Sunday share tips: Hikma Pharmaceuticals, Vinacapital Vietnam Opportunity Fund
By Alexander Bueso
Date: Sunday 07 Jun 2020
(Sharecast News) - The Sunday Times's Sabah Meddings told readers to 'buy' shares of Hikma Pharmaceuticals, touting it as a potential beneficiary of the White House's 'America First' strategy to promote US manufacturing.
In her 'Inside the City' column, Meddings points out that 1,900 of Hikma's 8,600 staff are based in the US.
And the company sells 10 of the 13 drugs with which patients on ventilators are treated.
The shares have already been boosted this year by news that its heart drug, Vascepa, did not infringe on a rival's patents.
Yet the shares still looked cheap, changing hands on a price-to-earnings multiple of 17.6 against a five-year average of 20.
Analysts from Citi were penciling in a rise in sales from $2.2bn in 2019 to $2.3bn for 2020.
Furthermore, the long-awaited launch of its generic version of GlaxoSmithKline's Advair inhaler was scheduled for the backhalf of 2020, which would likely hand it a chunk of a market worth over $1bn per year.
"It has also underlined its strength by confirming it will pay a final dividend, Buy."
The shift towards manufacturing in Asian countries beyond China is likely to continue to boost Vietnamese economic growth and the share price of the VinaCapital Vietnam Opportunity Fund, said the Mail on Sunday's Midas column.
Geopolitical frictions, the Covid-19 pandemic and higher labour costs in China all favoured continued growth in Vietnam.
Yes, emerging markets always had an additional level of risk, but thanks to breakneck growth since the turn of the century, the country also has a fast growing middle class.
"Most experts believe that, even if Vietnam's GDP growth is constrained his year, the long-term outlook is sound," the tipster said.
The fund, which is run by a former Prudential director, Andy Ho, has a track record of success when it comes to investing in companies with long-term potential.
In many cases, Ho invests in companies when they are in private hands, profiting from when they are either sold or listed on the local stockmarket exchange.
And the pandemic is throwing up opportunities as some business owners opt to sell to more experience outfits with deeper pockets.
"Today the group is in talks with a number of firms in areas such as healthcare, education, food and drink and the manufacture of recyclable products - sectors that are likely to grow, almost regardless of the macro-economic climate," Midas added.
"Investing in emerging markets is never risk-free but the Vietnam Opportunity Fund has proved its worth over the years and should continue to deliver, as the country expands and develops. At £3.32, the shares are a long-term buy. And the dividend is an attractive bonus."
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