KUALA LUMPUR: RHB research has recommended a buy call on Duopharma Biotech Bhd because it sees good prospects for the company in the medium to long term, supported by the rise in non-communicable diseases (NCD) and the growing number of older people in society.
According to the research house, Duopharma expects to book steady revenue growth this year post finalisation of the approved product purchase list tender (likely to be completed by the end-March or April), while its consumer healthcare segment should see gradually improving numbers.
"Our medium- to long-term outlook remains upbeat, underpinned by the increase in non-communicable diseases (NCD) and the trends of an ageing society," it said in a note today.
RHB said it makes no changes to its estimated earnings, and its target price is unchanged at RM1.41.
The research house maintains its positive view on Duopharma for several reasons, such as its better margin profile compared to its competitors, the government's increased budget allocation for the healthcare sector bodes well, and with the ongoing trend of an ageing population, there is a growing demand for healthcare products, which benefits the company.
However, RHB said it is important to acknowledge potential risks.
"These include the possibility of lower-than-expected sales volumes and the depreciation of the ringgit against the US dollar," it added.