The Straits Times / The Business Times News on AsiaPharm

Good upside seen for drug maker AsiaPharm

By Ven Sreenivasan - Aug 26, 2004
The Business Times

The stock of China-based pharmaceuticals maker AsiaPharm Group has hit new record highs this week as analysts and investors re-rated the company's prospects.

The stock closed 1.5 cents up at 62 cents with 21.4 million shares traded yesterday, marking a new peak. And the upside remains good, according to analysts.

AsiaPharm researches, develops products and sells pharmaceutical drugs to treat orthopaedic, gastro-intestinal and inflammatory ailments.

Last week, the company reported that its second-quarter net profit more than quadrupled to 16.1 million renminbi (S$3.3 million) as it sold more drugs from its laboratories. Group sales rose 75.4 per cent to just over 93 million renminbi for the second quarter, up from a proforma 53 million renminbi for the same period last year.

The company will start selling two new drugs next month and in October and expects to continue doing well, largely due to its Maitongna brand of anti-inflammatory and anti-swelling prescription injection used mainly in orthopaedics and neurology.

The drug, based on sodium aescinate, has an 80 per cent market share in China.

According to BNP Paribas, which has just initiated coverage on the company, AsiaPharm has just entered a stage of high exponential growth from this year, which should continue for several years. Its key earnings drivers are identified as its research and development capabilities with several new drugs in the pipeline and listed in the National Health Insurance Programme.

BNP has an 'Outperform' call on the stock, with a price target of 81 cents.