Summary of the H1/2019 results of Imexpharm Pharma. JSC (IMP VN)
H1/2019 results: highlights
- IMP’s revenue increased by 8.8% y/y. The own product group (+11.0% y/y) made up the bulk (90.8%) of the company’s overall revenue. Within this group, the two distribution channels hospitals and pharmacies saw quite different developments: Whereas hospital revenue increased strongly by +52% y/y, revenue at pharmacies inched up by 1%y/y only. We expect the robust growth of the hospital channel to continue. Pharmacies should do better going forward as well; the disappointing result in H1/2019 happened because of the stringent enforcement of Good Pharmacy Practices (GPP), which is likely to be a one-off effect.
- The net margin was nearly unchanged and net profit was 68bn, +7.8% y/y.
- IMP’s financial position remained solid with modest leverage (D/E of 0.05x).
- Circular 15/2019 from the Ministry of Health (MoH) was released in Jul 2019. Together with Pharmaceutical Law of 2016, it governs the drug procurement for the use in the social health insurance. These regulations are favorable for IMP.
- IMP2, which has got the EU-GMP certificate in Jan 2019, has started to operate commercially. IMP4 is on track to get the same certificate by the end of 2019.
- Our 2019 earnings outlook now trails our last estimate by 6%, due to H1 lower than expected pharmacy sales. The revised net profit estimate is VND160 bn, +15.6% y/y.
- From 2020 till 2023, we think that IMP can grow its revenue by a CAGR of 14.4%, driven by an increase of 7.0% p.a. for pharmacy sales and by an increase of 25.3% p.a. for hospital sales. During this period, we expect the net profit CAGR to grow by 16.3%, slightly higher than revenue growth.
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