Hyphens Pharma: Revenue Fell 9%. Gross Profit Hit a Record.
Hyphens Pharma (SGX: 1J5): net profit fell 43% and Vietnam collapsed, yet gross margin a record and cash flow a six-year high. Did the bad year upgrade the earnings base, or leave a smaller company?
The owner of Hyphens Pharma is not the founder of the firm. He used to work at Hyphens Pharma before leaving it and returning after many years to acquire it. Today’s investors have the same decision to make that Lim See Wah made: to see beyond its appearance and judge what it will become.
On the surface it looks bad.
FY2025 revenue fell 9.2 percent to S$177.4 million,
Net profit attributable to shareholders dropped 43 percent to S$5.8 million (S$6.1 million including non-controlling interests, the figure on the company’s highlights page [4]),
Earnings per share went from 3.30 cents to 1.89, and
Vietnam, until recently the second-largest market, collapsed 30.8 percent.
At S$0.35 [1] the market has filed Hyphens under “small-cap distributor in decline.”
Now the other line. The gross profit did not go down; rather, it increased to a new high of S$72.2 million from a new high margin of 40.7 percent, while the operating cash flow increased sharply to S$18.7 million, from practically nothing. Businesses in decline do not set new highs in gross profits and cash flow during the very year that revenues peak and decline. The problem is not whether FY2025 was bad. It was. The question is whether the bad year upgraded the earnings base.
Begin with understanding what Hyphens is – three businesses:
It in-licenses specialty drugs and aesthetics products and distributes them in more than five Southeast Asian countries;
It owns a growing set of brands like Ceradan and Ocean Health that carry a fatter margin; and
It operates docmedtech.com, a money-losing digital and wholesale business unit.
The point to remember here is that during the FY2025 period the company moved two products into the category of owned-brands and hence the reported figures showing 33% growth for that category are misleading along with an exaggerated 18% drop in the pharmaceuticals category.
Split the year in half, and the story becomes more compelling. Gross margin ended FY2025 at 42.0% in the second half of the year, versus around 39% in the first and 36% a year ago, the best in six years. The startling profit decline has been almost entirely contained within the first half of the year, when net profit plunged 66% compared to just 17% in the second half of the year. The first half decline is not attributable to a trading issue. While gross profit increased in the first half, this is because of problems further down the profit line due to Sterimar inventory write downs and foreign exchange losses, not loss of business.
The revenue bars are lumpy for reasons outside the thesis: the 2022 step up is the Novem acquisition consolidating for its first full year, and the 1H2024 peak was a post-disruption restocking bulge that then unwound. Gross profit, the steadier navy line, is the one that matters.
Let’s also be fair to the other side. The one thing that has mostly caused the decline in the revenue was Vietnam. This seems more like a regulatory problem caused by the obligatory reduction and not an optional one. According to management, the cause of the loss of the business in that country is due to them imposing stringent regulations on the pharmacies and the supply chain, which is evident through the new pharmacy laws in Vietnam and an inspection that will be carried out in 2025 [6].
The forward case rests on the owned brands. Hyphens in January 2026 did something that a pure distributor never does: it licensed its proprietary formula of Cerapro to a dermatology company from Switzerland for an up-front payment and royalties [2], demonstrating that owned technology has value. Medical aesthetics, via the Ardence acquisition, is the second pillar; though it remains small, it relies heavily on its founder’s presence. This is the best part of the portfolio, which explains why the gross margin can continue rising.
Now the number. Add back the genuine one-offs, chiefly a S$2.0 million Sterimar write-down plus smaller Vietnam and Ardence charges, about S$2.9 million before tax in total or roughly S$2.3 million after, and normalised earnings are about S$8.1 million against the S$5.8 million reported
On this basis, our FY2025 underlying earnings is down 15-20%, not 43%.
Given the currency headwind of S$2.8m needs to stay in the base as much as anything else (we’re assuming a currency effect annually whenever you do your buying in dollars and your selling in all sorts of other currencies around the region), a figure a bit above S$10.3m arises, which we will take to not be our base given that this is rather steep of a base to run on.
Yet, not all good business is a good stock. Hyphens, trading at 18.5x forward on S$0.35, sports P/E around the low teens to mid teens on our adjusted- earnings (and cash), while the market’s forward 8x P/E has it factoring a recovery of profits to S$13m-a level we think is too aggressive even on future predictions [2]. One free option sits on top: in 2022 a listed strategic, Metro Holdings, paid real cash for a slice of the digital-and-wholesale arm at a level the market now ignores [3], though the mark is stale and we credit it with nothing.
