Dhg Analysis
Autor: Mecghi123 • December 13, 2016 • Research Paper • 5,441 Words (22 Pages) • 749 Views
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[pic 2]Ticker: ●DHG | Recommendation: ●HOLD |
Price: ●VND 66,500 | Price Target: ● VND 74,597 |
2009 | 2010 | 2011 | 2012A | 2013F | 2014F | 2015F | 2016F | 2017F | |
(bn VND) | |||||||||
Net Sales | 1,746 | 2,035 | 2,491 | 2,968 | 3,569 | 4,319 | 5,263 | 6,460 | 7,989 |
Gross Profit | 924 | 1,019 | 1,209 | 1,497 | 1,649 | 2,223 | 2,704 | 3,391 | 4,356 |
Net Income | 362 | 383 | 420 | 541 | 527 | 829 | 946 | 1,220 | 1,638 |
EPS (VND) | 5,479 | 5,849 | 6,376 | 8,216 | 8,010 | 12,600 | 14,382 | 18,560 | 24,900 |
ROA (%) | 23.81 | 21.07 | 21.03 | 22.72 | 17.24 | 26.66 | 23.87 | 24.59 | 25.53 |
ROE (%) | 35.59 | 33.36 | 31.54 | 35.08 | 28.61 | 41.43 | 40.99 | 42.04 | 44.17 |
Highlights
- We recommend our target price of VND 74.597 with DHG shares and a HOLD recommendation. The stock is anticipated to gain 12.17% from current price of VND 66,500.
- Revenue is expected to record CAGR of 21% thanks to new plant operation and aggressive marketing strategy. In 2011, DHG has reported impressive revenue growth of 22.4% and growth in net income of 13.7%. High growth rate is supported by expansion in nutritious drugs, strong distribution channel and marketing activities. Stable relationship between DHG and hospitals also contributes to rapid growth rate in the next 5 years.
- Strong cash flow and abundant cash generated from operation: For the past 5 years, DHG generated a stable cash flow despite gloomy picture of macroeconomics. At the moment, DHG’s free cash flow is reported at VND 273 bn, helping the company to finance capital expenditure. Free cash flow is seen to decline in 2013 due to investment in new factory but then rebound from 2014 and reach VND 1000 bn in 2017
- Main risk to price target: Uncertainty in Vietnam’s economic situation and the concern of high inflation intensify the threat of further VND devaluation. Other significant risks comes from material price increase (80% of DHG’s materials is imported) and labor cost (minimum salary has increased 26% in 2012). These factors, combined with increasing competition, especially foregin firms, will heavily affect the target profitability of DHG.
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(Source: Bloomberg)
Business Description [pic 4]
Hau Giang Pharmaceutical Jsc (DHG) was established in 1974 in Ca Mau Province, Viet Nam as a stated owned company. Through long process of development, DHG has gained high level of consumer trusts thanks to high quality products at affordable prices. In September 2001, Hau Giang Pharmaceutical United Factory was equitized to become DHG Pharmaceutical Jsc with initial chartered capital of VND 80 billion. According to DHG’s 2011 Annual Report, the company has only 2 major shareholders, SCIC with 43.44% and Templeton Frontier Markets Funds (Luxembourg) with 8.05%.
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