Transcript Hau Giang Pharcma
Lecturer: Tran Thi Hoang Vi Contributors
Nguyen Thi Ngoc Tram Nguyen Cam Tu Nguyen Xuan Truong Nguyen Thi Phuong Thanh
Q & A
Answering questions of lecturer and classmates Common-size Analysis Activity Ratios Liquidity Ratios Solvency Ratios Profitability Ratios Dupont Analysis
Financial Statements Analysis
Contents
Company Introduction
Introduction Establishing history Nature of business Organization Revenue/ Net income/Total Equity Introduce peer company
In comparison with other listed pharmaceutical companies
Company name: DHG Pharmaceutical Joint-Stock Company Abbreviation: DHG PHARMA Headquarters: Vision: Mission: 288 Bis Nguyen Van Cu, An Hoa Ward, Ninh Kieu District, Cantho City “For a more beautiful and healthier life” DHG Pharma always provides high quality products and services to satisfy the aspiration for a more beautiful and healthier life Website:
http://www.dhgpharma.com.vn
Chartered capital: 653,764,290,000 VND
Establishment
Precursor of DHG Pharmaceutical Joint-Stock Company was 2/9 Pharmaceutical Factory and was founded on 02 September 1974 at Kenh 5 Dat Set, Khanh Lam Commune, U Minh District, Ca Mau Province The 2/9 Pharmaceutical Factory was assigned to be under the management of Hau Giang Health Service Hau Giang Pharmaceutical United Factory was founded basing on the consolidation of 3 units: State owned Pharmaceutical Factory, Level 2 Pharmaceutical Company and Herbal Medicine Station People’s Committee of Hau Giang Province decided to merge the Material Medical Supply Company into Hau Giang Pharmaceutical United Factory Hau Giang Pharmaceutical United Factory was equitized to become DHG Pharmaceutical Joint-Stock Company
Mrs. Pham Thi Viet Nga
Chairperson of DHG Pharma and Vinh Hao Algae JSC PhD of Business Administration BSc Pharmacy Leading DHG Pharma to
the best pharmaceutical brand
in Vietnam with an increase of 4.5 times in revenue and 7.5 times in profit after 7 years equitization Awarded one of
Top 50 businesswoman of Asia in 2013 FORBES Magazine
by
Leading position
in Vietnam pharmaceutical industry for
17 successive years
since 1996
12 invested brands
account for over
50% of the sales of the whole company
Growth Rate
60%
57%
50% 40%
46%
30% 20% 20% 26%
17%
19%
18%
16%
16%
11% 25%
21% 18%
10% 0% 5% 2006 2007 DHG 2008 2009 2010 2011 Domestically produced medicines market 2012
ASSETS I. Current Assets
1. Cash and cash equivalent 2. Short-term investment 3. Accounts receivable 4. Inventories 5. Other current assets
II. Long-term assets
1. Fixed assets 2. Investment property 3. Long-term investments 4. Other long-term assets
Total assets
31-Dec-09
79.66%
38.38% 1.05% 19.51% 20.15% 0.56%
20.34%
15.57% 0.00% 2.05% 2.71%
100.00%
31-Dec-10
79.24%
35.31% 0.00% 24.52% 19.07% 0.34%
20.76%
16.67% 0.35% 2.20% 1.53%
100.00%
31-Dec-11
74.69%
23.40% 0.00% 24.55% 25.81% 0.93%
25.31%
23.02% 0.00% 0.88% 1.41%
100.00%
31-Dec-12
76.43%
30.23% 0.00% 24.15% 21.52% 0.53%
23.57%
21.74% 0.00% 0.70% 1.13%
100.00%
RESOURCES I. Liabilities 1. Current Liabilities
