By Ying Xian Wong
Pharmaniaga Bhd.’s shares slumped after the Malaysian pharmaceutical company’s third-quarter net loss widened, coupled with a financial restructuring plan that could dilute existing shares.
Pharmaniaga shares fell as much as 12% in early trade Thursday and were recently 8.6% lower at 0.37 ringgit, bringing its loss over the last 12 months to 33%.
Pharmaniaga said late Wednesday that its third-quarter net loss widened to MYR49.34 million ($10.6 million), compared with a loss of MYR13.99 million in the same period a year earlier, mainly weighed by a one-off provision of MYR65.2 million for expiring pandemic-related consumables inventory. Quarterly revenue was 1.1% lower on year at MYR885.5 million.
It also announced a capital reduction plan involving the cancellation of MYR180 million worth of issued share capital along with a rights issue of 1.18 billion new shares with free warrants, as well as a private placement of 714 million new shares. The company had been placed under Bursa Malaysia’s Practice Note 17 classification for financially-distressed companies in February.
Hong Leong Investment Bank said in a note that the financial restructuring plan may substantially dilute existing shares.
Kenanga Investment Bank maintained an underperform rating on the Pharmaniaga’s stock and now expects the company to post a 2023 net loss of MYR41 million. It previously expected a MYR34 million profit.
Kenanga analyst Raymond Choo Ping Khoon said in a note that he remains cautious about Pharmaniaga’s outlook and pointed out that it couldn’t pay dividends given it had negative shareholders’ equity of MYR264 million as of Sept. 30,
The company may need to price its products more competitively as the government is looking for better value for money its in medical-supply contracts, Choo added.
Write to Ying Xian Wong at yingxian.wong@wsj.com
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