I, ABOUT TRAPHACO
1. An introduction to the company
- Traphaco Pharmaceutical and Medical Transport Joint Stock
Company is one of the leading business and production units in
Vietnam's medical industry. The company is now a financially
autonomous joint venture, responsible for its business results,
independent economic accounting, and under the management of the
Ministry of Transport. The company has full legal status in
accordance with the law of Vietnam, has its own seal, independent of
assets, is allowed to open accounts at the State Bank, banks at home
and abroad in accordance with the law. But that is not the reason why
the company only pursues profit, on the contrary, the company
always ensures the proper business process and checks and preserves
the quality of the medicine because medicine is a special product for
prevention and treatment. Serve directly to human life and health
- With more than 47 years of construction and development, Traphaco
is recognized as the most famous brand in Vietnam's Pharmaceutical
Industry. Starting out as a production unit of the Railway Medical
Department established on November 28, 1972, with the mission of
serving railway workers, Headquartered at 75 Yen Ninh - Hanoi with
the Department. Railroad Health. In August 1993, the company was
transferred to the Ministry of Transport to manage, the railroad
pharmaceutical factory changed its name to Traphaco pharmaceutical
company under the management of the Department of
Transportation. On July 5, 2001, the Company was changed to
TRAPHACO Joint Stock Company, with the aim of diversifying
business lines in line with the new economic trend. Main business
lines: Pharmaceuticals, Pharmaceuticals, Chemicals, Materials and
medical equipment,... Traphaco Joint Stock Company is listed on the
stock exchange: on November 26, 2008, initial charter capital of
VND 80 billion, with the number of shares listed for the first time is
8,000,000 shares listed on the Ho Chi Minh Stock Exchange (HOSE)
under the stock code TRA.
- Over many years of production activities, Traphaco Joint Stock
Company has had many changes in name, scale and form of
operation. Since moving from centralized planning mechanism to
market mechanism, along with the development of social production
capacity, the company has constantly changed to keep pace with the
market. The plan development is autonomous, based on clear market
research, plus focusing on investing in human resources, the
company has made great strides. Especially with the great progress of
equitlization, the company has really prospered, Traphaco has
become a famous pharmaceutical brand, the company's products are
loved and trusted by many people, and become become one of the
leading enterprises in high quality Vietnamese goods
2. Vision, Mission, Core values and Short term, Long term strategy
a, Vision
- Vision 2020 to become No. 1 Enterprise Vietnam Pharmaceutical
industry in terms of revenue, profit and market capitalization
b, Mission
- Their mission is to pioneer in the development of green
pharmaceuticals to protect human health
c, Core values
- Pioneering: Take a lead in governance of green value chains,
innovation and application of new technologies and knowledge
- Creativity: Create high-quality products and services that are
unique in the Traphaco's achievements
- Responsibility: Make commitments and keep the commitments for
the society, shareholders, customers, partners and workers on the
principle of profit share
- Identity: Traphaco's unique culture and people: Desire, passion and
dedication
d, Short term, Long term strategy
- long term: Change in assignment method and evaluation of
effectiveness according to principles, Assigning jobs in accordance
with functions and tasks of divisions/units/individuals; Evaluate
division/individual effectiveness based on common criteria, create a
professional, transparent and trustworthy working environment, KPI
results associated with workers' rights
- Short term: Traphaco will realize the targets of 2019, to gradually
achieve the objectives under the Traphaco Sustainable Development
Strategy for the period of 2017-2020 with the following main
criteria: consolidated revenue (without VAT) VND 2,160 billion,
Manufactured products VND 1,800 billion, Exclusively imported
goods: VND 100 billion, Revenue from subsidiaries VND 260
billion, Consolidated profit after tax VND 228 billion, Profit after tax
of the parent company VND 180 billion
3. Business activities
TRA has a diverse and diversified product portfolio which is
classified as follows:
- Manufactured products include traditional medicines and western
medicines. In which, traditional medicine is the key product with
high profit margin, accounting for 50% of the product quantity, 30-
50% of the revenue and 60-70% of the company's annual profit with
key products. such as: Hoat huyet duong nao, Boganic, Slaska.
Western medicine products 15-25% of revenue and 13-20% of profits
with main products like TB mouthwash, Antot - Philatop ... Goods
exploited: TRA entrusted import and export and exclusive
distribution of some products. exclusive products. This segment also
has significant contributions in revenue and profit, increasing
gradually to 2008 (accounting for 45% of revenue) and then tending
to decrease gradually in the last 2 years (2009 only accounted for
30% of revenue). .