1.1 Short-term borrowing 1.2 Account payable - trade 1.3 Advances from customers 1.4 Taxes payable to State Treasury 1.5 Payable to employees 1.6 Accrued expenses 1.7 Other payables 1.8 Bonus and welfare fund
2. Long-term Liabilities
2.1 Deferred taxes liabilities 2.2 Provision for severance allowance 2.3 Unearned revenue 2.4 Science and technology development
II. Equity
1.1 Share capital 1.2 Capital surplus 1.3 Treasury Shares 1.4 Investment and development fund 1.4 Financial reserves 1.5 Retained profits 2. Non-business expenditure fund and other funds
III. Minority interest Total resources
32.60% 29.12% 4.86% 4.69% 0.07% 2.34% 5.53% 10.59% 1.04% 0.00% 3.48% 0.00% 0.93% 0.00% 2.54%
66.89%
17.52% 24.89% -0.03% 0.31% 1.95% 21.75% 0.50%
0.51% 100.00%
29.16% 25.91% 0.70% 4.74% 0.08% 2.20% 5.53% 9.28% 1.77% 1.62% 3.25% 0.00% 1.16% 0.01% 2.08%
70.36%
14.79% 20.81% -0.03% 11.23% 3.53% 20.02% 0.00%
0.48% 100.00%
30.18% 27.26% 1.06% 6.19% 0.04% 1.42% 6.31% 8.31% 1.70% 2.23% 2.92% 0.00% 1.69% 0.00% 1.22%
69.23%
32.66% 0.00% -0.02% 14.35% 3.33% 18.91% 0.00%
0.60% 100.00%
28.37% 27.48% 0.82% 3.10% 0.05% 1.41% 6.61% 10.18% 2.67% 2.63% 0.89% 0.00% 0.00% 0.00% 0.89%
70.96%
27.49% 0.00% -0.02% 20.65% 2.81% 20.04% 0.00%
0.66% 100.00%
Total Revenue
Less sales deductions
Net Sales
Cost of Sales
Gross Profit
Financial Income Financial Expenses In which: Interest Expense Selling Expenses General and Administration Expenses
Net Operating Profit
Other Income Other Expenses Gains from others Share of losses in associates
Profit before Tax
Income Tax expense - current Income tax benefit - deferred
Net Profit after Tax Dec 31, 2009 100%
1.37%
98.63%
46.46%
52.17%
1.33% 0.19% 23.13% 6.42% 23.05%
0.80%
0.71% 0.09% -0.01% 23.14%
2.65%
0.02% 20.47%
0.30% Dec 31, 2010 100%
0.86%
99.14%
49.51%
49.63%
0.17% 0.00% 23.57% 6.58% 21.30%
0.45%
0.40% 0.05% -0.19% 21.15%
2.50%
-0.02% 18.68%
0.11% Dec 31, 2011 100%
0.79%
99.21%
51.06%
48.14%
0.29% 0.00% 22.26% 7.38% 20.17%
0.40%
0.61% -0.22% -0.40% 19.55%
2.90%
-0.07% 16.72%
0.17% Dec 31, 2012 100%
0.62%
99.38%
50.43%
48.95%
0.15% 0.09% 24.06% 7.40% 18.77%
1.34%
0.28% 1.06% -0.01% 19.83%
3.18%
-0.01% 16.66%
0.18%
Revenue Net cash generated from operating activities 31-Dec-09
100% 19.99%
Net cash used in investing activities Net cash used in financing activities
-0.95% 1.99%
31-Dec-10
100% 12.58% -3.62% -6.12%
31-Dec-11
100% 10.49% -7.50% -9.98%
31-Dec-12
100% 15.95% -2.97% -4.44%
Activity ratios Liquidity ratios Solvency ratios Profitability ratios
4,5 4 3,5 3 2,5 2 1,5 1 0,5 0
Short Term Activity Ratios
Inventory Turnover DOH 140 3,81 3,66 3,11 3,37 3,25 2,97 2,9
2. Days of inventory on hand
3,06 3,52 Lower level of inventory turnover will result in higher days of inventory on hand ratio
DOH
= 𝑵𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝒅𝒂𝒚𝒔 𝒊𝒏 𝒑𝒆𝒓𝒊𝒐𝒅 𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 120 100 80 60 40 20 115,84 110,88 121,06 117,46 124,30 94,56
1. Inventory Turnover
Measure from 2010 to 2012 nearly 3.0
times per year, the entire inventory of DHG was sold and replaced.
