DBD — Company Visit — September 2024

DBD targets +17.1% sales CAGR in 2023-2030. DBD’s revenue reached VND1,652bn in 2023, and management’s goal is for sales to reach VND 5,000bn by 2030. Management argues that this approximate tripling of revenues is achievable given its planned capacity expansion and upgrades.

Upgrading and expanding production. DBD is now upgrading two of its existing plants with the goal of achieving EU-GMP standards for pharmaceutical quality. Management plans to complete these upgrades in 2026. Additionally, DBD plans to expand capacity in small-volume injection and non-Betalactam OSD facilities, which is expects to add VND1.8tn to annual revenues by 2030.

New equity funding to support capex. DBD plans to issue 23.3mn new shares at VND50k each, 19% higher than the closing price of Sep 17 (VND 42,000), to five professional investors, with the shares restricted for one year. The purpose is to fund the small-volume sterile drug plant and non-Betalactam OSD facility.

1H24 PBT declined, along with gross margin. 1H24 revenue increased by +3% YoY to VND817 bn. However, 1H24 PBT slid by -6% YoY to VND166bn, reaching 52% of DBD’s annual target. The decline in PBT was due to a -1ppt YoY reduction in gross margin to 49%, which management attributes to lower ASPs amid intensified competition.

DBD is trading at 14.7x TTM P/E, slightly lower than the sector median. But the company exhibits superior profitability with TTM ROA of 13.8% (far higher than the industry median of 7.2%) and ROE of 19.3% (vs. just 13.0% for peers). This performance is supported by net profit margin of 16% (flat YoY). The company’s balance sheet leverage is relatively low, with a net cash position as of 2Q24.

Risks: 1) Delays for the EU-GMP standard upgrade, 2) competition from a major Indian rival that is now making headway in the Vietnam market, 3) regulatory risk related to drug approvals could be an industry-wide concern from 2025.

Please access the link for our complete report: 20240917 DBD Company visit EN M 3

Analyst:

An Nguyen, An.nguyen@yuanta.com.vn

Binh Truong, Binh.truong@yuanta.com.vn