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Company Quarterly Earnings Update – DBD VN – Q4 2023
Summary of the 2023 results and outlook of Binh Dinh Pharmaceutical and Medical Equipment JSC (DBD VN)
- Net revenue reached VND1,652bn (+6.2% y/y), mainly driven by pharmaceutical sales, particularly in the hospital (ETC) channel (+13.9% y/y). Of which, revenue from anti-cancer drugs, antibiotics, and dialysis solutions advanced by 17.5% y/y, 15.6% y/y, and 11.5% y/y respectively, driven by the government’s prioritization of local drugs with similar quality and lower price than imported products. OTC sales grew modestly by 4.0% y/y due to (1) normalized demand for flu-related products and (2) reduced consumption of vitamins/supplements amid the economy’s decelerated growth. Gross margin decreased to 48.3% due to the increase in API prices. The effective tax rate declined to 15.9% due to the tax incentives from the anti-cancer factory. Overall, net profit increased by 10.4% y/y to VND269bn.
- Solid financial position: Cash and short-term investments accounted for 15.5% of total assets. Leveraging was low with D/E and D/A ratios of 0.06x and 0.04x respectively.
- DBD’s projects are progressing as scheduled. The injectable line of the anti-cancer factory has been operated under GMP-WHO standards at an approx. 30% utilization rate. The oral line is expected to start commercial operation in early 2025. DBD plans to apply for the assessment of GMP-EU standards for both lines by the end of 2024. Meanwhile, DBD started the construction of the aseptic factory in December 2023, expecting to commence commercial operation by the end of 2026.
- Going forward, the rising treatment demand for chronic diseases and the new bidding law’s enforcement will support ETC sales. Demand from the OTC channel is expected to align with the sector’s growth rate. Meanwhile, the additional production capacity from the projects mentioned above will allow DBD to capture the demand growth.
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