MIRA INFORM REPORT

Report Date :

29.08.2007

IDENTIFICATION DETAILS

Name :	CUU LONG PHARMACEUTICAL JOINT STOCK COMPANY
Registered Office :	No. 150, 14-9 Road, Ward 5 Vinh Long Town, Vinh Long Province
Country :	Vietnam
Financials (as on) :	31.12.2006
Date of Incorporation :	1976
Legal Form :	Joint Stock Company
Line of Business :	Manufacturing and trading in pharmaceuticals products, capsules, and medical equipments Manufacturing and trading in high nutritional food, medical materials Import – export in medical field Manufacturing kinds of packing for pharmaceutical industry

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Satisfactory
Payment Behaviour :	Regular
Litigation :	Clear

SUBJECT IDENTIFICATION & LEGAL FORM
English Name			CUU LONG PHARMACEUTICAL JOINT STOCK COMPANY
Vietnamese name			CONG TY CO PHAN DUOC PHAM CUU LONG
Abbreviated Name			PHARIMEXCO
Founded			1976
Type of Business			Joint Stock Company
Equitization			2004
Equitization Decision			No. 2314 QD-UB
Date of Issuance			August 09^th 2004
Place of Issuance			Vinh Long People’s Committee
Business Registration			No. 5403000021
Date of Issuance			November 09^th 2004
Place of Issuance			Vinh Long Department of Planning and Investment
Current registered capital			81,000,000,000 VND
Former registered capital			56,000,000,000 VND
Tax code			1500202535
Total Employees			919 person (as of March 31^st 2007), in which staffs with university and post-graduated certificates holds 30%
Qualification			Fairly good
Note: On April 23^rd 2007, the subject registered to State Securities Commission of Vietnam in order to be listed on the Stock market in next time. In near future, the subject’s stock will be listed in Stock Trading Center.
ADDRESSES
Head Office
Address	No. 150, 14-9 Road, Ward 5 Vinh Long Town, Vinh Long Province
Country	Vietnam
Tel	(84-70) 822533
Fax	(84-70) 822129
	pharimexco@hcm.vnn.vn
Website	www.pharimexco.com.vn
Branches
At this moment, the subject has total 45 branches and transaction points in provinces and cities of Vietnam. Following is some of them:
Branch in Hanoi city
Address	Km 6, Giai Phong Road, Phuong Liet ward, Thanh Xuan Dist, Hanoi city
Country	Vietnam
Tel	(84-4) 8643622
Fax	(84-4) 8644639
Branch in Hochiminh city:
Address	No. 13 Nguyen Van Thu, Da Kao Ward, Dist 1, Ho Chi Minh City
Country	Vietnam
Tel	(84-8) 8225927
Fax	(84-8) 8298680
Branch in Hai Phong city:
Address	No. 71 Dien Bien Phu St, Minh Khai Ward, Hong Bang Dist, Hai Phong City
Country	Vietnam
Tel	(84-31) 3920546
Fax	(84-31) 3920432
Branch in Nghe An province:
Address	No. 2, Le Loi St., Vinh City, Nghe An Province
Country	Vietnam
Tel	(84-38) 594700
Branch in Da Nang city:
Address	No. 229 Hai Phong St, Da Nang City
Country	Vietnam
Tel	(84-511) 844449
Branch (representative office) in Laos
Address	402/4 Group 23 Makhan Commune, Siko Haong Comphen Marhan District, Vientiane
Country	Laos
Tel	(00.856.21)243624
Fax	(00.856.21)243625
Besides, the subject has 4 factories, a pharmaceutical farm. Factories of company are: - Pharmaceutical product manufacturing factory; - Antibiotic manufacturing factory (under construction) - Medical equipment factory – VIKIMCO and - Capsule factory - VICANCAP
DIRECTORS
1. NAME	Mr. LUONG VAN HOA
Position	General Director and Chairman
Resident	No. 18 Le Van Tam Str., Ward 1, Vinh Long Town, Vinh Long Province
Tel	(84-70) 824379
Nationality	Vietnamese
Inauguration day	2004
2. NAME	Mr. NGUYEN THANH TONG
Position	Vice General Director
Contact Address	No. 150, 14-9 Road, Ward 5, Vinh Long Town, Vinh Long Province
Nationality	Vietnamese
3. NAME	Mr. NGUYEN HUU TRUNG
Position	Vice General Director / member of management board
Contact Address	No. 150, 14-9 Road, Ward 5, Vinh Long Town, Vinh Long Province
Nationality	Vietnamese
BUSINESS NATURE AND ACTIVITIES
