Investors are eyeing IMP’s pharmaceutical stocks as potential hot picks

Favorable conditions of the Vietnamese pharmaceutical industry

According to KB Vietnam Securities Joint Stock Company (KBSV), the sustainable growth motivations of businesses in general come from 3 factors.

Firstly, compared to other Asian countries, pharmaceutical spending per capita in Vietnam had great growth potential when it reached 81 USD in 2022 compared to 116 USD in China and an average of 98 USD in Southeast Asia.

Next, the United Nations predicts that Vietnam is still in the golden age of population growth, but the aging rate will occur rapidly, increasing pressure on the health system, opening up growth prospects for the pharmaceutical industry.

Finally, according to Ms. Dao, "The percentage of people having insurance takes up to 90%. Especially in 2023, the  Party, State, National Assembly together with the Government paid special attention and introduced many mechanisms and laws to promote conditions for an adequate supply of medicine to serve people, especially those who are sick. The hospital must not lack medicine.”

Pioneering advantages in investing in technology

With a forward-thinking investment strategy, IMP has established itself as a pioneer in building factories that meet EU-GMP standards. This includes 11 production lines already certified, positioning it for a period of significant growth driven by international quality. Notably, IMP2 has recently achieved its second EU-GMP recertification, while IMP3 has secured its third. Futthermore, IMP4 is now operational and EU-GMP compliant, having already generated 80 billion VND in sales within its 5 first months. Finally, construction is underway on the large-scale IMP 5. Through these advancements, IMP is confident in its ability to deliver strong profit margins in the coming years.

2024’s plan for a high rate growing

In 2024, despite forecasts of continued challenges, IMP remains in its plan for positive growth. IMP’s General Director, Tran Thi Dao, outlined ambitious targets:  24% growth in gross revenue,  19% growth in net revenue, a pre-tax profit increase of approximately 12%, and an 18% rise in EBITDA.

“The ETC channel will remain crucial for Imexpharm”, Ms. Dao emphasized. “We will also continue expanding our raw material supplier base and developing competitive pricing strategies to capture market share in the ETC market and maintain momentum in the OTC channel.”.

Ms. Chun Chaerhan, Chairwoman of IMP Board of Directors, echoed the optimistic outlook. "This year”, she stated, “will be pivotal for strengthening our corporate governance capacity. As IMP continues its growth trajectory, robust internal structures are essential to achieve a sustainable business model, expand into new product lines and markets, and deliver significant breakthroughs in revenue and profit”.

Stable performance of the pharmaceutical sector 

Pharmaceutical stocks are becoming an attractive choice for investors. From January 2023 to April 2024, some pharmaceutical stocks have recorded outstanding growth momentum. Specifically, from January 3^rd to April 8^th of 2024, DP1 (Central Pharmaceutical CPC1) increased sharply by 84.8% from 18,563 VND per share to 34,400 VND per share while DMC (Domesco Medical Import-Export) increased from 39,624 VND/share to 64,400 VND/share (up to 62.5%) and DHG (Hau Giang Pharmaceutical) shot up to 115,000 VND/share from 82,291 VND/share (up to 39.7%). Moreover, DBT shares (JSC Ben Tre Pharmaceutical) increased from 10,227 VND/share to 12,500 VND/share (increased up to 22.2%).

Director of Analysis of Yuanta Vietnam Securities Company - Nguyen The Minh predicts that the growth rate of the pharmaceutical industry will stabilize at about 5.5%. Due to low debt level, the pharmaceutical industry shows the ability to minimize risks related to interest rate fluctuations.

“The pharmaceutical industry is characterized by regular dividends, attracting investors to apply long-term rather than short-term strategies. “This stability in dividend payments contrasts with the speculative nature of some other sectors, which prevents investors from seeking quick profits," Mr. Minh commented.

With outstanding business results compared to major competitors in the same industry, this year, IMP shareholders continue to "win" when the company implements a new dividend payment policy for the period of 2024 and 2025, which increases to 20% in dividend, including 10% cash dividends and 10% stock dividends.