Vietnam's leading pharma firm DHG plans 75% dividends for two consecutive years

Hau Giang Pharmaceutical JSC (DHG Pharma) has announced a plan to use over 90% of its profits to pay dividends at a rate of up to 75% for 2023 and 2024.

The company, listed on the Ho Chi Minh Stock Exchange as DHG, will pay 2023 dividends at a rate of 40% (one share receiving VND4,000 or $0.16), in the first phase on June 26, 2024; and the remaining 35% (one share receiving VND3,500) in the second phase on August 21, 2024.

The total amount the Hau Giang province-based pharmaceutical giant plans to spend for 2023 dividend payments is VND981 billion ($38.56 million), accounting for 93% of its after-tax profit last year. This is the highest cash dividend in the company’s history.

It plans to maintain a 75% cash dividend for 2024, which means it will give most of the profits generated during the year to shareholders.

In 2016-2022, DHG Pharma paid dividends at a rate of 35-40% each year, equivalent to about 60% of the profit generated.

The two largest shareholders benefiting from DHG Pharma's high cash dividends are the State Capital Investment Corporation (SCIC) and Japan’s Taisho Pharmaceutical Co., Ltd. With an ownership rate of 43.3%, SCIC will receive VND423 billion ($16.63 million), while Taisho will get VND500 billion ($19.66 million) for a 51.01% stake.

Taisho became a major shareholder in DHG Pharma in mid-2016 when it spent about $100 million purchasing 21.3 million DHG shares, equivalent to 24.5% of the company’s charter capital. The Japanese firm continued to accumulate more DHG shares until mid-2019, successfully surpassing SCIC to hold the controlling ratio.

During five years as the parent corporation, Taisho has received a total of VND1.5 trillion ($58.97 million) in dividends from DHG Pharma.

DHG Pharma is one of the top five pharma enterprises with the largest market share in Vietnam. In 2022, the company started construction of a Betalactam factory meeting Japan/EU-GMP standards, with a total investment of VND700 billion ($27.52 million).

Chairwoman Dang Thi Thu Ha said that the project is especially important to the company’s plan to develop high-quality product lines, bringing qualified products to customers.

According to the plan, the Betalactam project is expected to go into operation in the second quarter of this year, thereby increasing the company’s capacity by 25%.

DHG Pharma will expand its pharmaceutical factory and packaging printing factory with the goal of achieving global GMP standards for a number of production lines that are set to become operational in the second quarter. Its non-Betalactam factory has also been invested in to meet EU-GMP standards this year.

The firm boasts strengths in the over-the-counter (OTC) and essential therapeutic care (ETC) drug channels, which account for about 15% of its total revenue, Ha said, adding the upgrading of factories aims to increase the likelihood of winning bids, ETC revenue, and access to the European market.

This year, DHG Pharma targets net revenue of VND5.2 trillion ($204.4 million), up 4% year-on-year, and pre-tax profit of VND1.08 trillion ($42.45 million), down 7%.

In the first quarter of 2024, the company reported revenue of VND1.26 trillion ($49.53 million), equivalent to the same period last year. Its financial revenue fell 26% year-on-year to VND39 billion ($1.53 million). The gross profit margin decreased from 50% to 40.7%, resulting in VND250 billion ($9.83 million) in pre-tax profit, down 36% from the same period last year and fulfilling 23% of its year plan.

On the stock market, DHG closed Monday at VND121,300 ($4.77) per share.