MIRA INFORM REPORT

Report Date :

02.02.2008

IDENTIFICATION DETAILS

Name :	SAPHARCO - SAIGON PHARMACEUTICAL COMPANY
Registered Office :	No. 18-20, Nguyen Truong To Str, Ward 12, Dist 4, Hochiminh City
Country :	Vietnam
Financials (as on) :	31.12.2006
Date of Incorporation :	1975
Com. Reg. No.:	4106000356
Legal Form :	State Owned Company
Line of Business :	Producing, Importing, Exporting and Trading in Medicines, Materials and Medical Instruments

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 :	Usually Correct
Litigation :	Clear

SUBJECT IDENTIFICATION & LEGAL FORM

Current legal form:
English Name		SAIGON PHARMACEUTICAL COMPANY
Vietnamese name		CONG TY DUOC SAI GON
Trade Name		SAPHARCO
Original Founded		1975
Type of Business		State Owned Company
Current Business registration		4106000356
Issued on		December 21^st 2007
Issued by		Ho Chi Minh City Department of Planning and Investment
Current Registered Capital		278,106,000,000 VND
Tax Code		0300523385
Total Employees		500
Qualification		Fairly good
Note: The subject has just changed in the new type of business followed the decision of the Hochiminh People’s Committee. According to this decision, the subject operates with the model of parent and subsidiary company, in which, the subject plays the role as the holding company with 3 subsidiaries and 15 association companies. At the moment, the subject has just converted to new model. Sapharco will be the holding company and it has 3 subsidiaries include: - Mebiphar - Yteco - Khanh Hoi pharmaceuticals Company Besides, it also has 15 other association companies.
Former legal form:
English Name	SAIGON PHARMACEUTICAL COMPANY
Vietnamese name	CONG TY DUOC THANH PHO
Other name	CONG TY DUOC PHAM SAPHARCO
Abbreviation	SAPHARCO
Original Founded	1975
Type of Business	State Owned Company
Established Decision	No. 130/QD-UB
Date of Issuance	March 24^th 1993
Place of Issuance	People's Committee of Hochiminh City
Business registration	No. 102483
Date of Issuance	March 27^th 1993
Place of Issuance	Planning and Investment Department of Ho Chi Minh City
Registered Capital	14,461,000,000 VND
Tax Code	0300523385

ADDRESSES

Head Office
Address	No. 18-20, Nguyen Truong To Str, Ward 12, Dist 4, Hochiminh City
Country	Vietnam
Tel	(84-8) 940 0388, 8254553, 8254554, 9400459, 9400460
Fax	(84-8) 940 1975
Email	sapharco@hcm.vnn.vn
Factory
Address	No. 10, Huu Nghi Avenue, Vietnam Singapore Industrial Park, Thuan An Dist, Binh Duong Province
Country	Vietnam
Tel	(84-650) 784 541
Fax	(84-650) 784 542
Email	roussel@hmrvn.vnn.vn
Branch in Hanoi
Address	No. 65 Lane 178/1Thai Ha Str, Dong Da Dist, Hanoi City
Country	Vietnam
Tel	(84-4) 857 4721
Fax	(84-4) 847 0745
Registration No.	0116000747
Tax Code	0300523385-001

DIRECTORS

1. NAME	Mr. LE VAN QUE
Position	Chairman
Qualification	Management
Contact Address	No. 18-20, Nguyen Truong To Str, Ward 12, Dist 4, Hochiminh City
Nationality	Vietnamese
Inauguration date	Sep 2007
2. NAME	Mr. LE MINH TRI
Position	General Director
Qualification	Management
Contact Address	No. 18-20, Nguyen Truong To Str, Ward 12, Dist 4, Hochiminh City
Nationality	Vietnamese
Inauguration date	Sep 2007
3. NAME	Mr. PHAM SI BA
Position	Vice General Director
Contact Address	No. 18-20, Nguyen Truong To Str, Ward 12, Dist 4, Hochiminh City
Nationality	Vietnamese
4. NAME	Mr. TRAN VIET TRUNG
Position	Vice General Director
Contact Address	No. 18-20, Nguyen Truong To Str, Ward 12, Dist 4, Hochiminh City
Nationality	Vietnamese
5. NAME	Mr. CAP HUU ANH
Position	Vice General Director
Contact Address	No. 18-20, Nguyen Truong To Str, Ward 12, Dist 4, Hochiminh City
Nationality	Vietnamese
6. NAME	Mr. TRAN VAN THUONG
Position	Chief Accountant
Contact Address	No. 18-20, Nguyen Truong To Str, Ward 12, Dist 4, Hochiminh City
Nationality	Vietnamese

BUSINESS NATURE AND ACTIVITIES

The subject registered in the following activities:

ü Producing, importing, exporting and trading in medicines, materials and medical instruments.

ü Trading, import- export of cosmetic.

ü Producing, trading, import-export vaccines, serum, and biological products, medicine food, personal hygiene products and preventing.

ü Consultant for health, import medicine registration.

