Pharmaniaga Bhd., a Malaysian pharmaceutical company, saw its shares decline following the announcement of its third-quarter financial results. The company reported a widened net loss, which was further compounded by a financial restructuring plan that could potentially dilute existing shares.
Share Decline
In early trade on Thursday, Pharmaniaga shares fell by as much as 12%, ultimately settling at a decrease of 8.6% to 0.37 ringgit. Over the past year, the company’s shares have experienced a 33% loss.
Widened Net Loss
Pharmaniaga revealed that its net loss for the third quarter amounted to MYR49.34 million ($10.6 million), compared to MYR13.99 million in the same period the previous year. This increase was primarily due to a one-off provision of MYR65.2 million for expiring pandemic-related consumables inventory. The company’s quarterly revenue also decreased by 1.1% compared to the previous year, reaching MYR885.5 million.
Financial Restructuring Plan
As part of its efforts to address its financial situation, Pharmaniaga has announced a capital reduction plan. This plan involves canceling MYR180 million worth of issued share capital and issuing 1.18 billion new shares with free warrants through a rights issue, as well as a private placement of 714 million new shares. The company had previously been classified under Bursa Malaysia’s Practice Note 17 for financially distressed companies back in February.
Analyst Ratings and Outlook
Kenanga Investment Bank has maintained an underperform rating on Pharmaniaga’s stock and adjusted its 2023 net loss projection to MYR41 million, previously expecting a profit of MYR34 million. Raymond Choo Ping Khoon, an analyst at Kenanga, expressed caution about the company’s outlook and highlighted that Pharmaniaga is unable to pay dividends due to its negative shareholders’ equity of MYR264 million as of September 30. Choo also suggested that the company may need to price its products more competitively as the government seeks better value for money in its medical-supply contracts.
In conclusion, Pharmaniaga Bhd. has reported a widened net loss for the third quarter and has announced a financial restructuring plan that could potentially dilute existing shares. The company faces challenges in its outlook, such as negative shareholders’ equity and the need to offer more competitive pricing for its products.