- Source of raw materials: Because the main product of TRA is
traditional medicine, most of the company's medicine raw materials
are domestically grown (accounting for 65%, of which the
pharmaceutical area accounts for 35%), the remainder (accounting
for 35%) is imported raw materials for western medicine production
(Germany, France, Switzerland ...) and traditional medicine (20% of
herbal medicine needs of the company in China). . TRA signed a 3-5
years contract with the pharmaceutical supplier, signed an annual
contract for imported materials to ensure stability, reduce fluctuations
in raw material prices. Modern technological level, the capacity of
the lines is quite high, quality standards and standards of regional and
international as WHO - GMP / GLP / GSP, ISO 9001: 2000
standards.
4. Business profile
Company name: Tranphaco Joint Stock Company
Company Abbreviation: TRAPHACO
HOSE: TRA
Headquarters: 75 Yen Ninh Street - Quan Thanh Ward - Ba Dinh District - City Hanoi
Authorized Capital: 414,536,730,000
Tel: +84 (24) 38430076
Fax: +84 (24) 3681491
Email: info@traphaco.com.vn
http://www.traphaco.com.vn
Tax Number: 0100108656
5. Company structure
6. Ratios
Main Ratios FY2017F FY2018F
Liquidity
Current ratio 0.42 1.01
Quick ratio 1.08 1.67
Profitablility
Gross margin 55.64 51.97
Net margin 13.92 9.72
ROA 16.7 10.08
ROE 22.6 14.04
Operating Effi ciency
Receivable Turnover 16.65 14.33
Inventory Turnover 2.6 2.58
Asset Turnover 1.3 1.16
Equity Turnover 1.75 1.62
Earnings model
Unit: VND million FY2015A FY2016A FY2017A FY2018F
Net sales 531,44 366,147 429,848 375,197
gross profit 909,245 994,681 1,040.66 934,691
EBITDA 14.44 15.98 19.64 17.12
NPAT 203,667 228,226 260,417 174,773
NPATMI 180,967 210,596 241,103 156,278
EPS 6,612 6,097 5,351 3,352
P/E (x) 12.07 18.70 20.11 18.57
EV/EBITDA (x) 6.80 12.01 13.11 9.35
P/B (x) 2.26 3.88 4.33 2.62
II. STRUCTURE ANALYSIS
1. Assets and capital structure analysis
100% Assets structure
90% 26
80% 39 46
51
70%
60%
50%
40% 74
30% 61 54
49
20%
10%
0%
2015 2016 2017 2018
Short-term assets Series 3
Asset scale and structure
As of December 31st, 2018, the total assets of the
Company were VND 501.6 billion; increased 2.4%
compared to 2017 (VND 489.9 billion).
Short-term assets were VND 76.4 billion, accounted
for 15.2% of total assets, up 4.5% compared to 2017.
Long-term assets were VND 425.2 billion, accounted
for 84.8% of total
Equity structure
assets, down
100%
90% 4.5% compared
80%
70% 2017
75 74 74 70
60%
50%
40%
30%
20%
25 26 26 30
10%
0%
2015 2016 2017 2018
Liabilities Series 3
On the balance sheet, the total assets as of December 31, 2018 stood at
VND 1,590 billion, up slightly from the beginning of the year. The
liabilities of the Company is 483 billion VND, although it has increased
23.5% compared to the previous year, but it is still quite low compared
to the equity of 1,107 billion VND of this enterprise.. Assets structure
and capital structure remained stable and experienced less changes.
Specifically, the owner’s equity always accounts for more than 65% of
the total capital, which is a strong foundation to implement the long-
term development strategy of the Company.
The proportion of fixed assets in 2018 accounted for 42.13% of total
assets, showing that the Company has paid attention to long-term
investment through the construction of a modern pharmaceutical plant
with significant capacity, to ensure timely supply of high quality goods
for the nationwide distribution system.
The proportion of short-term assets on total assets in 2018 was 54.05%,
an increase of 4.65% compared to the same period of 2017, mainly
because the amount of cash and cash equivalents at the end of 2018
increased by over VND 150 billion while debt receivables decreased
continuously in recent years from 382 billion in 2016 to 200 billion in
2017 and by the end of 2018, the amount of receivable debts was only
153.5 billion, indicating
Traphaco Pharmaceutical has been re-selecting the product portfolio -
based on customer needs, to maximize corporate profits. Traphaco
Pharmaceutical instead of passive orders received from abroad and
exported to, the company has been deploying plans to offer, creating a
stable market in the country.