The subject focuses on the following activities: - Manufacturing and trading in pharmaceuticals products, capsules, and medical equipments - Manufacturing and trading in high nutritional food, medical materials - Import – export in medical field - Manufacturing kinds of packing for pharmaceutical industry
Main Products:
- Pharmaceutical products of all kinds tablet, power, capsule, drinking solution, and so on. - Kinds of capsules - Medical equipments: injection needle, other equipments… - Cosmetic - Nutrition foods
IMPORT & EXPORT ACTIVITIES
IMPORT: The subject imports from Japan, Canada, Korea, Germany, France …
EXPORT: The subject exports its products to Laos market.
BANKERS
The subject has banking relation with the banks:
1. BANK FOR FOREIGN TRADE OF VIETNAM (VIETCOMBANK) – VINH LONG BRANCH
Address		No. 143 Le Thai To Str, Vinh Long Town, Vinh Long Province
Country		Vietnam
Tel		(84-70) 833583
Fax		(84-70) 830562
Account No. (USD)		102020000037162
2. BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – VINH LONG BRANCH
Address		No. 50 Nguyen Hue St., Ward 2, Vinh Long Town, Vinh Long Province
Country		Vietnam
Tel		(84-70) 863086
Fax		(84-70) 824928
Account No. (USD)		72010370009808
SHAREHOLDER
In April 2007, the subject has just been increased its capital to 81 billion VND. Its shareholder structure is also changed. However, this change is not available, so we give the shareholder structure when its capital was 56 billion VND. We will update this as soon as possible.
1. State Shares: 51%
NAME		VING LONG PEOPLE’S COMMITTEE
Representative		Mr. LUONG VAN HOA
Position		General Director cum Chairman
Resident		No. 18 Le Van Tam St., Ward 1, Vinh Long Town, Vinh Long Province
Tel		(84-70) 824379
Nationality		Vietnamese
2. STAFFS OF COMPANY AND OUTSIDE SHAREHOLDERS
Position		Shareholders
Shares		49%
PAYMENT HISTORY AND EXPERIENCES
Trade Morality		Fair
Liquidity		Fair
Past Payment Status		Average
Current Payment Status		Fair
Past Financial Situation		Average
Current Financial Situation		Fairly good
Illegal action		No recorded
Bankruptcy		No recorded
Reputation		Fair
Modes of payment		Through corresponding bank
FINANCIAL DATA
BALANCE SHEET
Notes: The data in 2005 is not available.
Unit: VND million
Balance Sheet Date				31/12/2006	31/12/2004				31/12/2003
Number of Weeks				52	52				52
ASSETS
A. Current assets & Short term Investment				124,781	102,384				79,172
I. Cash and cash equivalents				9,707	6,261				4,086
II. Short term investment				0	0				0
1. Short-term securities investment				0	0				0
2. Other short-term investment				0	0				0
3. Provision for devaluation of short-term investment				0	0				0
III. Receivables				53,988	49,867				32,979
1. Receivables from customers				45,084	34,924				29,207
2. Prepaid for providers				2,981	432				987
3. Value-added tax deducted				0	883				983
4. Internal receivables				0	0				0
5. Other receivables				5,923	13,628				4,348
6. Provision for bad receivables				0	0				-2,546
IV. Inventory				59,083	42,137				40,368
1. Purchased goods in transit				0	145				6,010
2. Inventory raw materials				0	12,395				10,639
3. Inventory appliance				0	245				32
4. Cost for production and business in process				0	1,844				1,511
5. Inventory finished products				0	20,559				15,268
6. Inventory cargoes				59,083	6,949				9,259
7. Entrusted goods for sale				0	0				170
8. Provision for devaluation of stocks				0	0				-2,521
V. Other current assets				2,003	4,116				1,689
1. Advances					1,929				1,386
2. Prepaid expenses					1,248				116
3. Pending expenses for transfer					0				0
4. Pending assets					0				0
5. Hypothecation, collateral and short run collateral					939				187
VI. Administrative				0	3				50
1. Administrative expenses for previous year				0	3				50
2. Administrative expenses for current year				0	0				0
B. Fixed assets & Long term investment				138,421	145,793				134,575
I. Fixed assets				136,824	141,475				114,004
1. Tangible fixed assets				131,569	137,957				113,801
+ Original cost				226,391	209,724				163,152
