Company Quarterly Earnings Update – TNH VN – 2021 9M

Summary of the 2021 9M results of Thai Nguyen International General Hospital JSC (TNH VN)

9M/2021 results: Highlights

  • Net revenue grew by 31.7% y/y to VND308bn thanks to (1) the total number of hospital visits reaching 247,407 (+33.0% y/y) including outpatients (222,868 visits, +36.0% y/y) and inpatients (24,539 visits, +18.0% y/y), (2) a 15.1% y/y rise in the average service fees since February 2021.
  • The gross margin increased to 52.4% from 46.1% in 9M/2020 owing to (1) a 15.1% increase in the average service fees, (2) a higher proportion of COVID testing services (quick test and PCR test) which have low CAPEX investment and higher profitability. As a result of robust sales growth and greater gross margin, operating profit increased by 46.8% y/y. However, interest expenses soared by 84.1% y/y due to a new loan for Thai Nguyen International Hospital’s expansion and additional working capital, resulting in a lower net profit growth of 36.8% y/y to reach VND110bn, with a net margin of 35.6% (+13bps y/y).
  • Financial health: 1% of total assets are cash and deposits. Leveraging was moderate with D/E and D/A ratios of 0.6x and 0.4x, respectively.
  • EGM updates: 25% of the 2020 stock dividend of will be executed from December 2021 to January 2022. Following that, in Q1/2022, current shareholders will have a 2:1 right to purchase new shares at VND16,000/share.

Outlook 2021-2022

  • For 2021: we maintain our forecast that net revenue and net profit will increase strongly by 45.0% y/y and 44.2% y/y to VND487bn and VND158bn respectively thanks to (1) a 11.7% growth in the total number of patients, (2) a 15.1% rise in the average service fees, (3) achieving economies of scale with Thai Nguyen International Hospital (TIGH) and Yen Binh General Hospital (YBGH).
  • For 2022: TNH will finish the TIGH’s 50-bed expansion in H1/2022, YBGH’s 150-bed expansion, and a new Maternity Hospital in Q4/2022. Overall, we project total consolidated net revenue to rise by 19.5% y/y to VND582bn, and a net profit of VND183bn (+15.5% y/y).

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