KUALA LUMPUR: Hovid Bhd shares took a beating yesterday, losing more than 15 per cent in morning trade, following the revocation of its manufacturing licences that affected two plants.
According to analysts, there was panic selling yesterday morning but the stock managed to trade above the 25 sen support level. It closed at 30 sen, which was 4.5 sen, or 13.04 per cent, lower than Monday’s close of 34.5 sen.
“The 25 sen support level was tested during morning trading and the 30 sen price was seen as a strong support level.
“This is a temporary setback. Its share price dropped due to the negative story and bad sentiment,” Jupiter Research director Nazarry Rosli told NST Business.
“We believe the management will be able to rectify the problem and get the company back to normal, which will reflect a recovery in its share price.”
Hovid was one of the well-performing stocks as its earnings per share for the 2016 financial year and beat the Bloomberg consensus estimate by 10 per cent.
BIMB Securities has a “hold” call on the pharmaceutical company, with an upside potential of 39 sen.
CIMB Research downgraded its rating on Hovid from “hold” to “reduce”, on the assumption the company could suffer from a loss of production and lower sales volume.
Hovid’s manufacturing licences were revoked because its current good manufacturing practice compliance (cGMP) was not acceptable and its pharmaceutical quality system did not comply with the latest cGMP requirements.
Consequently, its manufacturing activities were halted on Monday, said Hovid in its filing to Bursa Malaysia.
Hovid said it would revert with the necessary corrective actions to comply with cGMP required by National Pharmaceutical Regulatory Department (NPRA) by the end of this month.
“We will invite the NPRA to audit our facilities and cGMP immediately thereafter. The re-issuance of the licences will be subject to NPRA being satisfied with the outcome of the audit,” it said.
The company said its distribution subsidiaries in Malaysia, Hong Kong and the Philippines would continue selling their existing stocks.
Last week, NPRA ordered Hovid to withdraw the batch of BG04645 Ternolol 50 film-coated tablets.