+ Accumulated depreciation value				-94,822	-71,767				-49,351
2. Financial leasing fixed assets				0	0				0
+ Original cost				0	0				0
+ Accumulated depreciation value				0	0				0
3. Intangible fixed assets				5,255	3,518				203
+ Original cost				5,255	3,518				203
+ Accumulated depreciation value				0	0				0
II. Long term investment				1,008	1,008				14,008
1. Long-term securities investment				0	0				0
2. Joint-venture capital contribution				1,008	1,008				14,008
3. Other long-term investment				0	0				0
4. Provision for long-term investment devaluation				0	0				0
III. Capital construction in process				589	86				3,173
IV. Other					3,224				3,390
TOTAL ASSETS				263,202	248,177				213,747
LIABILITIES
A. Payables				189,677	184,589				186,450
I. Short term payables				155,648	114,296				120,753
1.Short-term borrowings				58,079	70,796				72,404
2. Due long-term liabilities				63,599	21,461				19,621
3. Payable to seller				1,540	13,820				22,385
4. Prepaid buyer				663	188				314
5. Taxes and accounts dutiable				3,909	4,760				3,409
6. Employee payments				14,620	2,859				2,532
7. Internal payments				0	0				0
8. Other payables				13,238	412				88
II. Long term payables				34,029	57,053				55,671
1. Long-term borrowing				0	39,325				34,943
2. Long-term loans				0	17,728				20,728
III. Other liabilities				0	13,240				10,026
1. Disbursement payable				0	13,240				10,026
2. Pending assets				0	0				0
3. Receipts long-term collateral and deposit				0	0				0
B. Owner’s Equity				73,525	63,588				27,297
I. Capital and Funds				71,621	65,505				27,411
1. Working capital				56,000	64,055				23,306
2. Differences from assets revaluation					0				1,085
3. Exchange rate differences				94	0				0
4. Business development fund				4,641	921				2,500
5. Reserved fund				1,432	509				500
6. Retained profit				0	0				0
7. Construction capital sources				9,454	20				20
II. Other administrative and fund sources				1,904	-1,917				-114
1. Provident funds for unemployment				0	0				0
2. Welfare and reward funds				1,904	-1,917				-264
3. Management funds of higher level				0	0				0
4. Functional operation funds				0	0				150
5. Fund sources formed by fixed assets				0	0				0
TOTAL LIABILITY AND EQUITY				263,202	248,177				213,747
PROFIT AND LOSE ACCOUNT
Description				FY 2006		FY 2004				FY 2003
Total revenue				348,404		154,192				141,695
Deductions Items				1,907		1,218				2,279
- Discount				-		0				0
- Devaluation				-		0				0
- Return of sold goods				-		0				0
- Turnover tax, luxury and export taxes				-		1,218				2,279
1. Net Revenue				346,497		152,974				139,416
2. Cost of Goods Sold				291,100		114,796				108,548
3. Gross Profit				55,397		38,178				30,868
4. Sale expense				14,913		9,029				9,613
5. Administration expense				9,064		8,637				7,166
6. Income from business activities				31,420		20,512				14,089
7. Income from financial activities				593		317				138
8. Expense from financial activities				13,619		15,781				12,947
9. Profit from financial activities				-13,026		-15,464				-12,809
10. Other incomes				646		1,888				1,690
11. Other expenses				1,468		1,844				724
12. Other profit				-882		44				966
13. Total profit before tax				17,572		5,092				2,246
14. Income tax				0		508				793
15. Profit after income tax				17,572		4,584				1,453
FINANCIAL FACTORS
Description				2006			2004			2003
Current liquidity ratio				0.80			0.90			0.66
Quick Liquidity ratio				0.42			0.53			0.32
Inventory circle				4.93			2.78			5.38
Average receive period				56.87			118.98			86.34
Utilizing Asset Performance				1.32			0.62			0.65
Liability/ Total Asset (%)				72.07			74.38			87.23
Liability/ Owner’s equity (%)				257.98			290.29			683.04
Income before tax/ Total asset (%) ROA				6.68			2.05			1.05
Income before tax/ Owner’s equity (%) ROE				23.90			8.01			8.23
Income before tax/ Total revenue (%) NPM				5.04			3.30			1.59
Gross Profit / Total revenue (%) GPM				15.90			24.76			21.78
