MBSB Investment Bank Bhd (MBSB Research) has maintained its BUY call on Pharmaniaga Bhd with an unchanged target price of RM1.44, saying the pharmaceutical group is likely to reach a near-term earnings trough in FY26 before upside emerges from FY27 onwards. The target implies 22% share price upside and an estimated 3.6% dividend yield.
MBSB said the delay of an upcoming Health Ministry concession award to 2QCY27 removes a near-term catalyst but does not indicate a loss of the contract. Pharmaniaga’s concession revenue still grew 23% year-on-year while SKU volumes increased 7%.
The research house highlighted the RM282 million three-year human insulin contract as a key catalyst, with deliveries starting in June. It estimates the initial rollout could contribute RM51 million in revenue and RM7 million to RM9 million in net profit during the remainder of FY26.
Meanwhile, the commercialisation of three in-house vaccines worth an estimated RM209 million in total is underway. These include PCV-13, a hexavalent vaccine and HPV, which MBSB said could provide longer-term demand visibility between FY26 and FY28.
Pharmaniaga is also expanding its oncology portfolio, having secured six brands across nine SKUs while tendering for five additional products worth an estimated RM178 million under the APPL framework. MBSB noted that oncology drugs typically carry gross margins of 35% to 50%.
Commercial sales rose 6% year-on-year to RM75 million in 1HFY26, helped by stronger private-sector demand.
MBSB said additional provisions for slow-moving inventories and higher warehouse costs would weigh on FY26, but four automated warehouses expected to be operational in CY27 could reduce annual rental costs by around RM10 million and transport costs by RM4 million.
As of 11.25 am, the stock price increased 1.69% to RM1.20.