Three catches keep this honest.
To start, liquidity. Only 23.7 per cent of the stock, around S$25 million worth, is publicly held as two owners control the rest – more than two-thirds. This means no institution can add to a stake, or get rid of one, without affecting the market, and for long, so why shouldn’t the discount stay put and its causes perpetuate its presence.
Then, history. With S$10 million in net profit notched only twice in eight years as a listed company, the adjusted normalized base looks more like the midpoint of what it tends to deliver rather than a support floor.
Last, signals. Buying from CEO [5] deserves to be flagged, though against his existing control stake, it is trivial, and in a cash loaded, poorly performing public, it could mean either an inexpensive take private bid or re-rating. And don’t give the executive management’s promises much heed, as last year, for instance, it assured stakeholders the Vietnamese regulatory system would see no real shifts ahead - this was weeks before its collapse caused, it later insisted, by policy changes.
And what do you do with it? Not much, for a while. This is a watch-one-number scenario, and that one number is gross profit dollars. It is constructed to be a small position and watchlist candidate, not an investment; the float is just too thin to make a difference, the 4.3% dividend pays you to wait, and waiting may take a while.
The test is clean and close.
The next results come out in mid-August, covering the first half of 2026. One number tells you most of what you need: is gross profit still growing, above the S$35.3 million the group made in the first half of 2025? But gross profit alone is not the answer. It only helps you if it reaches the bottom line, instead of being spent on the marketing needed to sell those brands. And that risk is real, not theoretical. In the second half of 2025 the owned-brands arm grew its sales but earned less, because growing it cost more than it brought in.
So here is the good outcome: if gross profit keeps rising and this time reaches profit, then the market was ignoring a business that was quietly getting better, and that is exactly why you could buy it cheap.
And the bad outcome: if the marketing eats the gain, then FY2025 just made the company smaller at a nicer margin, no richer, and the low share price was right all along.
Watch that line, all the way to the bottom one.
Data integrity notes
All figures are from Hyphens Pharma’s SGX filings, except share price and market data, which are from Yahoo Finance at the 23 July 2026 close [1]. Net profit is the attributable figure, S$5.8 million; the S$6.1 million on the company’s highlights page is the total before the 3.5 percent attributable to non-controlling interests [4]. Two caveats matter: the FY2025 segment reclassification means the 33 percent Proprietary Brands growth is not clean like-for-like, and the first-half figures we use are derived from full-year figures less the company’s reported second half. A basic governance and accounting red-flag screen did not show obvious issues, with goodwill tested without impairment, an unqualified audit, and operating cash flow above reported net profit.
References
[1] Hyphens Pharma International (1J5.SI), share price and market data via Yahoo Finance, at the 23 July 2026 close (S$0.35). https://finance.yahoo.com/quote/1J5.SI
[2] “Hyphens Pharma out-licences Cerapro MED Skin Barrier Cream for six European countries,” Hyphens Pharma media release, 5 January 2026. https://www.hyphensgroup.com/media-release-hyphens-pharma-out-licences-cerapro-med-skin-barrier-cream-for-six-european-countries/
[3] “Metro Holdings takes 10% stake in Hyphens Pharma subsidiary DocMed at $60 mil valuation,” The Edge Singapore, 27 May 2022. https://www.theedgesingapore.com/news/ma/metro-holdings-takes-10-stake-hyphens-pharma-subsidiary-docmed-60-mil-valuation
[4] Hyphens Pharma International, Financial Highlights. https://www.hyphensgroup.com/investor-relations/financial-highlights/
[5] “Directors increase stakes in Aspial Lifestyle, Raffles Medical Group, Centurion, among others,” The Business Times, 24 May 2026. https://www.businesstimes.com.sg/companies-markets/directors-increase-stakes-aspial-lifestyle-raffles-medical-group-centurion-among-others
Primary filings (SGX disclosures, no inline citation): Hyphens Pharma International Limited, FY2025 full-year results (24 February 2026); FY2020 to FY2024 results and half-year results; Annual Report 2025; and Responses to Substantial and Relevant Questions from Shareholders for the 2026 AGM.
Disclaimer and holdings
This article is published for informational and educational purposes only. It does not constitute financial advice, a recommendation, or a solicitation to buy, sell or hold any securities. The author is not a licensed financial adviser under the Financial Advisers Act 2001 of Singapore and this content is exempt under Regulation 34 of the Financial Advisers Regulations as a generally available publication. Consult a licensed adviser before investing. Past performance is not indicative of future results. The author holds no position in the securities discussed.