𝑪𝒐𝒔𝒕 𝒐𝒇 𝑮𝒐𝒐𝒅𝒔 𝑺𝒐𝒍𝒅
Inventory turnover
= 𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚 0 2010
DHG PMC
2011 2012
Health Care Industry
2010
DHG
2011
PMC
2012 Comparing to the ratio of Health Care Industry and PMC Company, The lower rates of inventory turnover as well as the higher rate of DOH from 2010 to 2012 show: DHG had adequate inventory and was prevented from the shortages, but it was a bad sign because products tended to deteriorate as they sit in a warehouse.
Ineffective inventory management could lead to overstocking, deficiencies in the product line or marketing effort
Source of Industry and PMC data: cophieu68.vn
14,00 12,00
Short Term Activity Ratios
Receivables Turnover DSO 80,00 12,28 11,86 70,00 65,75 67,65 10,83 60,00 10,00
4. Days of sales outstanding
8,00 Lower level of receivable turnover will result in 6,00 5,32 5,51 50,00 40,00 30,00
3. Receivables Turnover
DHG was collected theoretically 65,36 Measure from 2010 to 2012 nearly 5.4
4,00 2,00 𝟑𝟔𝟎 Days
of sales outstanding
= 𝑹𝒆𝒄𝒆𝒊𝒗𝒂𝒃𝒍𝒆 𝒕𝒖𝒓𝒏𝒐𝒗𝒆𝒓 20,00 10,00 𝑵𝒆𝒕 𝑺𝒂𝒍𝒆𝒔
Receivables turnover
= 𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝒓𝒆𝒄𝒆𝒊𝒗𝒂𝒃𝒍𝒆𝒔 2010 2011 2012 2010 2011 2012
DHG PMC DHG PMC
• The Increase in accounts receivable turnover overtime indicates the improvement in process of cash collection on credit sales.
• Receivables turnover of PMC (10.83 – 12.28) was nearly double DHG’s (5.32 – 5.51) (as well as the opposite side with DSO) show that DHG was taking longer to collect money from customer.
The company’s credit or collection policies was not too stringent
Payables Turnover
Short Term Activity Ratios
Number of days of payables 50,00 45,00 46,38 40,00 35,00 35,71
5. Number of days of payables
30,77 30,00 25,00 Lower level of payables turnover will result in 20,00 15,00 10,00 5,00 higher number of days of payables turnover 13,82 360 15,04 N 𝑃𝑎𝑦𝑎𝑏𝑙𝑒𝑠 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 2010 2011 2012 30,00 25,00 20,00 15,00 10,00 5,00 26,86 2010 26,05 2011 23,94
4. Payables Turnover
Measure from 2010 to 2012 nearly 14 creditors 7,76 Payables Turnover = 10,08 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑠 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑟𝑎𝑑𝑒 𝑝𝑎𝑦𝑎𝑏𝑙𝑒𝑠 2012
DHG PMC DHG PMC
Having high liquidity in comparing with industry, the lower payables turnover ratio of DHG when comparing with PMC shows that the company was exploiting the leniency in lending policy of suppliers
2012
Short Term Activity Ratios
7. Working Capital Turnover 2,78 2,44 2011 2,60 2,47 2010 2,34 2,78 2,10 2,20 2,30 2,40
DHG
2,50
PMC
2,60 2,70 2,80 2,90
0 < Working Capital Turnover:
cover its short term debt DHG Company had enough short term assets to
Working Capital Turnover > 2 :
not investing excess assets.
