Stock Review – KOTRA (0002) (KOTRA INDUSTRIES BERHAD)

Bursa Malaysia - 0002

Bloomberg - KTRI:MK

Reuters - KOIN.KL

Webpage - https://kotrapharma.com/

Yahoo - 0002.kl

Sector            : Healthcare

Sub Sector    : Pharmaceutical

Focus            : Pharmaceutical

Company Profile

Kotra Industries Berhad (KOTRA) is engaged in pharmaceutical and healthcare products manufacturing and trading business. KOTRA had a research and development facility in Cheng, Melaka. KOTRA has 51 members working in R&D in 2020 which will be able to launch an average of 4 products over the 5 years; 2016 - 6 products, 2017 - 7 products, 2018 - 3 products, 2019 - 3 products and 2020 - 2 products.

KONTRA have 3 brands of products

1. Appeton

• Nutraceutical product focus on preventive healthcare

• consist s of 21 different health supplement products for children, expectant mothers and senior

2. Axcel

• Specialise in paediatric care, anti infective, dermatological and gastroenterology

3. Vaxcel

• Specialise in sterile antibiotic injection

KONTRA has completed Metered Dosage Inhaler Line and Pre Filled Syringe Manufacturing Line, a pioneer initiative in Malaysia and had obtain approval from National Pharmaceutical Regulatory Agency in 2019, 2 years delay from the expected completion date on 2017.

Income Statement

	30 June 2020	30 June 2019	30 June 2018	30 June 2017	30 June 2016
Revenue	171,730,000	172,550,000	178,480,000	166,370,000	160,230,000
Cost of Goods Sales	42,200,000	47,010,000	52,370,000	46,200,000	47,460,000
Operating Expense	100,840,000	104,170,000	110,210,000	107,630,000	104,900,000
Earning Before Tax	25,930,000	21,360,000	15,900,000	12,520,000	7,870,000
Nett Profit	29,560,000	22,200,000	15,750,000	12,400,000	7,760,000
5 Years CAGR of Revenue					1.40 %
5 years CAGR of Nett Profit					30.67 %

KOTRA 5 years CAGR of Nett Profit increased by 30.67 % although the revenue only had a 1.40 % increase. This is mainly because KOTRA managed to reduce its cost of good sales while keeping its operating expense constant around RM 100,000,000 over the 5 year. KOTRA profit margin had increase from 4.84 % in 2016 to 17.21 % in 2020.

KOTRA revenue is derived 57 % from the local market and 43 % from the overseas market.

Balance Sheet

	30 June 2020	30 June 2019	30 June 2018	30 June 2017	30 June 2016
Deferred Tax Asset	4,797,000	1,034,000	0	0	0
Account Receivable past due	10,863,000	11,376,000	14,567,000	7,720,000	8,569,000
Debt	32,300,000	44,450,000	57,700,000	73,750,000	96,930,000
Current Ratio	2.65	2.47	2.34	1.97	1.67
Cash / Current Asset	42.71 %	28.48 %	21.55 %	17.01 %	18.00 %

KOTRA deferred tax assets had increased from RM 1,034,000 in 2019 to RM 4,797,000 in 2020. 43 % of the KOTRA trade receivable in 2020 had past due. KOTRA debt had reduced significantly over the year from RM 96,930,000 in 2016 to RM 32,300,000 in 2020.

KOTRA had a current ratio above 1 over the past 5 years and increased over the years. KOTRA cash/current ratio had increased from 28.48 % in 2019 to 42.71 % in 2020.

Cash Flow

	30 June 2020	30 June 2019	30 June 2018	30 June 2017	30 June 2016
Cash Flow from Operation	49,910,000	36,970,000	35,670,000	32,980,000	25,910,000
Cash Flow from Investing	12,310,000	-25,760,000	-5,910,000	-2,850,000	-9,570,000
Cash Flow from Financing	-27,650,000	-17,390,000	-25,820,000	-29,500,000	-11,670,000
Free Cash Flow	47,350,000	24,460,000	29,280,000	29,930,000	16,240,000
5 years CAGR of Cash Flow from Operation					14.01 %
5 years CAGR of Free Cash Flow					23.86 %

KOTRA has had positive cash flow from operation for the past 5 years and 5 years CAGR of cash flow from operation is 14.01 %. KOTRA had positive cash flow from investing in 2020 is due to withdrawal of fixed deposits for RM 14,000,000.

Asides that, KOTRA has a 5 years CAGR of free cash flow of 23.86 % which is about the same as the 5 years CAGR of price which is 23.75 %.

Per Share Analysis

	30 June 2020	30 June 2019	30 June 2018	30 June 2017	30 June 2016
Share Outstanding	145,470,000	143,960,000	133,600,000	133,270,000	132,460,000
Price 30 June	2.96	1.76	1.82	2.08	1.02
BV/Share	1.31	1.20	1.15	1.07	0.99
P/E	14.57	11.42	15.44	22.35	17.41
5 years CAGR of Price					23.75 %

As of 30 June 2020, there are 5,187,600 number of the Employee Share Option Scheme (ESOS) outstanding until 2023 about 3.57 % of the share outstanding.

Dividend

	31 Dec 2020	31 Dec 2019	31 Dec 2018	31 Dec 2017	31 Dec  2016
Dividend Per Share	0.09	0.074	0.05	0.02	0.00
Dividend Payout	44.29 %	47.99 %	42.41 %	21.50 %	0.00 %
Dividend Yield	3.04 %	4.20 %	2.75 %	0.96 %	0.00 %
10 year Malaysia Government Bond	2.68 %	3.33 %	4.01 %	3.94 %	4.24 %

KOTRA had high dividend payout of 44.29 % for the year 2020. KOTRA start paying out dividend from 2017. KOTRA had increased its dividends every year since it pay dividend in 2017.

Research Report

No Recent research report

Peer Analysis (Pharmaceuticals)

	KOTRA	AHEALTH	DPHARMA	PHARMA	YSPSAH
P/E	18.48	25.59	35.28	47.84	16.21
Dividend Yield	3.63	1.56	2.08	2.13	3.65

KOTRA P/E is quite low compared to its peers. Only YSPSAH had lower P/E compared to KOTRA. Asides that KOTRA had high dividend yield compared to its peer.

Technical Analysis

KOTRA daily chart show a downward trench testing support of RM 2.52. If price break above RM 2.52 there might be a reversal.

KOTRA weekly chart also shows a support level at RM 2.27.

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