IMP Update – NEUTRAL

IMEXPHARM CORP (IMP VN)

The company retained growth of 10.6% YoY in net revenue and 7.1% YoY in EAT in 2024, from the high bases earlier. 2025 EAT is expected to generate decent growth of 18% YoY given that the company may continue to foster high-value products, advanced production standards, and impact from higher depreciation due to incorporation of IMP4 would normalize. Our target price for the stock by YE2025 is VND48,200/share, equivalent to a total return of 3.9%. Rating NEUTRAL.

IMP announced (unaudited) net revenue at VND2,205bn (+10.6% YoY) and EAT at VND321bn (+7.1% YoY) in 2024, reflecting a normalization following stunning growth in 2022-2023. Sales of finished goods captured almost 100% of its net revenue. 

Net revenue growth was driven by a jump (of 45% YoY in our estimate) in the hospital channel, which outpaced the pharmacy channel and become IMP’s largest earner. The pharmacy channel was estimated to fall by 7% YoY, including a 74% YoY rise in retail chains – whose share in IMP’s pharmacy sales was still humble at 9% in 2024. 

Value growth, thanks to increased demand for high-value products, has facilitated the expansion of production at its EU-GMP certified factories (i.e IMP2, IMP3, besides the new addition of IMP4) despite dull volume growth (details on the consumption side were unavailable). Antibiotics remain their most crucial products, accounting for 76% of IMP’s sales.

Divergence in EAT and revenue growth was attributed to a squeeze in gross margin, primarily due to higher depreciation as IMP4 came online from 3Q2023. However, this impact was offset notably by a well-controlled SG&A expenses to net revenue ratio.

The company is working to set up a new EU-GMP factory – IMP5, aiming at more complicated drugs beyond antibiotics (e.g cardiovascular, diabetes, etc.). The factory is expected to start construction in 3Q2025 and go into operation in Dec 2028 – 1Q2030.  

Net revenue and EBT growth (EAT was unavailable) reached 18% YoY and 16% YoY respectively in 2M2025. While the hospital channel sustained vigorous growth of 32% YoY, the pharmacy channel also witnessed improvements with 18% YoY sales growth.

Outlook: We project that the company may deliver VND2,510bn of net revenue (+13.8% YoY) and EAT of VND372bn (+15.9% YoY) in 2025, fueled by the company’s continued investments in high-value products, advanced production standards, and that impact from higher depreciation due to incorporation of IMP4 would normalize.