After great results in 2020, pharmaceutical stocks (IMP) await a good year ahead

Social distancing and strict control at hospitals, and an economic recession due to COVID-19, resulted in lower sales of both prescription and non-prescription drugs. However, many companies still witnessed outstanding performance.

 

In the fourth quarter financial results, Central Pharmaceutical JSC No3 (DP3) reported a gain of eight per cent year-on-year in net revenue, but its profit after tax was 11.6 times higher than that in 2019 to VND38.2 billion.

The good result was due to a strong increase in financial activities income (up 15.2 times), and a decrease in interest expenses (down 20.7 per cent) and other expenses (down nearly 70 per cent).

Last year, the company’s profit after tax was VND114.05 billion, 13 times higher than that of 2019.

Imexpharm Corporation (IMP)’s net revenue in the last quarter of 2020 dropped 5.6 per cent year-on-year to VND478 billion. But a decline in costs of goods sold (nearly 12 per cent), general and administrative expenses (52.4 per cent) and other expenses (70.5 per cent) helped its profit after tax rise against the same period of 2019.

Imexpharm saw an increase of 35.3 per cent in profit after tax in the fourth quarter of last year to nearly VND70.4 billion. For the whole of 2020, its profit after tax rose over 29 per cent to VND209.7 billion.

Another drug company seeing good performance last year was Traphaco JSC (TRA). In the fourth quarter, Traphaco posted a rise of 11.6 per cent in revenue to over VND602 billion. Its profit after tax increased by 20.1 per cent to VND75.3 billion in the same period.

In 2020, the company’s profit after tax climbed nearly 27.2 per cent to VND216.75 billion.

Similarly, DHG Pharmaceutical JSC (DHG)’s profit after tax increased by 2.76 per cent year-on-year to VND209.5 billion in the last quarter of 2020. Its profit after tax also rose slightly by 1.2 per cent to VND738.5 billion in 2020.

Even though seeing a decrease of 11.3 per cent in the last quarter last year, Binh Dinh Pharmaceutical and Medical Equipment JSC (DBD)'s profit after tax still posted a gain of 14.4 per cent for the whole year.

Pharmaceutical stocks still attractive investments

In an industrial report, SSI Securities Corporation expected that the pharmaceutical industry will recover and grow by 15 per cent in 2021, mostly because demand for health checks wase growing and social distancing orders were being eased.

“We estimate that spending on healthcare will be back to its normal level in 2021, when social distancing orders are loosened and demands for health checks recover,” SSI wrote in its report. A rapidly aging population and increasing incomes also support the industry, the securities firm added.

All these factors make drug stocks more attractive this year.

“Pharmaceutical stocks are very promising. I have seen many investors, including foreign investors, searching for new prominent pharmaceutical stocks to invest in,” a senior market analyst told Viet Nam News on the condition of anonymity.

Last year, the total value of merger and acquisition (M&A) deals in the industry was VND1.68 trillion (US$73 million) and they involved a number of foreign investors such as the deal worth VND350 billion of Japan’s Aska Pharmaceutical in Ha Tay Pharmaceutical JSC (DHT).

On Tuesday, DP3 shares were traded at VND109,700, up 4.48 per cent. TRA shares increased 2.27 per cent to finish the day at VND67,500 while DHG gained 1.39 per cent to VND101,900.

Meanwhile IMP’s share price declined by 2.06 per cent to VND61,700. 

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DBD 46,500 500 +1.09%
DHG 99,300 200 +0.20%
DHT 52,000 -300 -0.57%
DP3 124,500 0 %
IMP 72,600 0 %
SSI 35,250 50 +0.14%
TRA 71,000 -1,000 -1.39%

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