KDN PP17686/03/2013(032117)
APEX HEALTHCARE BERHAD
Dragged By Weaker Associate Contribution
DESCRIPTION
An investment holding company involved in the development, manufacturing, marketing and distribution of pharmaceuticals, diagnostics, consumer healthcare products and orthopaedic devices.
- 12-Month Target PriceRM2.28
- Current PriceRM2.53
- Expected Return-9.9%
- Previous Target PriceRM2.36
- MarketMain
- SectorHealthcare
- Bursa Code7090
- Bloomberg TickerAPEX MK
- Shariah-CompliantYes
SHARE PRICE CHART
2.70
2.50
2.30
2.10
1.90
1.70
1.50
Feb-25 Mar-25 Apr-25 May-25 Jun-25 Jul-25 Aug-25
52 Week Range (RM): 1.90 – 2.78
3-Month Average Vol (‘000): 82.3
SHARE PRICE PERFORMANCE
| 1M | 3M | 12M | |
|---|---|---|---|
| Absolute Returns | 6.3 | 19.3 | 5.1 |
| Relative Returns | -2.9 | 14.5 | 3.9 |
KEY STOCK DATA
- Market Capitalisation (RMm)1,823.1
- No. of Shares (m)720.6
Apex Healthcare’s (ApexH) 2QFY25 net profit dropped by 20.4% YoY to RM18.8m, primarily due to higher share of losses from its associate, SAG. After excluding non-operating items, ApexH’s 2QFY25 core net profit fell by 22.2% YoY to RM18.5m. The results were below both our and market expectations at 41% and 40% of full-year forecasts respectively. The discrepancy in our forecasts was due to the performance of SAG, which proved weaker-than-expected. We cut our FY25F-27F forecasts by an average of 12% to account for lower earnings from SAG. All told, we reiterate our Neutral call on ApexH, with a lower TP of RM2.28 based on 18x 5-year historical mean on FY26F EPS. On a side note, ApexH declared an interim single-tier dividend of 3.0 sen per share, in addition to a special single-tier dividend of 3.0 sen per share, bringing the total DPS to 6.0sen for FY25.
Revenue. ApexH reported a marginal 0.8% YoY increase in 2QFY25 revenue, supported by steady demand for pharmaceuticals, consumer healthcare products, and medical devices in key markets. However, topline growth was partly offset by the stronger ringgit, which dampened revenue translation from its Singapore subsidiaries. ApexH’s manufacturing segment recorded an increase of 1.5% YoY to RM22.2m, while the distribution segment improved marginally by 0.8% YoY to RM218.4m in 2QFY25.
Net profit. ApexH posted a 20.4% YoY decline in 2QFY25 net profit to RM18.8m, dragged by a RM2.6m share of loss from SAG. The weaker performance of its associate was due to lower customer orders. Excluding non-operating items, core net profit declined by 22.2% YoY. Meanwhile, PBT margin dropped to 10.2% in 2QFY25 from 12.2% in 2QFY24, attributed to higher marketing expenses and increased finance costs.
Outlook. We remain cautious on ApexH’s near-term prospects, given the prevailing external headwinds such as currency volatility, rising trade barriers, and global economic uncertainties that could continue to weigh on associate contributions. Nevertheless, we are confident in ApexH’s long-term resilience, supported by steady demand across key markets and the ongoing launches of new Group-branded products. Notably, the Group introduced 10 new products in 1H25, with the pipeline expected to support topline growth in the coming quarters. All told, we reiterate our Neutral call on ApexH.
