Company Quarterly Earnings Update – IMP VN – 2019 Q4

Published On - March 13, 2020

TIM COMPANY RESEARCH

Summary of the 2019 results of Imexpharm Pharma. JSC (IMP VN) 

2019 results: highlights
  • 2019 revenue was up by 15.0% y/y, with Q4’s higher by 26.2% y/y. The increase was thanks to higher sales to hospitals as products from the newly added production facilities successfully bid in public auctions for social medical insurance. Sales to pharmacies (~two thirds of IMP’s total sales) remained stagnant because of the stringent enforcement of Good Pharmacy Practices (GPP).
  • Net profit was VND162bn, +17.1% y/y, marginally higher than our last estimate.
  • Financial position remained solid with only a modest leverage (D/E of 0.02x).
  • The last factory of the recent year’s investments, the IMP4 plant in Binh Duong, was initially expected to get its EU GMP in Q2/2020. However, the certification procedure may be delayed as the certifiers from the EU find it more difficult to travel due to the Covid-19 outbreak.
Outlook
  • The company’s management estimates that the Vietnamese pharmaceutical market has grown by 12% in 2019. But no official data is released yet. However, this estimate matches FitchSolutions’ anticipation of a 11.0% CAGR till 2027.
  • The Covid-19 outbreak has both a positive impact (higher demand for supplement and antibiotics) and a negative impact (potential shortage of raw materials, API’s) on IMP. The company has a sufficient raw material inventory till the end of H1. As for H2, the contracts for raw material purchases have been signed with fixed prices. However, if the API production in China is delayed further (unlikely in our view) than the plan to resume in mid-March, there might be some shortage in H2.
  • We forecast IMP’s revenue to increase by 25.4% in 2020 and by 22.5% in 2021. IMP is expected to enjoy above average industry growth thanks to similar drivers as in 2019. We also expect similar profitability as the Covid-19 impact is minimal as said above.
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