IMP - New bidding policy strengthens its competitive advantage
When the IMP4 factory is approved for EU-GMP early next year, IMP will be one of the first two companies in Vietnam (with PME) to have 3 EU-GMP plants. After many years of focusing on that IMP is coming back to the ETC channel. With new modern factories and beneficial changes in government’s policies to favor domestic drugs, IMP’s ETC sales growth potential in the coming years is very promising. We forecast IMP to have revenue and NPAT CAGR of 16% and 19% over the next 5 years, starting from 2020.
We combined FCFF valuation model and multiples comparison with an applied P/E of 18 times. Our target price for IMP in the next 12 months is around VND 64,500, up 22% compared to the recent target price in the annual strategy report (Dec 2018). This revision is mostly because of positive prospect from Circular 15 and the transition from foreign drugs to domestic ones. Adding a cash dividend of VND 2,000, the 12-months expected return is 26% compared to the closing price on December 10th 2019. We have a BUY recommendation on the stock. We believe that pharmaceutical stocks with sustainable growth prospects such as IMP would be suitable as defensive stocks in a current risky market
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