Company Quarterly Earnings Update – IMP VN – 2020 H1

Summary of the 2020 H1 results of Imexpharm Pharma. JSC (IMP VN) 

H1/2020 results: highlights
  • Revenue was up by 6.0% y/y, dropping from the Q1 growth of 11.2% as declines in pharmacies sales offset robust growth from hospital sales. The decline in pharmacies sales was due to panic buying of pharmaceutical products in Q1 for fear of medicine shortage during the pandemic. The stockpiling was alleviated in Q2 when Vietnam well contained the spread of COVID-19. Meanwhile, sales to hospitals and clinics increased substantially thanks to the successful auctions of high-quality antibiotics produced by IMP’s new EU-GMP qualified factories.
  • Net profit was VND88bn, +28.3% y/y. Operating margin improved to 19.2% from 15.6% in the same period last year. Sales to hospitals/clinics incurred less selling expenses than sales through the pharmacies channel.
  • The financial position remained solid with only minimal leverage (D/E of 0.04x).
  • 2019 dividend of VND1,000/share will be paid on 31 Jul (ex-date 14 Jul).
  • For 2020, we revised down our revenue estimate by 8% to VND1,607bn (+14.6% y/y) solely because of the lower than expected sales in Q2 to both hospitals and pharmacies. Nevertheless, H2 sales will likely return to a robust growth of 20% y/y to VND1,015bn. The reason for such tremendous growth is because in Q4, hospitals would usually hold auctions for medical products, which IMP has an exceptionally high chance of winning due to 1) the company’s high-quality products, and 2) the government’s regulation to prioritize domestically-produced drugs. We also see pharmaceutical consumption normalizing from the low level in Q2.
  • Profitability is revised up following H1 development. Net profit estimate of VND199bn (+22.8% y/y) is thereby unchanged from our last expectation.
  • For 2021, we estimate revenue & net profit to grow by 29.9% & 21.7%, respectively.

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