Hyphens Pharma International Limited: FY2025 Financial Results Analysis

Hyphens Pharma International Limited, a Singapore-based pharmaceutical group listed on the Catalist, released its interim financial statements for the six months and full year ended 31 December 2025. The report details a challenging year marked by portfolio transitions, inventory write-offs, and foreign exchange volatility, but also highlights positive developments in proprietary brands and digital health initiatives.

Key Financial Metrics and Comparative Table

Historical Performance & Trends

• Revenue: Full-year revenue fell 9.2% YoY to \$177.4m, mainly due to declines in the Pharmaceutical and Medical Aesthetics segment and lower sales in Vietnam. Proprietary Brands saw robust growth (+33.1% YoY), offsetting some of the decline.
• Gross Profit: Despite lower sales, gross profit improved by 3.8% YoY to \$72.2m, with gross margin rising as portfolio optimization shifted the sales mix towards higher-margin products.
• Net Profit: Net profit after tax dropped 43.6% YoY to \$6.1m, weighed down by foreign exchange losses (\$2.8m), substantial inventory provisions/write-offs (\$3.9m), and a provision on other receivables. The second half showed a sequential recovery in profit.
• EPS: EPS declined in line with net profit, but the company maintained its final dividend at 1.50 cents per share, consistent with the prior year and in line with its policy of distributing at least 30% of net profits.

Exceptional Earnings & Expenses

• Inventory Write-Offs: The group recorded a \$2.0m inventory obsolescence provision for excess Sterimar® stock, following a mismatch in supply and demand after a prior-year stockout.
• Foreign Exchange Losses: FX losses increased to \$2.8m, particularly impacting operations in Vietnam, the Philippines, and Indonesia.
• Provision on Other Receivables: A \$0.6m provision was made for a loan to support the Vietnam Hypermart platform, reflecting slower-than-expected sales uptake.
• Fair Value Loss on Derivatives: The exercise of Tranche 2 in the Ardence Pharma acquisition resulted in a \$0.3m fair value loss on derivative instruments.

Asset Revaluation & Corporate Actions

• Acquisition: The group acquired an additional 17% stake in Ardence Pharma Sdn. Bhd., raising its ownership to 82%.
• Share Buybacks: 7,000 treasury shares were repurchased during the year, with total treasury shares representing 0.1% of issued shares.
• Dividends: A final dividend of 1.50 cents per share is proposed, unchanged from last year.

Management Commentary (Chairman’s Statement)

“Looking ahead, the Group will continue to unlock the long-term brand value of its Proprietary Brands portfolio by sharpening its focus on key strategic brand pillars, enhancing multi-channel customer access, and pursuing selective geographic expansion. These initiatives are intended to strengthen brand equity, broaden market reach and support the sustainable scaling of the Group’s proprietary products across existing and new markets.

… The Medical Aesthetics segment remains a strong growth pillar for the Group in 2026. Markets where the Group has established an initial scale are expected to continue delivering growth as the Group further strengthens its market position, while markets at an earlier stage of development are well positioned to deliver higher growth momentum as market penetration deepens and the Group continues to scale its presence. In parallel, the Group will also explore opportunities for expansion into new territories, in alignment with its strategic priorities and commercial objectives.

… The Group remains focused on execution, risk management and long-term value creation while navigating near-term uncertainties. The Board is pleased to propose a final dividend of 1.50 Singapore cents per share for FY2025. This proposed dividend is above the Company’s established dividend policy of distributing at least 30% of net profits attributable to shareholders and underscores the Board’s confidence in the Group’s financial position and long-term prospects.”

The tone is cautiously optimistic: management acknowledges operational challenges but emphasizes growth initiatives, portfolio optimization, and shareholder rewards.

Events Impacting the Business

• Portfolio Transition: Transition from Vivomixx® to Visiopro®, reclassification of Fenosup® to Proprietary Brands, and supply chain enhancements have changed segmental revenues and improved margins.
• Termination of License Agreement: The Ustekinumab biosimilar deal with Favorex Pte. Ltd. was terminated, but there is no revenue impact as the product is still under regulatory review.
• Foreign Exchange Volatility: Significant FX losses were incurred, especially in Southeast Asian operations.
• Supply Chain & Inventory Management: New appointments for supply chain and commercial leadership aim to strengthen performance amid past inventory issues.

Cash Flow & Balance Sheet Highlights

• Operating Cash Flow: Net cash from operations surged to \$18.7m, driven by strong working capital inflows (inventory reduction, receivable collections).
• Investing Activities: Outflows of \$4.6m, mainly for acquisition of Ardence Pharma and capex.
• Financing Activities: Outflows of \$10.7m, reflecting loan repayments, dividend payments, lease payments, and share buybacks.
• Net Asset Value: NAV per share remained stable at 22.68 cents (2025) vs 22.95 cents (2024).

Dividends

Outlook & Forecasted Events

• Proprietary Brands: Continued focus on Ceradan®, Ocean Health®, Visiopro®, Winlevi®, and new launches expected in 2026, including potential expansion into Thailand and Europe.
• Digital Platform & e-Pharmacy: Double-digit growth in Wellaway e-pharmacy, with potential to benefit from public sector home medication delivery contracts.
• Acquisitions: Completion of final Ardence Pharma tranche anticipated in FY2026; ongoing evaluation of strategic investments and M&A.
• AI/Technology Adoption: Early deployment of AI modules in POM platform; further productivity enhancements and agentic AI initiatives planned.
• Risk Management: Focus on supply chain, inventory optimization, and FX risk mitigation in response to recent challenges.

Conclusion & Investment Recommendations

Overall Assessment: The group’s financial performance for FY2025 is mixed. While sales and profits fell, gross margin improved, working capital was tightly managed, and the dividend was maintained. Management is actively addressing operational issues and is positioning for growth in proprietary brands and digital health. The outlook is cautiously optimistic, but near-term risks remain regarding FX volatility and inventory management.

If You Are Currently Holding Hyphens Pharma Shares: The company remains fundamentally sound with improvements in gross margin, cash flow, and a stable dividend. Investors may consider holding their position, especially if seeking consistent yield and exposure to Southeast Asian healthcare growth, but should monitor management execution on inventory and FX risks.

If You Are Not Holding Hyphens Pharma Shares: Prospective investors may consider initiating a position if they believe in the group’s proprietary brands strategy, digital health expansion, and Southeast Asian market potential. However, caution is warranted due to recent profit volatility and external risks. Consider accumulating gradually, especially if management delivers further improvements and FX risks abate.

Disclaimer: This analysis is based strictly on the contents of the company’s official financial report. It does not constitute investment advice. Investors should consult their own financial advisors and consider their risk tolerance before making any investment decisions.

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