Highest return on equity over three years & Highest growth in profit after tax over three years & Highest Returns to Shareholders over three years
Kotra Industries Bhd - Solid pre-pandemic growth buffers Covid-19 headwinds
In realising its vision of enabling people to be healthier, Kotra Industries Bhd has also made its shareholders wealthier over the past three years.
Malaysia’s leading pharmaceutical group scored a hat-trick in The Edge Malaysia Centurion Club Corporate Awards 2022, clinching all three awards in the healthcare category, namely Highest Return on Equity (ROE) Over Three Years, Highest Growth in Profit After Tax (PAT) Over Three Years and Highest Returns to Shareholders over Three Years.
Notably, this is the second time Kotra is bagging all three awards. The group also won big at the inaugural event in 2019.
Kotra manufactures a wide range of healthcare products under its three main brands, namely Appeton, Axcel and Vaxcel. The Appeton brand offers high-quality over-the-counter (OTC) supplements that cater to people in all stages of life, from prenatal development needs to geriatric health supplements.
Axcel covers paediatric care, anti-infective medicine and dermatological care while Vaxcel products focus on sterile injectables, including a range of antibiotics to treat an extensive list of health conditions.
The group is currently run by the second generation of the founder’s family. Kotra was founded by the late Piong Nam Kim @ Piong Pak Kim — the father of its managing director Jimmy Piong Teck Onn.
The Piong family controls 60% of Kotra. Teck Onn’s wife, Chin Swee Chang, also sits on the board as executive director while his brother Piong Teck Yen and nephew Piong Chee Kien are non-executive directors.
The pharmaceutical group achieved an adjusted shareholders’ return of 42.7% during the three-year period under review, based on the awards methodology.
Its share price rallied 190% from RM1.50 on March 29, 2019, to RM4.35 on March 31, 2022. On top of that, Kotra shareholders were rewarded with a total dividend per share of 25.4 sen for the financial years ended June 30, 2019, 2020 and 2021 (FY2019 to FY2021).
In terms of profitability, Kotra, whose market capitalisation stood at RM643.7 million as at March 31 this year, achieved a weighted ROE of 13.8%, outperforming its peers in the healthcare sector of Bursa Malaysia whose market capitalisation was below RM1 billion, according to awards methodology.
Kotra delivered solid financial performances in FY2019 and FY2020, despite facing headwinds caused by the outbreak of Covid-19. The adverse impact was mitigated by the group’s ongoing cost rationalisation efforts.
Kotra did not escape unscathed from the pandemic but still managed to remain profitable. The prolonged lockdowns weakened the company’s earnings in FY2021, with its net profit falling 18% to RM24.4 million from RM29.6 million in FY2020. Its net profit for the three-year period under review saw a compound annual growth rate of 12.6%, according to awards methodology.
Kotra regained its growth momentum in FY2022, when economic activities gradually normalised and sales of its pharmaceutical and health supplements recovered. Its revenue grew 30% to RM207.92 million in FY2022 from RM159.62 million in FY2021. The growth in its net profit was even bigger, more than doubling to RM62.09 million in FY2022 from RM24.4 million in FY2021.
In his message to shareholders in the company’s latest annual report, Teck Onn wrote that it is more important now than ever to remain focused on its goals in driving greater output in productivity by continuing its cost rationalisation measures and creating long-term value for its shareholders. “Moreover, the group will be dynamic in making changes whenever needed and seize new opportunities should they arise, given the increase in health and self-care awareness,” he added.
The managing director also took note of the highly competitive operating landscape at home and abroad. The group is competing with rivals that have significantly greater resources.
“Recovery of the global economy is not expected to be swift. To remain dynamic, we will continue to deepen our focus on marketing and brand development, pricing strategy and other relevant strategies that give us a comparative advantage to effectively deal with the intensity of external pressure,” said the 64-year-old chieftain.