In today’s briefing:
- Dechra Pharmaceuticals (DPH LN): Recent Sell-Off Is a Buying Opportunity; Fundamentals Remain Intact
- Continuously outpacing domestic growth
- Kossan Rubber Industries (KRIB.KL) – Asp Continues To Decline
Dechra Pharmaceuticals (DPH LN): Recent Sell-Off Is a Buying Opportunity; Fundamentals Remain Intact
- Dechra Pharmaceuticals (DPH LN) shares corrected around 25% from its recent peak of GBX5,150 in late December, due to general market apathy toward high multiple stocks.
- Despite the extraordinary levels experienced in the prior year, Dechra maintained its double-digit revenue growth and reported constant currency revenue growth of 15% y/y for H1FY22.
- Long-Term fundamental growth story remains intact for Dechra. The company has also forayed into a new and niche therapy area through acquisition of one drug this year.
Continuously outpacing domestic growth
- JB Chemicals & Pharmaceuticals’ (JBCPL) Q3FY22 performance was better than our estimates on operational fronts.
- Excluding revenue deferred to Q3FY21 from Q2FY21, consolidated revenue grew 23% YoY to Rs6bn (I-Sec est: 5.8bn).
- EBITDA margin stood at 21.3%, higher than our estimate of 19.8%.
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Kossan Rubber Industries (KRIB.KL) – Asp Continues To Decline
- Negatives largely priced in; U/G to HOLD
- Results in line
- More details on 4Q21 results
- Earnings adjustments; Upgrade to HOLD.
Kossan’s 4Q21 net profit of MYR218.7m (-56% YoY, -59% QoQ) was in line. The QoQ decline in 4Q21 earnings performance was mainly dragged by lower ASP. We lower our FY22-23 earnings forecasts by -41%/-8% to factor in lower ASP and utilisation rate assumptions as well as the Prosperity tax. Our TP is lowered to MYR1.71 (-16 sen; on an unchanged 17.7x CY23 PER or -1SD of historical mean). After the selloff, risk-reward in the stock appears evenly balanced. U/G to HOLD.
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