MAJOR SHAREHOLDERS
- Apex Pharmacy Holdings SB39.6
- Washington H Soul Pattinson29.5
- Lim Teh Realty Sdn Bhd1.4
KEY FORECAST TABLE
| FYE Dec (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F | CAGR |
|---|---|---|---|---|---|---|
| Revenue | 936.2 | 961.8 | 998.8 | 1,070.2 | 1,191.3 | 8.4% |
| Pre-tax Profit | 423.3 | 101.2 | 98.6 | 120.8 | 134.8 | n.a. |
| Net Profit | 398.0 | 76.5 | 74.6 | 91.4 | 102.0 | n.a. |
| Core Net Profit | 92.9 | 76.4 | 74.6 | 91.4 | 102.0 | 3.1% |
| EPS (Sen) | 55.2 | 10.6 | 10.4 | 12.7 | 14.2 | n.a. |
| P/E (x) | 4.6 | 23.8 | 24.4 | 19.9 | 17.9 | |
| DPS (Sen) | 22.5 | 8.1 | 4.1 | 5.1 | 5.7 | |
| Dividend Yield (%) | 8.9 | 3.2 | 1.6 | 2.0 | 2.2 |
Source: Company, PublicInvest Research estimates
Table 1: Results Summary
| FYE Dec (RM m) | 2Q25 | 2Q24 | 1Q25 | YoY chg (%) | QoQ chg (%) | YTD FY25 | YTD FY24 | YoY chg (%) | Comments |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 240.8 | 238.7 | 238.9 | 0.8 | 0.8 | 479.6 | 486.9 | -1.5 | |
| Cost of Sales | -181.9 | -182.7 | -183.3 | -0.4 | -0.7 | -365.2 | -375.1 | -2.6 | |
| Gross Profit | 58.8 | 56.0 | 55.6 | 5.0 | 5.9 | 114.4 | 111.8 | 2.3 | |
| Other operating income/ (expenses) | 3.0 | 4.2 | 2.7 | -29.9 | 8.5 | 5.7 | 9.8 | -42.1 | |
| Operating profit/ (loss) | 27.7 | 28.2 | 24.8 | -1.8 | 11.9 | 52.5 | 55.2 | -4.8 | |
| Finance income/ (costs) | -0.5 | -0.2 | -0.5 | 211.6 | -5.5 | -1.1 | -0.3 | 275.7 | |
| Other income/ (expenses) | -2.6 | 1.0 | -1.6 | -364.3 | 68.7 | -4.2 | 0.5 | -983.4 | |
| Profit/ (Loss) before tax | 24.6 | 29.1 | 22.7 | -15.4 | 8.3 | 47.3 | 55.4 | -14.6 | |
| Taxation | -5.8 | -5.4 | -5.1 | 6.2 | 12.9 | -10.9 | -10.5 | 3.4 | |
| Net Profit | 18.8 | 23.6 | 17.6 | -20.4 | 7.0 | 36.4 | 44.9 | -18.8 | |
| Core Net Profit | 18.5 | 23.7 | 17.3 | -22.2 | 6.7 | 35.7 | 44.7 | -20.0 | |
| Operating Margin (%) | 11.5% | 11.8% | 10.4% | 11.0% | 11.3% | ||||
| Pre-tax Margin (%) | 10.2% | 12.2% | 9.5% | 9.9% | 11.4% | ||||
| Net Margin (%) | 7.7% | 9.9% | 7.2% | 7.5% | 9.2% |
Segment Revenue
| 22.2 | 21.9 | 19.3 | 1.5 | 15.1 | 41.6 | 47.7 | -12.9 | ||
|---|---|---|---|---|---|---|---|---|---|
| Manufacturing and Marketing | 218.4 | 216.7 | 219.4 | 0.8 | -0.5 | 437.8 | 439.1 | -0.3 | |
| Wholesale and Distribution | 0.1 | 0.1 | 0.1 | 13.6 | 3.3 | 0.2 | 0.2 | 61.8 | |
| Corporate |
Segment EBIT
| 21.3 | 19.8 | 16.9 | 7.9 | 26.1 | 38.2 | 39.7 | -3.8 | ||
|---|---|---|---|---|---|---|---|---|---|
| Manufacturing and Marketing | 7.3 | 7.3 | 7.9 | -0.3 | -8.1 | 15.2 | 15.5 | -1.9 | |
| Wholesale and Distribution | -2.6 | 1.9 | -0.9 | -241.2 | 207.2 | -3.5 | 1.7 | -298.5 | |
| Corporate |
Source: Company
KEY FINANCIAL DATA
INCOME STATEMENT
| FYE Dec (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Revenue | 936.2 | 961.8 | 998.8 | 1,070.2 | 1,191.3 |
| Operating Profit | 87.5 | 112.4 | 107.8 | 130.5 | 145.3 |
| Other Gains/(Losses) | 336.4 | -9.8 | -8.0 | -8.6 | -9.5 |
| Finance Costs | -0.6 | -1.4 | -1.3 | -1.1 | -1.0 |
| Pre-tax Profit | 423.3 | 101.2 | 98.6 | 120.8 | 134.8 |
| Income Tax | -25.3 | -24.7 | -24.0 | -29.4 | -32.8 |
| Effective Tax Rate (%) | 6.0 | 24.4 | 24.4 | 24.4 | 24.4 |
| Minorities | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Net Profit | 398.0 | 76.5 | 74.6 | 91.4 | 102.0 |
| Core Net Profit | 92.9 | 76.4 | 74.6 | 91.4 | 102.0 |
Growth
| Revenue (%) | 2.7 | 3.9 | 7.1 | 11.3 | |
| Operating Profit (%) | 28.5 | -4.1 | 21.0 | 11.3 | |
| Net Profit (%) | -80.8 | -2.6 | 22.6 | 11.5 |
Source: Company, PublicInvest Research estimates
BALANCE SHEET
| FYE Dec (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Property, Plant & Equipment | 199.2 | 255.7 | 309.1 | 352.5 | 386.5 |
| Cash and Cash Equivalents | 383.0 | 214.0 | 254.4 | 250.0 | 257.4 |
| Receivables | 194.4 | 192.5 | 186.1 | 199.4 | 221.9 |
| Other Assets | 346.0 | 346.7 | 332.8 | 340.3 | 354.4 |
| Total Assets | 1,122.6 | 1,008.9 | 1,082.4 | 1,142.2 | 1,220.3 |
| Payables | 180.9 | 151.4 | 185.2 | 195.2 | 217.0 |
| Borrowings | 3.6 | 47.0 | 42.0 | 37.0 | 32.0 |
| Deferred Tax | 13.9 | 13.1 | 13.1 | 13.1 | 13.1 |
| Other Liabilities | 5.9 | 7.7 | 7.7 | 7.7 | 7.7 |
| Total Liabilities | 204.3 | 219.3 | 248.0 | 253.0 | 269.9 |
