Not many peoples are aware of this pharmaceutical company that manufactures generic drugs, i.e., YSPSAH that was established in Malaysia since 1987. It is a Taiwanese pharmaceutical company based in Bangi, Selangor. The company was listed in KLSE since 2004.
From the annual report 2024 of YSPSAH, the overseas revenue consists of almost 30% of the total revenue reported. Indeed, the weightage of overseas sales is quite heavy as compared to its competitors. I think it is part of the strategy of the management team, as they are aware that Malaysian market is relatively small as compared to other ASEAN countries and the local market is dominated by bigger players such as DPHARMA and AHEALTH.
But why this company grasps my attention? Firstly, it is cheap, not in price though, but in terms of valuation. Secondly, the traded share price on 19 Dec 2025 is discounted at almost 28% from its book value. Thirdly, strong operating and free cash flows, allowing the company to pay consistent dividend. At the time of writing, the traded share price is RM2.09, which translates to RM0.11/RM2.09 = 5.3% dividend yield.
The historical share price of YSPSAH (up to 19 Dec 2025) is shown below:
Figure 1: Historical share price of YSPSAH
Why is its share price plunging since June 2024? Well, I believe it is due to the cutting of interest rate in the US, thus weakening the USD against other currencies. From June 2024 to Dec 2025 (time of writing), USD has weakened against MYR from RM4.7/USD to RM 4.08/USD. See below:
Figure 2: USD to MYR rate
As an export-based pharmaceutical company like YSPSAH, foreign exchange loss is inevitable in the current condition. The foreign exchange loss would appear in the income statement (e.g. in Other Expenses), decreasing the reported bottom line (profit attributed to shareholder). The historical reported profit attributed to shareholder of YSPSAH looks like this:
Figure 3: Reported profits of YSPSAH
As seen from Figure 3 above, the reported profits experienced a more apparent fluctuation since 2016. However, do note that the reported profit has included non-cash item such as unrealized foreign exchange (forex) loss. As it is a non-cash item, it should be added back to the reported earning in Figure 3 to come out with the “core profit” of the company, which can provide a clearer, more consistent picture of a company's ongoing, primary business health. The historical core profit (after adding/deducting the forex loss/gain, respectively, with the reported profit) is shown below:
Figure 4: Core profits (after including the effect of unrealized forex gain/loss) of YSPSAH
As shown in Figure 4, the core profit is trending upwards generally, except during the Covid lock-down period. So, based on Figure 4, I believe that the core business of YSPSAH is still growing.
So, now we know the business of YSPSAH is still doing fine. The next question is its valuation. Can we accumulate the shares?
Following the approach of HLIB in valuing DKSH, the fair PE ratio (PER) based on core earnings per share (core EPS) is used. The historical PER based on core EPS, or the core PER, is shown in Figure 5 (last sub-figure at the bottom).
Averaging Process: Use of 5-year average PER to estimate the fair PER of a company
Many investors, including my respected investment guru (cold eye) advocated the use of 5-year average PER (some used median value) as the method to estimate the fair PER of a company. It is one of the relative valuation methods which is quite helpful. However, in 2024 (and even 2025), the share price of YSPSAH is depressed (due to low reported earnings, see Figures 1 & 3) regardless of the strengthening of its core profit (Figure 2). Hence, the core PER value of YSPSAH in 2024 is relatively low, which might not reflect the true valuation of the company. On the other hand, in 2021, the core PER is very high as the company reported very weak earnings during the Covid period.
Therefore, instead of taking the core PER directly from the most recent 5-years (as what most peoples did) for the averaging process, the PER values used to perform the averaging must be selected carefully to get the fair PER of a company, from my point of view. My modified criterion is below:
To get the averaged core PER of a company, the core PER values should be obtained only from those years where both reported and core earnings are trending upward year on year. This is to make sure there is a close valuation alignment between the market perception (mainly based on reported EPS) and the core business operation (based on core EPS).
The core PER values that satisfy the above criterion is highlighted in the red box shown in Figure 5, obtained from years 2013, 2015, 2018 and 2022. Averaging the core PER values from these years, the mean and median values are around 12.35 and 11.94, respectively. One may set the fair core PER of YSPSAH at 11.94 (on the conservative side).
The reported core EPS in year 2024 is RM 0.25. Based on the closing price as of 19 Dec 2025 (RM 2.09), the core PER is currently at 8.36 merely, a very undemanding valuation. The margin of safety [MOS = (11.94-8.36)/8.36] is around 43%!!
Is it a safe bet?
In terms of valuation, it is very attractive obviously. However, as long as USD stays weak against MYR, I believe the market would not favour YSPSAH, although the core profit is strong. Nevertheless, this might be a good opportunity for any value investors out there to accumulate the shares of a good company at a cheap price, isn’t it? As value investors, our role is to merely monitor its core earning and ensure it stays resilient.
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