (20.93%), and Boustead Naval Shipyard Sdn Bhd (68.85%), which is tasked to build six littoral combat ships.
Boustead’s share price fell 12% to 62.5 sen yesterday following Pharmaniaga’s financial results announcement the previous day. It closed at 62 sen today, with a market capitalisation of RM1.27 billion.
At the close of trading today, Pharmaniaga’s shares fell one-and-a-half sen or 5.56% to 26 sen, with a market capitalisation of RM334.1 million.
In a separate filing earlier, the company said it was taking the necessary steps to address its PN17 status, and is in the midst of formulating a plan to regularise its financial condition.
Downgrades for Pharmaniaga
In a note, CGS-CIMB Securities said Pharmaniaga may need to raise more equity to lift its shareholders’ equity back to levels above the PN17 threshold.
Such a move, if undertaken, should help the company to secure funding of its working capital and maintenance of capital expenditure and operational expenditure without violating debt covenants, the research house said.
“However, investors may not take well to these exercises as they may be reluctant to increase their investments in the company, where recoverability or returns on investments at this juncture remain uncertain,” said CGS-CIMB, which has changed its ‘hold’ call to ‘reduce’.
Meanwhile, Hong Leong Investment Bank (HLIB) has downgraded its ‘buy’ call to ‘sell’.
“There could be potentially a reversal in the impairment provision should Pharmaniaga be able to sell more of its stockpile, as they are in talks with various parties such as the Islamic Development Bank and health ministry,” said HLIB.