2. Capital structure analysis
The total asset reached 1.590 billion VND as of December 31, 2018 , up
slightly from the beginning of the year.
With the scale of Traphaco's chartered capital, if bank loans increase to 4
times the current loan level, the total liabilities will still be lower than
the equity, within the necessary safety level according to the common
management practice. corporate finance. The hypothetical scenario is
that Traphaco raised the loan and finance lease debt to 4 times, reaching
828 billion dong, the interest expense will increase to 48.8 billion dong.
In this case, the Company will only need to push the net revenue
increase by a small percentage, it will offset the additional portion of
financial costs when increasing debt increase by a small percentage, it
will offset the additional portion of financial costs when increasing debt.
COMPARISON WITH OTHER PHARMACEUTICAL COMPANIES
Under the SCIC restructuring project, the Corporation will continue to
hold capital and make long-term investments in 3 pharmaceutical
enterprises: DHG - SCIC holds 43.4% of the charter capital, TRA -
SCIC holds 35.7 % of charter capital, DMC - SCIC holds 34.7% of the
charter capital.
These 3 pharmaceutical enterprises have total assets of nearly VND
6,000 billion, equity of more than VND 4,000 billion, charter capital of
nearly VND 1,400 billion, of which SCIC holds the capital value
equivalent to VND 570 billion.
These are also the top 3 pharmaceutical enterprises in Vietnam in terms
of equity size of VND 700 billion or more, revenue of VND 1,500
billion or more, operational efficiency with a ratio of return on equity.
over 20% and the potential of modern production technology.
It is worth noting that TRA, DHG, and DCL were also among the seven
drug makers that saw a hefty fall in gross profit margins in the second
quarter of 2018, with DCL taking the lead with a drop from a margin of
33 per cent in the second quarter of 2017 to 26 per cent. TRA and DMC
followed, both reporting a decline of 12 per cent. Pymepharco (PME),
DHG, and OPC Pharmaceutical JSC saw an on-year decline of 5 per
cent on average.
2. Asset structure analysis
At the end of the first six months of 2017, Traphaco has achieved
revenue of VND 859 billion, down 15.7% over the same period last year
before. Although the company's net sales declined in the first half,
However, core business revenue still grew quite positive. Specifically
revenue from the sale of finished products in six
The first month of 2017 reached VND 753 billion, up 4.4% over the
same period
Last year. Explain the cause of negative growth in sales
Net revenue is due to a decrease in import and export business
consignment and revenue from subsidiaries. However, two activities
This activity does not have a great impact on profit, and profit before tax
remains
increased by 6.7% over the same period.
- Healthy financial structure
- The financial structure of the company is quite healthy with little debt.
Capital of enterprises are mainly financed by 74% of equity and only
26% of debt. In particular, the debt mainly comes from accounts payable
selling (accounting for 42% of total debt), while credit debt is quite low,
short-term debt and long-term debt accounted for a small proportion
(both accounted for 2% of total debt) shows that Traphaco is quite
proactive in finance, and there is almost no payment risk.
4. Liabilities and equity structure analysis
2018
2017
2016
2015
0 10 20 30 40 50 60 70 80 90
Owners equity Longterm Liabilities Current Liabilities
The bar chart witness erratic in liabilities and equity structure:
Total loans and finance lease liabilities both long-term and short-term at
the end of 2018 of this enterprise were about VND 207 billion and
interest expenses in 2018 were only VND 12.2 billion. This figure
accounts for a very low proportion of revenue and profit, only 0.68% of
total net revenue and 5.7% of net profit. Accordingly, when this
enterprise doubled its bank debt (interest expense also increased
accordingly), a small increase in net revenue can offset the financial
expense. main increase.
With the scale of Traphaco's chartered capital, if bank loans increase to 4
times the current loan level, the total liabilities will still be lower than
the equity, within the required safety level according to the common
management practice. corporate finance. The hypothetical scenario is
that Traphaco raised the loan and finance lease debt to 4 times, reaching
828 billion dong, the interest expense will increase to 48.8 billion dong.
In this case, the Company will only need to push the net revenue
increase by a small percentage, it will offset the additional portion of
financial costs when increasing debt.
