Company update – DHG (Hold)

DHG Pharmaceutical JSC​ – ​Hold​ (DHG : HSX​ – ​Pharmaceuticals & Biotechnology)
  • Hau Giang Pharmaceutical JSC (DHG – HOLD) just released their unaudited consolidated results for FY2018 calling for a 4.3% decline in the top line to VND 3,888 billion with a 1.8% increase in PBT to VND 732.3 billion.
  • The improvement in margins were mainly due to better product mix with higher contribution from in-house medicine coupled with the reversal of provisions in FY2018.
  • In-house medicine sales increased by only 4.0% y/y in this period, while the trading segment declined by 27.2% y/y as expected.
  • The Vietnamese Government is now tightening management of prescriptions by applying information technology measures. This would have negative impact on in-house medicines of DHG in the short-run. 
  • For FY2019, HSC forecasts 7.7% growth to VND 788.8 billion in pre-tax profits while net sales will be flat y/y at VND 3,915 billion.
  • Assuming there is no change in the AOS this leads to an EPS of VND 4,847, and thus values the stock at a forward PE of 17.3 times.
  • Reiterate HOLD.

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