Imexpharm Investor Relations News – Quarter IV 2020

By Quốc Huy
05/02/2021 - 17:04

I. VIETNAM ECONOMY IN 2020, OPPORTUNITIES AND THREATS IN 2021

In 2020, Vietnam has become a bright point of growth in the globe. In detail, the gross domestic product (GDP) of Vietnam increased 2.9% while the world economy could drop at least 4% according to World Bank induced by the Covid-19 pandemic. The ability to control the pandemic and maintain businesses and productions have contributed to strengthening Vietnam to overcome the negative effects of the pandemic. However, it should be considered that the growth rate of 2020 is the lowest in 10 years. The proportions of the sectors can be shown as followed: the first position is industry and construction: 53%, the next is service: 33.5% and last one is agriculture and forestry: 13.5%.
The productivity of Vietnam labors has been rising. Based on the figures of the General Statistic Office, current labor productivity is 5,081 USD/worker increasing 291 USD/worker compared to the year of 2019. This positive signal showed that productivity has been enhanced, the levels of workers are improved. In the context of disruption of the global supply chain, Vietnam had an export surplus of 19.1 billion USD, going up by 8.2 billion years over year. The United States of American was the largest export market of Vietnam with the value of 76.4 billion USD, rising 24.5% in comparison with the earlier year; the second rank was China with 48.5 billion USD, increasing 17.1%; EU export market was 34.8 billion USD, going down about 2.7%; South Korea export value was 18.7 billion USD, decreasing 5.1%. in terms of import market value, China was the biggest one with the volume of 83.9 billion, increasing 11.2% year over year, the next position was South Korea with the value of 46.3 billion USD, declining 1.5%, ASEAN market achieved about 30 billion USD, decreasing 6.9%; Japan market reached 20.5 billion USD, rising 5%; EU market was 14.5 billion, growing 3.5% while the USA market was 13.7 billion USD, going down by 4.9%
Vietnam is persevering to follow the duo targets which mean fighting with the pandemic and boosting the economy. The policies of the Vietnam government until now are very effective and shown clearly via the impressive economic picture of 2020. However, Vietnam’s economy has been relying on exports and sticking to the world economy; therefore, Vietnam’s economy only fully recoveries and catches the momentum as ever if the pandemic has been controlled globally.
In 2021, the forecasting of Vietnam’s economy is still bright. According to the assessment of the World Bank, Vietnam’s economy would increase by 6.8% while International Monetary Fund (IMF) predicted that the growth rate of the Vietnam economy might be 6.5%. In the 10th meeting of the National Assembly XIV, the Government has launched the target of 6%, which is set conservatively and may be lower than the potential resources of Vietnam. But this is coming from the low growth rate in 2020 and uncertainties of the world economy.

II. VIETNAM PHARMACEUTICAL INDUSTRY IN 2020 AND FORECAST FOR 2021

The pharmaceutical industry as well as other industries have been influenced by the pandemic although medicines are necessities. According to a survey done by Vietnam Report in 2020, there were 64.3% of enterprises saying that the impact of the pandemic on the pharmaceutical industry is pretty serious, while 7.1% of firms considered that the effects are serious and 28.6% of companies stated that the impacts were less serious.

This survey also emphasized that the main difficulty pharmaceutical enterprises encountered is the change in demand for use. The less necessary medicines had a downward trend while pain relief, antipyretic drugs, and vitamins have strong sales together with medical tools such as masks, sanitized water. Besides, the government enforced the law to strictly control the pandemic in hospitals, which caused huge impacts on the ETC channel because the residences tried to restrict to go to the hospitals. Enterprises have been facing problems of supply chain disruptions, difficulty to buy materials while most raw ingredients for the pharmaceutical industry have to be imported from foreign countries mostly being China and India. However, the pharmaceutical and medical industry of Vietnam has many accomplishments in 2020, becomes a “star” and values to be praised. In detail, the fighting with the pandemic of Vietnam government and ministry of Health was very effective, the pandemic was under controlled in 2020 and the Vietnam pharmaceutical industry provided sufficient medical tools and drugs for domestic treatment and exports.

III.  IMEXPHARM STOCK MOVEMENTS

In 2020, there were 24,296,972 IMP stocks traded (which is not counted the volume dealt via State Securities Commission). This number is very impressive while the amount of 2020 increased 3.7 times compared to 2019. The volume of ordered matching stocks was 21,965,300 and there were 2,331,672 stocks traded by put through the method. The appearance of the strategic shareholder-SK group together with the expectation of investors on the resilience and fast recovery of pharmaceutical stocks after the crisis has made IMP stock more attractive. In 2020, Imexpharm has issued stocks to pay dividends (10%), offer stock awards (20%), and ESOP (5%). As of December 31st, 2020, there were 66,671,570 outstanding IMP stocks.

