Company Quarterly Earnings Update – IMP VN – 2020 9M

Summary of the 2020 9M results of Imexpharm Pharma. JSC (IMP VN) 

9M/2020 results: highlights
  • Revenue was VND882bn, -0.4% y/y. Sales was weak in Q3 with a decline of 11.5% y/y as the second wave of Covid-19 hit Vietnam between July-August. Own-product revenue made up 95% of the total revenue. The strong growth of 33.1% of sales via hospitals could not offset the decline of 26.8% y/y in sales via pharmacies. In Q3 sales via hospitals already accounted for more than half of the total revenue. All the increase in hospital sale was from products of the EU-GMP factories.
  • Net profit was VND139bn, +26.1% y/y. Operating margin improved to 19.2% from 14.8% in the same period last year. Drivers of the improved margin are: 1) stronger contribution of high-margin drugs; 2) lower selling expenses for sales to hospitals than sales through the pharmacy channel; and 3) cut in administration expenses during the pandemic.
  • The financial position remained solid, although leverage increased moderately (D/E of 0.12x). All loans are short-term and carry low interest rates.
Outlook
  • Covid-19 is well contained in Vietnam and people have returned to normal activities. For IMP, the EU-GMP certification of IMP4 continues to face delay till probably early 2021 because of Vietnam’s existing travel restriction for travelers from Europe, which will shift the potential revenue stream from this factory to Q4/2021. On the demand side, we see no change from our last assessment that sales to hospitals for public insurance coverage will continue to be robust thanks to the government’s priority for domestically-produced drugs.
  • For 2020, we revised down our last revenue estimate by 11% because of the lower sale in Q3 while keeping the net profit estimate (VND199bn, +22.6% y/y) thanks to higher profitability as shown in the 9M performance.
  • For 2021, we estimate net revenue to grow by 22.3% to VND1,735bn and net profit to grow by 15.4% to VND229bn.
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