The Straits Times / The Business Times News on AsiaPharm

AsiaPharm a good proxy for healthcare industry

By R Sivanithy - Jun 15, 2004
The Business Times

Two stocks traded more than 35 million shares yesterday. The first was computer school Informatics Holdings, thanks to the presence of prominent businessman Oei Hong Leong as a shareholder.

The other is the much lesser-known China pharmaceutical company AsiaPharm Group, which recently listed at 28 cents a share. It gained one cent to close at 49 cents yesterday, bucking the overall downtrend in the broad market. As such, perhaps a closer look is warranted.

One reason for AsiaPharm's outperformance could have been that DBS Vickers initiated coverage of the stock with a 'buy' recommendation, citing strong growth over the next two years and robust R&D capabilities.

'Its flagship product Maitonga commands a 77 per cent market share, while a pipeline of new products will drive prospective growth,' said DBS Vickers.

'With high barriers to entry in an industry heavily regulated by the government and with its R&D capabilities ensuring a steady stream of new products, AsiaPharm is an attractive proxy for the growing healthcare industry,' it added.

The only snag would be that the stock has had a good run since listing last month, and, at 49 cents, is at its all-time closing high. Also, China stocks have lost some allure recently, or at least investors have become much more discerning in their choices when it comes to China.

In addition, small caps have fallen out of favour over the past six months, and so upside movement might be slower than might have been the case earlier this year.

Still, the high liquidity and growing interest in healthcare could bode well for AsiaPharm, which appears to have decent fundamentals.