And following is the financial highlight of the subject in 2005:
Unit: VND million
Description								2005
Current assets & Short term Investment								137,294
Fixed assets & Long term investment								136,931
TOTAL ASSETS								274,225
Payables								208,431
Owner’s Equity								65,794
TOTAL LIABILITY AND EQUITY								274,225
Total revenue								167,109
Deductions Items								1,739
Net revenue								165,370
Net income from business activity								23,720
Net income from financial operation								-13,216
Irregular Profit								883
Total pre-tax profit								13,390
Following is the estimated data in 2007 which are collected from the subject:
Estimated revenue in 2007								525,000,000,000 VND
Estimated After tax profit in 2007								40.5 billion VND
Estimated Profit/Equity in 2007								50%
INTERPRETATION
Originally, the subject was a State Owned Company established in 1976 as a pharmaceutical factory with the annual capacity of 1.2 million products per year. In August 2004, after some times of splitting and merger with other entities, the subject was officially equitized and operated as a joint stock company. In the shareholder’s meeting of company held on March to April 2007, the subject has approved the plan to increase its legal capital from 56 billion VND to 81 billion VND by issuing more shares. Total shares published are 250,000 ones with the value of 100 VND per share. Among them, 22,000 shares (8.8%) are for staffs of company; 30,000 for existing shareholders (1.2%) and other 200,000 ones (80%) will be sold out of company. The subject also has changes in management structure by raising the number of them from 5 to 9 ones at the time reported. Mr. Luong Van Hoa is both the general director and chairman of company. However, at this time, this process is still on the plan. The subject now specializes in manufacturing and trading in kinds of medical products and pharmaceutical materials. It has 4 factories manufacturing pharmaceuticals, capsule and medical equipment (one is under construction). Besides, the subject also has a farm aiming to growth herb in Binh Phuoc province, a Southern one of Vietnam. It also expands operation by set up representative office in Laos in order to expand markets. Presently, the subject has totally 45 branches and transaction points across the country. This large system will help the subject much. The premises of the subject are large. The head office of the subject is located in Vinh Long province, Mekong delta area. All the subject’s factories are equipped with modern technology and follows the management standard GPM – WHO. In 2007, the subject plans to invest 10 million USD to open one more factory with the technology of Canada and capacity of 4 billion tablets per annum. The management capacity of the subject is good. It was received certificates of ISO 9001:2000, ISO IBC 17025, GMP and GSP for the quality management. The staff’s ability is good. The market share of the subject is wide. Its products are consumed in many provinces from the North to the South. Its productivity is about 1 billion pharmaceutical products per year. At present, the subject is the unique manufacturer in Vietnam with capacity of 2 billion capsules per year. However, its trademark and prestige in comparison with others in the same field is only on the above average level. The financial status of the company is healthy. Its revenue and profit are fairly high, creating the good condition for all of its staffs and workers. The future prospect of the subject is good. In general, the financial and operational bases of the subject are good. Its business operation is stable and developing. The subject has capacity to meet the financial commitments. No caution needed for normal business transactions.

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

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