| Total Equity | 918.3 | 789.6 | 834.4 | 889.2 | 950.4 |
| Total Equity and Liabilities | 1,122.6 | 1,008.9 | 1,082.4 | 1,142.2 | 1,220.3 |
Source: Company, PublicInvest Research estimates
PER SHARE DATA & RATIOS
| FYE Dec | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Book Value Per Share | 1.3 | 1.1 | 1.2 | 1.2 | 1.3 |
| EPS (Sen) | 55.2 | 10.6 | 10.4 | 12.7 | 14.2 |
| DPS (Sen) | 22.5 | 8.1 | 4.1 | 5.1 | 5.7 |
| Payout Ratio | 40.7% | 76.2% | 40.0% | 40.0% | 40.0% |
| ROA | 35.5% | 7.6% | 6.9% | 8.0% | 8.4% |
| ROE | 43.3% | 9.7% | 8.9% | 10.3% | 10.7% |
Source: Company, PublicInvest Research estimates
RATING CLASSIFICATION
STOCKS
- OUTPERFORMThe stock return is expected to exceed a relevant benchmark’s total of 10% or higher over the next 12months.
- NEUTRALThe stock return is expected to be within +/- 10% of a relevant benchmark’s return over the next 12 months.
- UNDERPERFORMThe stock return is expected to be below a relevant benchmark’s return by -10% over the next 12 months.
- TRADING BUYThe stock return is expected to exceed a relevant benchmark’s return by 5% or higher over the next 3 months but the underlying fundamentals are not strong enough to warrant an Outperform call.
- TRADING SELLThe stock return is expected to be below a relevant benchmark’s return by -5% or more over the next 3 months.
- NOT RATEDThe stock is not within regular research coverage.
SECTOR
- OVERWEIGHTThe sector is expected to outperform a relevant benchmark over the next 12 months.
- NEUTRALThe sector is expected to perform in line with a relevant benchmark over the next 12 months.
- UNDERWEIGHTThe sector is expected to underperform a relevant benchmark over the next 12 months.
DISCLAIMER
This document has been prepared solely for information and private circulation only. It is for distribution under such circumstances as may be permitted by applicable law. The information contained herein is prepared from data and sources believed to be reliable at the time of issue of this document. The views/opinions expressed herein are subject to change without notice and solely reflects the personal views of the analyst(s) acting in his/her capacity as employee of Public Investment Bank Berhad (“PIVB”). PIVB does not make any guarantee, representations or warranty neither expressed or implied nor accepts any responsibility or liability as to its fairness liability adequacy, completeness or correctness of any such information and opinion contained herein. No reliance upon such statement or usage by the addressee/anyone shall give rise to any claim/liability for loss of damage against PIVB, Public Bank Berhad, its affiliates and related companies, directors, officers, connected persons/employees, associates or agents.
This document is not and should not be construed or considered as an offer, recommendation, invitation or a solicitation of an offer to purchase or subscribe or sell any securities, related investments or financial instruments. Any recommendation in this document does not have regards to the specific investment objectives, financial situation, risk profile and particular needs of any specific persons who receive it. We encourage the addressee of this document to independently evaluate the merits of the information contained herein, consider their own investment objectives, financial situation, particular needs, risks and legal profiles, seek the advice of their, amongst others, tax, accounting, legal, business professionals and financial advisers before participating in any transaction in respect of any of the securities of the company(ies) covered in this document.
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PIVB is a participant of the Mid and Small Cap Research Scheme (“MidS”), and will receive compensation for the participation. This report has been prepared by PIVB pursuant to the MidS administered by Bursa Malaysia Berhad. This report has been produced independent of any influence from Bursa Malaysia Berhad or the subject company. Bursa Malaysia Berhad and its group of companies disclaims any and all liability, however arising, out of or in relation to the administration of MidS and/or this report.
PUBLIC INVESTMENT BANK BERHAD (20027-W)
