Company Quarterly Earnings Update – DBD VN – Q3 2022

Summary of the Q3/2022 results and outlook of Binh Dinh Pharmaceutical and Medical Equipment JSC (DBD VN)

  • Net revenue slightly declined by 5.5% y/y to reach VND1,090bn. However, pharmaceutical sales (accounting for 94.3% of total revenue) continued to grow by 18.6% y/y. Of which, the sales contribution between hospitals (ETC): and pharmacies (OTC) was 58:42. DBD’s major products of cancer treatments, dialysis solutions, and injectable antibiotics grew 58.0% y/y, 23.0% y/y, and 47.0% y/y respectively. The gross margin improved to 49.7% thanks to a greater sales contribution from high-margin pharmaceutical products, and a lower API price from the peak during COVID. SG&A expenses as a percentage of sales increased to 31.7% due to higher marketing activities in the OTC channel. Overall, net profit reached VND165bn, up 21.8% y/y.
  • 9M/2022 Financial position: Cash & short-term investments accounted for 14.3% of total assets. D/E and D/A ratios were at low levels of 06x and 0.05x, respectively.
  • Project update: The cancer-medicine factory, which is operating to GMP-WHO standards, expects to receive the GMP-EU standards for the injectable line by Q2/2023 and the tablet line by Q2/2024. For the non-betalactam factory, DBD plans to commence construction after the Tet holiday in 2023.
  • Going forward, ETC sales of domestic medicines will increase due to higher health insurance coverage and the government’s prioritization of local products (with similar quality to foreign brands but at lower prices) for national insurance scheme medicines. Demand for cancer treatment and dialysis solutions will rise as cancer and kidney-related illness have increased rapidly. Meanwhile, COVID/flu product consumption will normalize, and OTC sales will be driven by vitamins/supplements.
  • For 2022, we forecast revenue and net profit to be VND1,472bn (-5.5% y/y) and VND216bn (+17.5% y/y), reflecting an improved margin of pharmaceutical sales. 2023’s revenue is projected to rise by 26.0% y/y to VND1,854bn, of which, pharmaceutical sales will be driven by the added capacity from the GMP-EU cancer factory. The gross margin will expand to 49.7% in 2022 and slightly narrow to 49.3% next year, assuming the imported API will be more expensive due to VND’s depreciation against the USD. All in all, we project 2022 and 2023 net profit to stand at VND216bn (+17.5% y/y) and VND271bn (+25.7% y/y) respectively.


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