Broker: CGS International
Date of Report: August 20, 2025
Hyphens Pharma International: Strategic Portfolio Shift Drives Margin Gains Amid Short-Term Headwinds
Executive Summary: Hyphens Pharma Reshapes Portfolio for Profitable Growth
Hyphens Pharma International (HYP), a leading Singapore-based pharmaceutical and health supplements company, is navigating a pivotal transition toward higher-margin products. Despite a revenue dip in 1H25, the company reported a record gross profit and expanded margins, underscoring the effectiveness of its portfolio optimization strategy. With a reinforced focus on proprietary brands and medical aesthetics, HYP is poised for improved earnings quality, even as it faces currency headwinds and inventory write-offs.
Key Highlights
- 1H25 core PATMI: S\$5.8m, down 7.4% YoY, but up 6.7% HoH, representing 52.3% of full-year estimates.
- Gross profit margin: Expanded by 4.5 percentage points YoY to a record 39.4%.
- Revenue: Declined 10.1% YoY due to deliberate culling of low-margin products.
- Target Price Raised: S\$0.43 (DCF-based, WACC: 13.8%), implying FY26F P/E of 10.3x.
- Recommendation: Add; significant upside potential as the company accelerates its transition to premium segments.
Financial Performance Snapshot
| Metric |
1H25 |
1H24 |
2H24 |
YoY Change |
HoH Change |
| Revenue (S\$m) |
89.5 |
99.6 |
95.8 |
-10.1% |
-6.5% |
| Gross Profit (S\$m) |
35.3 |
34.8 |
34.7 |
+1.5% |
+1.7% |
| Gross Profit Margin (%) |
39.4% |
34.9% |
36.2% |
+4.5 pts |
+3.2 pts |
| Core PATMI (S\$m) |
5.8 |
6.3 |
5.5 |
-7.4% |
+6.7% |
| Reported Net Profit (S\$m) |
1.7 |
5.4 |
4.8 |
-69.0% |
-64.9% |
One-Off Losses Mask Underlying Profitability
Hyphens Pharma’s reported net profit plunged in 1H25 due to non-cash losses:
- Inventory obsolescence: S\$2.2m allowance, mainly for the Sterimar nasal spray inventory, following excess stock from a previous stockout event.
- Foreign exchange translational losses: S\$2.0m, due to VND and Indonesian Rupiah depreciation against the Euro, impacting procurement costs and margins.
Despite these one-off charges, the underlying gross profit reached a record high, reflecting the company’s successful margin-accretive shift. Higher staff costs, however, partially offset these gains.
Strategic Shift: Higher-Margin Portfolio Drives Sustainable Growth
The 10.1% YoY revenue decline in 1H25 is a direct result of Hyphens’ strategic exit from low-margin businesses. Notably, the company:
- Discontinued distribution of Physiolac infant formula in Cambodia and Myanmar after just two years, with minimal impact to GP (less than 1% contribution).
- Refocused efforts on proprietary brands and medical aesthetics—segments with demonstrably higher margins.
This portfolio optimization is expected to sustain margin expansion and earnings growth, even if topline momentum moderates in the near term.
Upward Earnings Revisions and Valuation Upside
Hyphens Pharma’s improved profitability profile prompted upgrades to earnings forecasts:
- FY25F EPS raised by 8.6%.
- FY26F EPS raised by 11.6%.
- FY27F EPS raised by 14.6%.
The DCF-based target price now stands at S\$0.43, offering a potential upside of 48.3% from current levels. This equates to a forward P/E of 10.3x for FY26F, slightly below regional pharma peers, reflecting Hyphens’ smaller scale but superior margin trajectory.
Segment Revenue Breakdown
| Segment |
1H25 (S\$m) |
1H24 (S\$m) |
YoY Change |
HoH Change |
| Pharmaceutical & Medical Aesthetics |
51.7 |
63.7 |
-18.9% |
-14.6% |
| Proprietary Brands |
17.5 |
14.3 |
+22.5% |
+31.4% |
| Digital Platform & E-Pharmacy |
20.4 |
21.7 |
-5.9% |
-7.0% |
Product Pipeline and Expansion Initiatives
Hyphens Pharma is expanding its product pipeline with notable launches and licensing agreements:
- Launched Winlevi, a novel topical acne treatment, in Singapore and Malaysia in July 2025.
- Secured exclusive Southeast Asia rights for Winlevi from Cassiopea SPA.
- Signed a marketing and distribution agreement for Metoject, an autoinjector for rheumatoid arthritis and psoriasis, covering Singapore, Malaysia, Philippines, and Vietnam.
