CGS International
August 20, 2025
Hyphens Pharma International: Strategic Portfolio Shift Drives Margin Growth Despite Revenue Dip
Executive Summary: Navigating a Pivotal Transition in Hyphens Pharma International
Hyphens Pharma International (SGX: HYP), a leading Singapore-based pharmaceutical and health supplements distributor, is in the midst of a strategic overhaul, optimizing its product portfolio towards higher-margin products. While headline revenue has declined, Hyphens has achieved record gross profit margins and is positioned for improved profitability in the coming years. This detailed analysis covers financial results, portfolio changes, peer comparisons, ESG progress, and guidance for investors.
Robust Gross Profit Amid Revenue Decline: Financial Highlights
| 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 Net Profit (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% |
| EBITDA (S\$ m) |
4.5 |
9.1 |
7.4 |
-50.3% |
-38.9% |
One-off Losses Mask Underlying Strength
– Headline net profit for 1H25 was S\$1.7 million, down sharply due to non-cash one-off losses: – S\$2.2 million in inventory obsolescence (largely Sterimar nasal spray, following FY23 stockouts and FY24 inventory build-up) – S\$2.0 million in FX translation losses (VND and IDR weakness against Euro; Hyphens sources inventory from Europe, sells in Vietnam and Indonesia) – These losses are deemed pre-emptive and non-cash, with obsolescence recognized ahead of expiry. Excluding these, core profit was S\$5.8 million, just 7.4% lower year-on-year, and on track for annual targets.
Strategic Shift: Prioritizing High-Margin Products
– 1H25 revenue fell by 10.1% YoY, partly due to Hyphens discontinuing the low-margin Physiolac infant formula in Cambodia and Myanmar (less than 1% of gross profit). – The company is consciously optimizing its product mix, de-emphasizing lower-margin lines and investing in higher-margin proprietary brands and medical aesthetics. – The revenue dip is a strategic trade-off for margin expansion — 1H25 saw gross margin surge 4.5 percentage points to 39.4% despite currency headwinds.
Product Pipeline Expansions and Portfolio Developments
– In July 2025, Hyphens launched Winlevi (novel topical acne treatment) in Singapore and Malaysia, following a licensing agreement with Cassiopea SPA for 10 Southeast Asian countries. – Hyphens also secured an exclusive distribution agreement for Metoject (rheumatoid arthritis and psoriasis autoinjector) for Singapore, Malaysia, the Philippines, and Vietnam. Commercial launches are expected 18–24 months post-approval. – Pipeline focus remains on proprietary and high-margin specialty products, supporting future margin and profit growth.
Segment Financial Breakdown
| Segment |
1H25 Revenue (S\$ m) |
1H24 Revenue (S\$ m) |
YoY Change |
| Pharmaceutical & Medical Aesthetics |
51.7 |
63.7 |
-18.9% |
| Proprietary Brands |
17.5 |
14.3 |
+22.5% |
| Digital Platform & E-Pharmacy |
20.4 |
21.7 |
-5.9% |
Outlook: Upgraded Earnings Forecasts and Valuation
– FY25F–27F EPS upgraded by 8.6–14.6% due to improved margin assumptions. – Discounted cash flow-based target price raised to S\$0.43 (WACC: 13.8%), representing a 48.3% upside to the current price of S\$0.29. – Implied FY26F P/E is 10.3x, below regional pharmaceutical peers due to Hyphens’ smaller scale, but supported by robust margin expansion and pipeline growth. – Key catalysts: Launches from the medical aesthetics portfolio and new proprietary product introductions. – Risks: Further inventory write-offs, currency volatility (especially VND/Euro), and execution of new launches.
Key Financial Projections
| Year |
2023A |
2024A |
2025F |
2026F |
2027F |
| Revenue (S\$ m) |
170.6 |
195.4 |
190.0 |
197.3 |
205.1 |
| Operating EBITDA (S\$ m) |
10.30 |
13.52 |
15.00 |
15.99 |
17.04 |
| 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 |
| ROE (%) |
13.0 |
16.2 |
16.2 |
15.7 |
15.1 |
Valuation and Peer Comparison: Hyphens Stands Out for Value
| Company |
Ticker |
Market Cap (US\$m) |
CY25F P/E |
CY26F P/E |
CY27F P/E |
EV/EBITDA (25F) |
Dividend Yield (25F) |
ROE (25F) |
| Duopharma Biotech |
DBB MK |
307 |
15.1 |
12.9 |
12.1 |
8.6 |
3.0% |
11.5% |
| Kotra Industries |
KTRI MK |
148 |
13.4 |
N.A. |
N.A. |
7.0 |
6.2% |
N.A. |
| Apex Healthcare |
APEX MK |
430 |
21.0 |
19.4 |
17.6 |
14.6 |
2.9% |
10.6% |
| Kalbe Farma |
KLBF IJ |
4,028 |
18.3 |
16.3 |
14.5 |
11.4 |
3.0% |
15.3% |
| Industri Jamu Dan Farmasi Sido Muncul |
SIDO IJ |
986 |
15.1 |
14.4 |
13.8 |
10.6 |
6.0% |
30.8% |
| Mega Lifesciences |
MEGA TB |
798 |
13.3 |
12.8 |
11.9 |
7.3 |
4.4% |
18.4% |
| Hyphens Pharma International |
HYP SP |
70 |
7.4 |
6.9 |
6.5 |
4.1 |
5.2% |
15.7% |
Hyphens trades at a significant discount to regional peers on both P/E and EV/EBITDA, while offering a higher-than-average dividend yield and competitive ROE.
ESG Overview: Building a Responsible Pharmaceutical Brand
– Hyphens is not rated by major ESG agencies but demonstrates tangible progress: – Environmental: Introduced Singapore’s first refill pouch for health supplements, reducing plastic by 90% versus standard bottles. – Social: Community outreach to the needy, high product quality (no recalls or controversies since 2018 listing). – Governance: Zero-tolerance for corruption, robust policies, strong management communication, and no breaches of governance or ethics.
Balance Sheet and Cash Flow: Financial Health Remains Solid
| Metric |
2023A |
2024A |
2025F |
2026F |
2027F |
| Total Cash & Equiv. (S\$ m) |
23.37 |
23.42 |
32.21 |
38.15 |
45.19 |
| Shareholders’ Equity (S\$ m) |
62.99 |
70.90 |
78.36 |
86.65 |
95.81 |
| Net Cash Per Share (S\$) |
0.08 |
0.08 |
0.10 |
0.12 |
0.15 |
| BVPS (S\$) |
0.20 |
0.23 |
0.25 |
0.28 |
0.31 |
Major Shareholders and Market Data
- INOMED Holdings Pte Ltd: 47.8%
- Tan Kia King: 28.0%
- Free float: 24.1%
- Market cap: S\$89.57 million (US\$69.75 million)
- Average daily turnover: S\$0.03 million
- Current shares outstanding: 308.8 million
Conclusion: A Compelling Margin Expansion and Value Opportunity
Hyphens Pharma International’s strategic transition toward higher-margin products is already bearing fruit in terms of gross profit and margin expansion, even as revenue contracts due to portfolio optimization. With an upgraded earnings outlook, a compelling valuation discount to peers, a strong balance sheet, and a robust product pipeline, Hyphens stands out as an attractive opportunity for value-seeking investors in the regional pharmaceuticals space. The company’s continued focus on governance, ESG, and innovation further underpins its long-term growth potential.
Broker Recommendation
Rating: Add Target Price: S\$0.43 (48.3% upside) Current Price: S\$0.29 Key Risks: Inventory write-offs, FX volatility, slower-than-expected product launches.
