The Straits Times / The Business Times News on AsiaPharm

AsiaPharm exceptional performer among IPOs

By R Sivanithy - Jul 30, 2004
The Business Times

The IPO market has become very discerning lately, with first-day flops a regular occurrence. Also, it's not unusual to see new listings trade below water. So when one manages to stay above its offer price and attracts 'buy' recommendations from various houses, perhaps investors should sit up and take notice.

The stock in question is AsiaPharm Group, and the most recent recommendation comes from DBS-Vickers. In a Wednesday report, the local broker said it recently visited AsiaPharm's China plant and found the visit fruitful.

'Management is young and dynamic and has ambitions for AsiaPharm to outperform China's industry sales growth of 21 per cent,' it said. Besides a solid R&D team, AsiaPharm's strengths include new products in specialised areas like neurology and gastroenterology. 'The business is highly scaleable as the launch of new products, feeding through AsiaPharm's wide network of 1,500 hospitals, will lead to margin enhancement,' DBS-Vickers said. 'Maintain buy' and target price raised to 70 cents based on 15 times FY05 earnings.'

The only snag may be that the counter is trading at an all-time high. Having been offered at 28 cents, it hasn't dropped below this price since listing in May and now sells for 60 cents. Still, liquidity isn't a problem, and the stock's outperformance versus the broad-based weakness throughout the rest of the market is commendable.