IV.  IMEXPHARM OPERATION IN 2020 AND KEY OBJECTIVES IN 2021

  1.  Business results of 2020
STT Criteria 2020 % Plan 2020 2019 Growth rate
I Operational results (billion dong)      
1 Total net revenue and income 1,382.3 79% 1,420.7 (2,7%)
2 Net revenue 1,369.4 1,402.5 (2,4%)
3 Operating profit 252.5 194.4 29.9%
5 Profit before tax 255.4 98.2% 202.4 26.1%
6 Profit after tax 209.7   162.4 29.1%
II Asset-Liability (billion dong)        
1 Total assets 2,096.5 1,847.2 13.5%
2 Owner equity 1,730.5 1,558.9 11.0%
3 Charter capital 667.1 494.2 35.0%
III Liquidity ratios (time)        
1 Current ratio 2.8 3 (0.2)
2 Quick ratio 1.6   1.6 (0.0)
IV Liquidity ratios        
1   Profit before tax/Net revenue 18.7% 14.4% 4.3%
2 ROS 15.3% 11.6% 3.7%
3 ROE 12.8% 10.6% 2.2%
4 ROA 10.6% 9% 1.6%
5 EPS (adjusted) 3.245 2.528 28.3%
6 BV (dong) 26,782   24,281 10.3%
7 P/E (times) 17.3   17 0.3
8 P/B (times) 2.1   1.8 0.3
Market price at  Dec 31st  (dong) 56,300   42,900 31.2%

Total net revenue and income of Imexpharm in 2020 reached 1,382.3 billion dong, which dropped about 2.7% year over year and met 79% of the annual plan. Revenue decreased and followed the trend of the market in the turmoil year of Vietnam’s economy as well as the world economy. Net revenue correspondingly declined by 2.4% compared to last year. Imexpharm still played an important role in revenue structure and made up about 93.4%. Revenue of franchising products in 2020 decreased by 26.1% year over year, which is equal to the drop of 25.1 billion dongs. OTC revenue in 2020 witnessed a plummet of 10.5% due to the decline of aggregate demand, especially in quarters 2 and 3. Although ETC went up by 20.1%, it was not enough to compensate for the decrease of OTC.
However, the bright point of Imexpharm operation in 2020 was the sustainable development of profit. To make it clear, profit before tax increased 26.1% and profit after tax surged 29.1%. Imexpharm has not distributed Science and Technology Fund in 2020.
Cost of goods sold decreased nearly 6% year over year thanks to restructuring product portfolio, concentrate to the high margin ones. On the other hand, stockpile materials to tackle the problem of price increase will support to maintain the product cost. Selling and administrative expenses have been well controlled. Selling expenses in 2020 dropped by 5,3% compared to the previous year while administrative expenses declined 28.5%. On the whole, Imexpharm has controlled its operations well in the challenging year.
Besides profit, total assets and owner’s equity both went up in comparison with 2019. Total assets increased by 13.5% due to the record of machines and equipment of IMP4 factory as well as health protecting foods plant. Owner’s equity grew due to an increase in profit. The Charter capital rose because of new issuance for stock dividends, stock award, and ESOP.
The current ratio of the Company was improved in quarter 4 compared to the previous quarter due to the decrease of borrows and short-term debt. However, this figure slightly dropped year over year, quick ratio was kept stably compared to last year.

2. Update remarkable activities of Imexpharm in 2020

In 2020, most activities of Imexpharm have focused on fighting the pandemic. Firstly, the Company has to protect employees, especially those who work at high risk of infection conditions as well as enhance the disseminate protections and provide masks, sanitizers for all staff.
Furthermore, risk management has been concentrated, Imexpharm had to control expenses, cash flow to deal with market uncertainties. Marketing activities for OTC and ETC channel were postponed due to the impacts of social distancing orders. However, Imexpharm put best efforts to meet the profit target while the revenue went down together with the whole market.
In 2020, Imexpharm welcomed the strategic shareholder-SK Group from South Korea. The debut of SK is expected to create many advantages for Imexpharm in accessing new technology as well as support the company to diversify suppliers all over the world.
To add more capital for business operations, Imexpharm signed a contract with Asian Development Bank (ADB) for the loan of 8 million USD in 2020. The support of ADB will help Imexpharm more active in the material stockpile to maintain business continuity plan. The agreement with ADB has emphasized the credibility of Imexpharm brand.

3.  Imexpharm strategies in 2021

In 2021, Imexpharm continues to implement the strategy to boost EU-GMP accreditation for IMP4 factory and sales of ECT channel; register EU visa for many products to improve bidding competitiveness in group 1. Besides, the Company is going to restructure the product portfolio for the OTC channel, focus on effective products.
Controlling expenses, cash flow have to be strictly followed. Fluctuations in the domestic and international market are difficult to predict in 2021; therefore, the Company has to continuously follow the target of stable, sustainable, and conservative development in uncertain situations.
Imexpharm will boost international cooperation with the strategic partner and others to create sustainable values, mitigate risks of lack of materials as well as look for export markets to grow.
The Company will closely follow the price trends of materials to have an appropriate and timely solution to reduce the risk of the price increase. Moreover, Imexpharm will control tightly inventory to avoid a high volume of stocks negatively impacting the Company cash flow.
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