Industry Comparison – Pharmaceuticals

Sector                 : Health care

Sub Sector         : Pharmaceuticals

This comparison would look into companies that manufacture and distribution of pharmaceutical products. There are five (5) companies in this industry:

1) AHEALTH (7090) – APEX HEALTHCARE BERHAD

2) DPHARMA (7148) – DUOPHARMA BIOTECHBERHAD

3) KOTRA (0002) – KOTRA INDUSTRIES BERHAD

4) PHARMA (7081) – PHARMANIAGA BERHAD

5) YSPSAH (7178) – Y.S.P SOUTHEAST ASIAHOLDING BERHAD

Competitiveness

Market shares is an importance indicator to determine the competiveness of the company. Total revenue make from manufacturing and distribution of pharmaceutical products for the year 2018 is RM 3,994,481,510.

COMPANY	REVENUE (PHARMACEUTICAL PRODUCTS) 2018 (RM)	MARKET SHARE (%)
AHEALTH (7090)	643,557,510	16.11
DPHARMA (7148)	498,733,000	12.49
KOTRA (0002)	178,476,000	4.47
PHARMA (7081)	2,384,956,000	59.71
YSPSAH (7178)	288,759,000	7.23

PHARMA had the highest market share in manufacturing and distribution of pharmaceutical products in 2018 which is 59.71 %.

Operational

For operational, operating income of the companies had been review. Operating income determine how much the companies’ revenue had turn into profit after reduction cost of operating expense.

Besides operating income, operating margin ratio is also calculated. Companies with higher operating margin ratio have more probability to survive in today financial crisis. The median operating margin ratio for this group of companies for 2018 is 11.57 %.

COMPANY	2018 OPERATING INCOME (RM)	2018 OPERATING MARGIN RATIO
AHEALTH (7090)	68,823,824	10.69
DPHARMA (7148)	65,824,000	13.09
KOTRA (0002)	20,652,000	11.57
PHARMA (7081)	106,292,000	4.46
YSPSAH (7178)	43,537,000	15.08

PHARMA is having the highest operating margin ration in this industry.

Sustainability

For the sustainability of the business, debt of the companies is being review. There are two criteria to look at interest coverageratio, which is used to determine how easy the companies able to pay off the interest of outstanding debt and debt ratio. The median debt ratio for 2018 is 0.37.

COMPANY	2018 INTEREST COVERAGE RATIO	2018 DEBT RATIO
AHEALTH (7090)	43.02	0.28
DPHARMA (7148)	8.45	0.42
KOTRA (0002)	4.35	0.37
PHARMA (7081)	2.95	0.72
YSPSAH (7178)	10.69	0.22

AHEALTH and YSPSAH  are good companies for sustainability because they has either high interest coverage ratio and low debt ratio.

Summary

In summary a point is given to each company to evaluate each company competitiveness, operational and sustainability. Points given are as follows:

Competitiveness

Criteria	Point
Greater than 50 % Market Shares	5
30.01 % - 50.00 % Market shares	4
10.01 % - 30.00 % Market shares	3
5.01 % - 10.00 % Market shares	2
1.00 % - 5.00 % Market shares	1
Less than 1%	0

Operational

Criteria	Point
Greater than 15.00  Operating Margin	5
12.51 – 15.00 Operating Margin	4
10.01 – 12.50 Operating Margin	3
5.01 – 10.00 Operating Margin	2
1.00 – 5.00  Operating Margin	1
0.00 – 1.00 Operating Margin	0
Less than 0	Disqualified

Sustainability

Criteria	Point
No Financial Cost	2
Greater than 10 Interest Coverage Ratio	1
Less than 10 Interest Coverage Ratio	0

Criteria	Point
Less than 0.30	3
0.30 – 0.40	2
0.40 – 0.50	1
Greater than 0.50	0

COMPANY	Competitiveness	Operational	Sustainability	Total
AHEALTH (7090)	3	3	4	10
DPHARMA (7148)	3	4	1	8
KOTRA (0002)	1	3	2	6
PHARMA (7081)	5	1	0	6
YSPSAH (7178)	2	5	4	11

From the evaluation above, YSPSAH (11 points) and AHEALTH (10 points) are worth for further evaluation.

Summary of Stock Reviews

http://ivkls.blogspot.com/2020/04/industry-comparison-pharmaceuticals.html