DHG Company had too much inventory and was
2012
Long Term Investment Activity Ratios
1. Total Asset Turnover 2. Fixed Asset Turnover 1,34 6,00 2012 1,89 8,57 2011 1,31 1,91 2011 6,53 7,04 2010 1,22 1,95 0,50 1,00
DHG
1,50
PMC
2,00 2,50 2010 6,15 7,53 2,00 4,00
DHG
6,00
PMC
8,00 10,00
5 4,5 4 3,5 3 2,5 2 1,5 1 0,5 0 2,74 1,38 4,42 3,06
1. Current Ratio
1,51 4,54 2,74 1,47 3,47 2,78 1,50 3,25 2009 2010 2011 DHG Health Care Industry PMC
1 < Commonly acceptable current ratio < 2
2012 Current ratio measure 2.74, 3.06, 2.74, 2.78 VND in current assets for every 1 VND in current liabilities at the end of 2009,2010,2011 and 2012 respectively.
The current ratio was too high (>2) The company had high level of liquidity but may not was using its current assets or its short-term financing facilities efficiently
Source of Industry Data: cophieu68.vn
2. Quick Ratio
3,00 2,50 2,00 1,50 1,00 0,50 2,02 0,75 2,19 2,31 0,86 2,49 1,76 0,79 1,61 1,98 0,80 1,79 2009 2010 2011 DHG Health Care Industry PMC
Commonly acceptable quick ratio > 1
2012 Quick ratio measure 2.02, 2.31, 1.76, 1.98 in current assets after excluding inventory for every 1 VND in current liabilities at the end of 2009,2010,2011 and 2012 respectively
Source of Industry Data: cophieu68.vn
1,60 1,40 1,20 1,00 0,80 0,60 0,40 0,20 1,35 0,83
3. Cash Ratio
1,36 1,33 0,86 0,86 1,10 1,14 2009 2010 DHG PMC 2011 2012 Because cash ratio is the most stringent and conservative of the three liquidity ratios (current, quick and cash ratio)
Cash ratio > 1
in 3 years: 2009,2010 and 2012 indicates that DHG Company had enough cash/ cash equivalent to pay off all current obligations easily DHG has high liquidity
1,50 1,00 0,50 3,50 3,00 2,50 2,00 2,74 2,02 1,35 3,06 2,31 1,36 2,74 1,76 0,86 2009 2010 Current Ratio Quick Ratio 2011 Cash Ratio 2,78 1,98 2012 1,10
Debt ratios
1. Debt to assets ratio 0,70 0,60 0,50 0,40 0,30 0,20 0,10 0,33 0,58 0,15 0,29 0,54 0,15 0,30 0,58 0,22 0,28 0,56 0,25 2009 DHG 2010 Health Care Industry 2011 PMC 2012
Debt to assets ratio < 0.5
measure that most of the company’s assets were financed through equity Company has more opportunities to borrow in the future at no significant risk.
