Cập nhật DHG – KHẢ QUAN

HAU GIANG PHARMACEUTICAL (DHG VN)

The company maintained the leading position in terms of both top and bottom lines among listed Vietnamese pharmaceutical manufacturers; however, EBT growth returned to normal in 2023 from the high base in 2022 and a slight decline is set for 2024. Revise rating from BUY to OUTPERFORM with a revised target price of VND127,400/share, 11% lower than the previous update.

DHG announced net revenue of VND5,015bn (+7.3% YoY) and EBT of VND1,159bn (+5.4% YoY) in 2023.  In which, finished products, capturing 88% of DHG’s net revenue, grew by 5.7% YoY.  

The pharmacy channel continued to be DHG’s key earner. Antibiotics and analgesic-antipyretic remained the company’s largest product categories, followed by cardiovascular category, although the company did not publish a breakdown. 

The company’s gross margin shrank to 46.7% in 2023 (2022: 48.3%) while the SG&A expenses to net revenue ratio climbed slightly to 25.7% in 2023 (2022: 25.3%). Financial profit surged 253% YoY, thanks to interest income, contributing to the EBT. A high level of cash sustained, with the net debt to equity ratio of -36.1% at YE2023 (i.e net cash).

For 2024, DHG set a conservative plan of VND5,200bn in net revenue (+3.7% YoY) and VND1,080bn in EBT (-6.8% YoY). The decline in EBT is attributed to an expected fall in financial profit. 

In sum, our projections for DHG’s net revenue and EAT are VND5,205bn (+3.8% YoY) and VND1,089bn (-6.0% YoY) in 2024, 18% lower than our previous earnings forecast due to lower revenue growth projection to reflect the company’s conservative view about 2024. Combining DCF and PER methods, our target price for DHG is VND127,400/share (~ total return of 17.8%), 11% lower than the previous update.