Apex Healthcare Bhd's (AHB) 9MFY12 results were largely in line with our expectations. Its 9MFY12 revenue rose 10.6% y-o-y to RM302.6m, accounting for about 74.6% of our full-year target, while YTD PBT surged 22.5% y-o-y to RM32.4m. Its strong performance was attributed to improvements in all business segments. AHB's share price, which once hit RM3.86 on 15 Oct 2012 before retreating to yesterday's close of RM3.56, has gone up by 22.3% since our first report on 3 Aug 2012. In addition, its consistent good dividend payout should provide support to the share price. We are leaving our FY13 forecast unchanged with RM3.84 FV, based on its 10-year average PER of 9.5x, but revising our call to NEUTRAL.  

In line. 9MFY12 results were within our expectation, with annualised revenue and PBT were accounted for about 99.4% and 96.2% respectively of our full-year estimate. 3QFY12 revenue came in at RM97.8m (+6.5% y-o-y, -2.9% q-o-q), while PBT stood at RM8.8m (+41.9% y-o-y, -22.6% q-o-q).  The  lower  q-o-q  performance  was  mainly  due  to  higher  contribution  from  its  high-margin  products  during  2QFY12.  9MFY12  PBT  rose 22.5%  y-o-y  to  RM32.4m,  on  the  back  of  a  10.6%  increase  in  revenue  of  RM302.6m.  The  improved  results  were  due  to  better  performance across all its business segments, with the revenue from its manufacturing & marketing segment and wholesale & distribution segment up 11.0% and 15.0% y-o-y, respectively. The performance was also partly boosted by a RM2.2m impairment loss recorded in 3QFY11 when the company divested its stake in Xiamen Maidiken Science & Technology Co Ltd, China. Stripping off the impairment loss, PBT growth was relatively modest at 13.1% y-o-y.

New  own-brand  product  to  boost  sales.  The  company  launched  a  new  product,  ADROTEN  (bisoprolol  5mg)  under  its  own  brand  during  the quarter under review. The product, a treatment of hypertension, has attained good market reception. This further strengthens its portfolio of cardiovascular products. The company is working towards its target of generating higher contribution from its own-brand products with higher margins.

Strengthening wholesale &  distribution business. The company's wholesales & distribution arm,  Apex  Pharma, has shown  steady growth. Its AVO  Diagnostics  products  continue  to  gain  market  share,  with  its  sales  growing  41%  y-o-y.  The  newly-launched  AVO  products  managed  to penetrate the market. Its performance in the Singapore's market is commendable, with revenue up by 13% y-o-y, backed bystronger margins from  all  segments. The group's exports  to  Singapore  have  increased,  especially  for  its  Agnesia  medicated  powder  line  which  has  recently expanded with the addition of two new fragrances, Lavender and Rose.

Maintain RM3.84 FV, revised to NEUTRAL. We continue to like AHB for its sound fundamentals, good dividend payout track record and higher margins from its own-brand products. Its share price, which once hit RM3.86 on 15 Oct 2012 before retreating to yesterday's close of RM3.56, has gone  up  by 22.3% since our  first report on 3 August 2012. In addition, its consistent good dividend payout  should providesupport to the share  price.  We  are  leaving  our  FY13  forecast  unchanged  with  RM3.84  FV,  based  on  its  10-year  average  PER  of  9.5x,  but  revising  our  call  to NEUTRAL. 

 Source: OSK