III. Asset ultilization, or Turnover Ratios analysis:
Efficiency of operation 2013 2014 2015 2016 2017
3.50 3.54 3.69 3.25 2.60
Inventory turnover 6.79 8.24 9.61 10.93 13.95
2.43 3.14 3.61 2.93 2.26
Account receivables turnover Account liabilities turnover
The Account receivables turnover of the Company in 2017 was 13.95
compared with 10.93 of 2016. With the policy of selling goods by cash
on delivery, the collection and recovery of debts were very effective,
ensuring a safe financial resource, supporting resources for investment
in the most modern pharmaceutical factory project in Vietnam.
Inventory turnover in 2017 decreased compared to the same period last
year because the Company actively increased production in order to
accumulate sufficient goods for sales in the production transition period
to the new factory
The Accounts liabilities turnover in 2017 also decreased compared to the
same period due to the investment cost in the modern pharmaceutical
factory with the total investment.
Solvency 2013 2014 2015 2016 2017
Quick solvency 1.53 2.06 1.98 1.51 1.08
Current solvency 2.32 3.08 2.93 2.37 1.96
In 2017, the Company’s solvency index decreased compared to the same
period . However, the payment ratio of TRA was always guaranteed.
TRA DHG IMP DMC OPC PME
Inventory turnover 2.60 3.34 2.74 2.85 1.92 2.39
Account
receivables
turnover 13.95 5.96 5.1 3.93 6.84 3.64
Account liabilities
turnover 2.26 8.22 4.51 5.7 11.88 7.9
Traphaco's business performance chart compared to other listed
pharmaceutical companies (Turnover)
IV. Liquidity ratios
Efficiency 2015 2016 2017 2018
rations
Current ratio 2.88 2.37 1.96 2.75
Quick ration 1.93 1.51 1.08 1.67
Cash ratio 1.05 0.58 0.42 1.01
Traphaco Pharma’s liquidity ratios are always better than the average in
the industry. It brings an advantage in raising capital for business
operations as well as increases credibility with suppliers.
V. MARKET VALUE RATIO ANALYSIS
Market value in Dec 2016
TRA DHG DMC IMP OPC DCL
Book value VND 29,377 33,204 25,445 32,339 21,506 11,657
Earning per share 6,097 6,993 4,856 3,076 2,775 1,600
P/B 3.9 2.9 2.7 1.7 1.8 2.0
P/E 18.7 14.0 13.9 18.2 14.0 14.6
In 2016, the stock price of several pharmaceutical company rose sharply
due to the improvement on business performance, plus positive
information such as increasing the foreign ownership limited (FOL). In
that situation, the spectacular business results of TRA Pharma in 2016
has built investors’confidence through the increase of P/B ratio from
2.26 in 2015 to 3.9 in 2016. Simultaneously, with a high P/E ratio (18.7
compared to the industry: 15.6). TRA Pharma’s shares are appealing to
investors.
VI. Profitability ratios
One of the most frequently used tools of financial ratio analysis
is profitability ratios, which are used to determine the company's bottom
line and its return to its investors. The goal of a business is to make a
profit, so this type of ratio examines how well a company is meeting that
goal. The commonly used ratios to evaluate profitability are:
Net profit margin: measures how successful a company has been
at the business of marking a profit on each dollar sales
Net income
NET PROFIT MARGIN = Sale
Return on asset: how efficient management is at using its assets to
generate earnings.
Net income
RETURN ON ASSET= Total asset
Return on equity: measures how well the company is using its
shareholders' or owners' invested money to generate profit.
Net income
RETURN ON EQUITY= Total equity
Profit Return on Return on
margin assets equity
2015 10.32% 13.95% 20.53%
2016 11.42% 15.29% 22.66%
2017 13.92% 15.97% 23.39%
2018 9.72% 9.8% 15.31%
The chart shows a up ward trend in profit margin from 10.32% in
2015 to 13.92% in 2017, approximately 3%. However, a sharp
decrease from 2017 to 2018 was 4.2%
The company saw a lightly increase in percentage of return on
equity during 3 years. Around 2.13% of ROE increased from
2015 to 2016 and continued increasing in 2016 and 2017
respectively. However, the company saw a sharply decrease in
2017 and 2018 was around 8.08%.
The chart shows a lighly increase in percentage of return on asset
from 13.95 % in 2015 to 15.29% in 2016, nearly 1.5%. This
increase indicated that TRA generated more profit from all of its
resources in the year 2014 compared to the previous year. After
hitting a high of 15 % in 2016, the return on asset is increasing in
next one year, at 15.29% and 15.97% in 2017. This increase
indicates that company uses its assets to generate earning more
effective in comparison with the previous years.