Product commercialisation typically requires 18-24 months post-licensing.
Peer Comparison: Hyphens Pharma vs. Regional Peers
| Company |
Ticker |
Rec. |
Price (LC) |
TP (LC) |
Market Cap (US\$m) |
P/E CY25F |
P/E CY26F |
P/E CY27F |
Div Yield CY25F |
ROE CY25F |
EV/EBITDA CY25F |
| Duopharma Biotech |
DBB MK |
Add |
1.35 |
1.74 |
307 |
15.1 |
12.9 |
12.1 |
3.0% |
11.5% |
8.6 |
| Kalbe Farma |
KLBF IJ |
Add |
1,400 |
1,650 |
4,028 |
18.3 |
16.3 |
14.5 |
3.0% |
15.3% |
11.4 |
| Mega Lifesciences |
MEGA TB |
Add |
29.75 |
33.00 |
798 |
13.3 |
12.8 |
11.9 |
4.4% |
18.4% |
7.3 |
| Hyphens Pharma International |
HYP SP |
Add |
0.29 |
0.43 |
70 |
7.4 |
6.9 |
6.5 |
5.2% |
15.7% |
4.1 |
Key Takeaways: Hyphens trades at a notable discount to regional peers on both P/E and EV/EBITDA metrics, despite a double-digit ROE and attractive dividend yield. Its smaller scale is offset by a disciplined focus on margin expansion and product innovation.
Comprehensive Financial Summary and Outlook
| Year Ended Dec 31 |
2023A |
2024A |
2025F |
2026F |
2027F |
| Revenue (S\$m) |
170.6 |
195.4 |
190.0 |
197.3 |
205.1 |
| Operating EBITDA (S\$m) |
10.3 |
13.5 |
15.0 |
16.0 |
17.0 |
| Net Profit (S\$m) |
8.58 |
10.86 |
12.09 |
12.92 |
13.80 |
| Core EPS (S\$) |
0.028 |
0.035 |
0.039 |
0.042 |
0.045 |
| Dividend (S\$) |
0.045 |
0.015 |
0.015 |
0.015 |
0.015 |
| Dividend Yield (%) |
15.4 |
5.2 |
5.2 |
5.2 |
5.2 |
| ROE (%) |
13.0 |
16.2 |
16.2 |
15.7 |
15.1 |
ESG and Corporate Governance: High Standards, No Controversy
- Hyphens Pharma is not yet rated by LSEG or MSCI for ESG, but demonstrates strong environmental, social, and governance initiatives.
- No record of product recalls or adverse events since listing in 2018—supporting brand equity and customer trust.
- First in Singapore’s health supplement sector to launch a refill pack, reducing plastic usage by 90% for key products.
- Zero cases of corruption or governance breaches reported in FY24, underpinned by a robust management culture.
Balance Sheet and Key Ratios
| Metric |
2023A |
2024A |
2025F |
2026F |
2027F |
| Total Cash & Equivalents (S\$m) |
23.37 |
23.42 |
32.21 |
38.15 |
45.19 |
| Inventories (S\$m) |
25.53 |
34.45 |
31.94 |
33.07 |
34.26 |
| Shareholders’ Equity (S\$m) |
62.99 |
70.90 |
78.36 |
86.65 |
95.81 |
| Operating EBITDA Margin (%) |
6.04 |
6.92 |
7.90 |
8.11 |
8.31 |
Risks and Investment Considerations
- Currency Exposure: A weaker Vietnamese dong versus the Euro could pressure margins, as Hyphens procures from Europe and sells in Vietnam and Indonesia.
- Inventory Write-Offs: Elevated stock obsolescence could affect near-term earnings, though recent allowances are seen as pre-emptive.
- Scale: Valuation discount to peers due to smaller size, but this is offset by high return metrics and a defensive balance sheet.
Conclusion: Long-Term Upside from Margin-Focused Growth
Hyphens Pharma International is executing a strategic pivot from volume-driven sales to profit-centric portfolio management. With robust gross margin expansion, a healthy balance sheet, and a pipeline of innovative products, the company is well-placed to deliver sustainable shareholder value. Despite temporary earnings volatility, the outlook remains attractive, especially as new high-margin products are commercialised and the company deepens its presence in proprietary brands and medical aesthetics.
The Add recommendation and raised target price underscore confidence in Hyphens Pharma’s ability to outpace its regional peers on profitability, even as it weathers near-term operational headwinds.
Key Financial Contacts: Lead Analyst: Tay Wee Kuang CGS International Phone: (65) 6210 8604 Email: [email protected]