ü Making out an customs duty service, advertisement

IMPORT & EXPORT ACTIVITIES

IMPORT: The subject imports materials and products from USA, France, Germany, Australia, Canada, Switzerland, Netherlands, Italy, Japan and Korea.

EXPORT: The subject exports its oriental medicine and medicine, materials to South Africa, Korea, Taiwan, Cambodia and Laos.

BANKERS

1. DEUTSCHE BANK
Address	No. 65, Le Loi Str, Ben Nghe Ward, Dist 1, Hochiminh City
Country	Vietnam
Tel	(84-8) 822 2667
Fax	(84-8) 829 3865
2. INDUSTRIAL AND COMMERCIAL BANK OF VIETNAM (INCOMBANK) BRANCH NO.4
Address	No. 54 - 56, Le Quoc Hung Str, Dist 4, Hochiminh City
Country	Vietnam
Tel	(84-8) 940 2281
Fax	(84-8) 940 0973
Swift	ICBVVNVX908
3. EXIMBANK – HOCHIMINH CITY
Address	No. 7, Le Thi Hong Gam Str, Dist 1, Hochiminh City
Country	Vietnam
Tel	(84-8) 821 0055
Fax	(84-8) 829 6063
Telex	812690 EIB VT
Swift	EBVIVNVX
4. BANK FOR INVESTMENT & DEVELOPMENT OF VIETNAM- HCM CITY BRANCH
Address		No. 134 Nguyen Cong Tru Street, District 1, Hochiminh City
Country		Vietnam
Tel		(84-8) 8230125, 8297384
Fax		(84-8) 8298862
Swift		BIDVVNVX310

SHAREHOLDER (S)

Name	HO CHI MINH CITY’S PEOPLE COMMITTEE
Address	No. 86 Le Thanh Ton Str, Dist 1, Ho Chi Minh City
Country	Vietnam
Tel	(84-8) 8226191
Fax	(84-8) 8296116
Share	100%
Representative by	Mr. LE VAN QUE

PAYMENT HISTORY AND EXPERIENCES

Trade Morality	Good
Liquidity	Average
Payments	Fairly Good
Financial Situation	Above Average
Development trend	Fairly Good
Litigation Data	No reported
Bankruptcy	No reported
Payment Method	TT, L/C
Sale Method	Manufacture, Imports and Supplying for distributor, agents