Source of Industry Data: cophieu68.vn
Debt ratios
2. Debt to capital ratio 0,35 0,30 0,25 0,20 0,15 0,10 0,05 0,33 0,15 0,29 0,15 0,30 0,22 0,29 0,25 2009 2010 2011 2012 DHG PMC Debt to capital ratio measure 33%, 29%, 30%, 29% of DHG’s capital represented by debt in 2009,2010,2011 and 2012 respectively
0,60 0,50 0,40 0,30 0,20 0,49 3. Debt to equity ratio
Debt ratios
4. Financial Leverage ratio 1,60 1,49 1,44 1,41 1,40 1,28 1,18 1,18 0,44 1,20 0,41 0,40 1,00 0,33 0,28 0,80 1,40 1,33 0,60 0,18 0,18 0,40 0,10 0,20 2009 2010 2011 2012 2009 2010 2011 2012 DHG PMC DHG PMC
0 (Liabilities = Equity) < Optimal debt to equity ratio < 0.5 - 1 1 (Liabilities = Equity) < Optimal financial leverage ratio < 1.5 - 2
Average ratio indicates that DHG company was talking advantage of the increased profits that financial leverage may bring
Source of Industry Data: cophieu68.vn
0,60 0,50 0,40 0,30 0,20 0,10 0,52 0,35
1. Gross profit margin
0,50 0,38 0,48 0,38 0,49 0,38 2009 2010 DHG PMC 2011 2012 DHG and PMC have the different trends in gross profit margin within 4 years The DHG’s gross profit margin is much higher than PMC in this period (11% higher)
Per VND of safe of DHG can contribute more money for gross profit than PMC
2. Net profit margin
0,25 0,20 0,15 0,10 0,05 0,20 0,12 0,19 0,14 0,17 0,15 0,17 0,15 2009 2010 DHG PMC 2011 2012 DHG and PMC have the different trends in net profit margin within 4 years. From 2009 to 2010, PMC showed a great rise in net profit margin (from 0.12 to 0.14), while DHG’s rate decreased slightly (from 0.2 to 0.19). In the period of 2011-2012, there are no change in net profit margin of each company, DHG still much higher than PMC 2%
0,30 0,25 0,20 0,15 0,10 0,05 DHG Health Care Industry PMC
3. ROA
–
Return on total assets
0,28 0,27 0,23 0,23 0,22 0,28 0,10 2009 0,28 0,10 0,23 0,11 2010 0,23 0,11 0,27 0,10 2011 0,22 0,10 0,28 0,22 0,10 2012 0,22 0,10 0,28 0,28
0,45 0,40 0,35 0,30 0,25 0,20 0,15 0,10 0,05 DHG Health Care Industry PMC
4. ROE
–
Return on capital equity
0,42 0,23 0,28 2009 0,42 0,23 0,28 0,33 0,25 2010 0,33 0,25 0,32 0,32 0,32 0,23 2011 0,32 0,23 0,34 0,34 0,32 0,24 0,36 2012 0,32 0,24 0,36
• Be used to analyze return on equity (ROE) • Uses basic algebra to break down ROE into a function of different ratios analyst can see the impact of leverage, profit margins, turnover on shareholder returns.
ROE 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 = = = = = 𝐸𝑞𝑢𝑖𝑡𝑦 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡
𝑅𝑂𝐴
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝑆𝑎𝑙𝑒𝑠 x 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡 𝐸𝑞𝑢𝑖𝑡𝑦
𝑥 𝐿𝑒𝑣𝑒𝑟𝑎𝑔𝑒 𝑟𝑎𝑡𝑖𝑜
x 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡
Net profit margin
x 𝑆𝑎𝑙𝑒𝑠 x 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡 𝐸𝑞𝑢𝑖𝑡𝑦
Total asset turnover
x
Leverage ratio
2009 2010 2011 2012 ROE = 42% 33% 32% 32% DHG ROA x
28% 23% 22% 22%
Leverage
1.49 1.41 1.44 1.40
ROE = 28% 32% 34% 36% PMC ROA x
23% 27% 28% 28%
Leverage
1.18 1.18 1.28 1.33
2009 2010 2011 2012 ROE = 42% 33% 32% 32% DHG Net profit margin x Asset Turnover
20% 1.4
x Leverage
1.49 19% 17% 17% 1.22 1.31 1.34 1.41 1.44 1.40
ROE = 0.28 PMC Net profit margin x Asset Turnover
12% 2
x Leverage
1.18
0.32 0.34 0.36
14% 15% 15% 1.95 1.91 1.89 1.18 1.28 1.33
Earning leading revenue / net profit after tax, but almost DHG’s ratios in 3 years from 2009-2012 was not good as well as a small-scale company such as PMC and had downward trends in the future.
Shortcomings: • Inventory/ receivables management was not effective • The company had high level of liquidity but may not was using its current assets or its short-term financing facilities efficiently • ROA The ability of attracting investor’s attention
If you are an administrator… If you are an investor…..
Annual Report 2010
–
2011 -2012 of DHG JSC Annual Report 2010
–