Hyphens Pharma was listed in SGX in May-2018 at a listed price of $0.26. Core business of the group comprise of:
Ceradan: dermocosmetic products
TDF: dermocosmetic products
Ocean Health: health supplements
CG 210: scalp care products
Medical hypermart & digital
Served markets are: Singapore, Vietnam,Malaysia, Indonesia and Philippines. Other markets served via distribution networks are Hong Kong, Myanmar, Brunei, Cambodia and Oman.
Singapore constitute 49% of revenue and Vietnam 38% in FY20. Malaysia was 6% with remaining 7% under Others.
Since IPO, revenue have declined 1% in FY19 and grew 4% in FY20.
Specialty Pharma saw a dip of 6% sales in FY19.
Proprietary brands grew at a rate of 10% in FY19 and 26% in FY20. Mix have increased from 11% in FY16 to 15% in FY20.
Geographically, revenue in Singapore continue to trend up while Vietnam were largely range bound at around $47M per year.
Gross margin have trended up from 32.2% in FY15 to 35.4% in FY20. However, expenses increased at a sharper rate from 23.9% and 29.6% during these periods resulting in lower operating & net margins.
Balance sheet is healthy. However receivables have trended up from 70 days in FY15 to 86 days in FY20. Current ratio 2.1 and Z-score 4.1.
1Q21 revenue was up 7.5% due to Vietnam demand and offset by lower sales in proprietary brands and hypermarket & digital. Net profit was up 0.6%.
The group was recently awarded an e-pharmacy licence for WellAway Pharmacy by Health Science Authority. The company have partnered with about 100 clinics in Singapore to provide this service.
Hyphens operates in a fragmented and highly competitive markets. Top line growth had been anaemic with growing expenses chipping away margins.
Vietnam recovery will provide much needed top line growth but in FY17 & FY18 where mix was higher, the company GM declined by 2% points. If valid, then margin may suffer some pressure going forward.
e-Pharmacy will be interesting to watch, if the channel will provide structural advantage in building a loyal customer base.