FINANCIAL DATA

Note: The financial data in 2005 is not available
BALANCE SHEET
Unit: Million VND
Balance sheet date	31/12/06	31/12/04		31/12/03
Number of weeks	52	52		52
ASSETS
A. Working assets & short-term Investment	545,303	294,426		278,510
I. Cash and cash equivalents	154,496	102,326		88,067
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 short-term investment	0	0		0
III. Receivables	170,388	69,271		47,908
1. Receivables from customers	26,859	31,039		32,765
2. Prepayment for providers	22,855	0		1,510
3. Value-added tax deducted	0	1,803		1,829
4. Internal receivables	96,977	36,042		11,687
5. Other receivables	0	387		117
6. Provision for bad receivables	23,697	0		0
IV. Inventory	210,404	114,961		141,712
1. Purchased goods in transit	0	0		0
2. Raw materials	0	0		0
3. Instrument, tools	0	0		0
4. Cost for production and business in process	0	0		0
5. End products	0	0		0
6. Goods	210,404	114,961		141,712
7. Goods on consignment	0	0		0
8. Provision for devaluation of stocks	0	0		0
V. Other current assets	10,015	7,868		823
1. Advances	10,015	7,868		823
2. Prepaid expenses	0	0		0
3. Pending expenses for transfer	0	0		0
4. Pending assets	0	0		0
5. Mortgage, collateral and short run collateral	0	0		0
VI. Administrative	0	0		0
1. Administrative expenses for previous year	0	0		0
2. Administrative expenses for current year	0	0		0
B. Fixed assets & Long term investment	47,627	12,804		33,877
I. Fixed assets	7,317	5,912		5,907
1. Tangible fixed assets	6,584	5,912		5,907
+ Original cost	21,601	19,335		18,916
+ Accumulated depreciation value	-15,017	-13,423		-13,009
2. Financial leasing fixed assets	0	0		0
+ Original cost	0	0		0
+ Accumulated depreciation value	0	0		0
3. Intangible fixed assets	733	0		0
+ Original cost	733	0		0
+ Accumulated depreciation value	0	0		0
II. Long term investment	30,812	500		24,113
1. Long-term securities investment	0	500		501
2. Joint-venture capital contribution	30,252	0		23,612
3. Other long-term investment	560	0		0
4. Provision for long-term investment devaluation	0	0		0
III. Capital construction in process	2,882	6,392		3,857
IV. Other	6,616	0		0
TOTAL ASSETS	592,930	307,230		312,387
LIABILITIES
A. Payable loans	368,347	142,119		172,154
I. Short term payables	364,703	142,030		171,954
1. Short-term borrowings	0	4,074		4,073
2. Due long-term liabilities	330,695	0		0
3. Payables to supplier	13,169	101,277		139,917
4. Prepayment of buyer	846	7,703		5,087
5. Taxes and accounts dutiable	19,072	-1,957		-2,445
6. Employee payments	0	30,196		23,405
7. Internal payables	0	0		0
8. Other payables	921	737		1,917
II. Long term loans	3,644	89		200
1. Long-term borrowings	0	0		0
2. Long-term payables	3,644	89		200
III. Other payables	0	0		0
1. Payable expenses	0	0		0
2. Pending assets	0	0		0
3. Receipts long-term collateral and deposit	0	0		0
B. Owner’s Equity	224,583	165,111		140,233
I. Capital and Funds	221,495	154,395		129,866
1. Working capital	62,040	58,239		54,875
2. Differences from asset revaluation	0	0		0
3. Exchange rate differences	0	0		0
4. Development investment funds	142,866	84,565		65,776
5. Reserved funds	16,589	11,591		9,215
6. Retained profit	0	0		0
7. Construction capital sources	0	0		0
II. Other administrative and fund sources	3,088	10,716		10,367
1. Provident funds for unemployment	3,088	3,449		3,080
2. Reward and welfare funds	0	7,267		7,287
3. Management funds of higher level	0	0		0
4. Functional operation funds	0	0		0
5. Fund sources formed by fixed assets	0	0		0
TOTAL LIABILITY AND EQUITY	592,930	307,230		312,387
PROFIT & LOSE STATEMENT
Description	FY 06	FY 04		FY 03
Total revenue	988,819	636,225		671,092
Deductions Items	13,059	1,268		1,268
- Discount	0	0		0
- Devaluation	0	0		0
- Return of sold goods	13,059	1,268		1,268
- Turnover tax, Luxury tax & Export tax	0	0		0
1. Net revenue	975,760	634,957		669,824
2. Cost of goods sold	905,336	571,140		616,867
3. Gross Profit	70,424	63,817		52,957
4. Sales expenses	44,720	28,998		28,686
5. Enterprise administrative expenses	6,837	8,301		9,358
6. Net income from business activities	18,867	26,518		14,913
Income from financial activities	16,492	16,712		28,012
Expenditure from financial activities	20,359	9,535		3,202
7. Net income from financial operation	-3,867	7,177		24,810
Irregular income	4,943	1,490		2,311
Irregular expenditure	264	236		664
8. Irregular Profit	4,679	1,254		1,647
9. Total pre-tax profit	19,679	34,949		41,370
10. Income tax	7,252	8,571		7,730
11. After tax profit	12,427	26,378		33,640
FINANCIAL FACTORS
Description	FY 06	FY 04		FY 03
Current liquidity ratio	1.50	2.07		1.62
Quick Liquidity ratio	0.92	1.26		0.80
Inventory circle	4.30	4.45		4.01
Average receive period	63.74	39.82		26.11
Utilizing Asset Performance	1.65	2.07		2.14
Liability/ Total Asset (%)	62.12	46.26		55.11
Liability/ Owner's equity (%)	164.01	86.07		122.76
Income before tax/ Total asset (%) ROA	3.32	11.38		13.24
Income before tax/ Owner's equity (%) ROE	8.76	21.17		29.50
Gross Profit / Total revenue (%) GPM	1.99	5.49		6.16
Income before tax/ Total revenue (%) NPM	7.12	10.03		7.89
And following is highlight of the subject in 2005:
Unit: 1,000,000 VND
Description			2005
Current assets & Short term Investment			250,771
Fixed assets and long-term investment			39,176
Total Assets			289,947
Payable			100,817
Owner’s Equity			189,130
Total Liability and Equity			289,947
Total Revenue			575,005
Deduction items			2,081
Net Revenue			572,924
Net Income From business Activities			14,588
Net Income From Financial Operation			18,051
Irregular Profit			2,154
Total pre-tax Profit			34,793
INTERPRETATION ON THE SCORES
Sapharco is a State owned company. It was officially established in 1975. It was directly under the Health Department of Hochiminh city. In 1998, Sapharco co-operated with Aventis Corporation to establish a joint venture called Aventis SRL with the registered capital of US$ 4.54 million (Sapharco hold 30% of the stakes). On March 30^th 2004, Aventis Group has separated Aventis SRL from Sapharco. Now, Aventis SRL is a 100% foreign (Aventis) invested company. In late 2007, the Hochiminh People’s Committee has just decided to set up “Cong ty Duoc Sai Gon” basing on the re-structure of Sapharco. Following this decision, the subject will operate as a parent and subsidiary model. This will be the first holding and subsidiary company model in pharmaceutical industry of Vietnam. After the change, the subject now is “Sai Gon Pharmaceutical Company” or “Cong ty Duoc Sai Gon” and the subject became the parent company with 3 subsidiaries and 15 association companies. The subject is representative for state management and control state capital in subsidiaries. The management board of the subject new people comes from other state owned companies. Total capital of this parent and subsidiary company is about more than 278 billion VND, in which the holding company will hold the control shares in other units. The mergence between these companies into one model will help to enhance the strength of pharmaceutical industry in Hochiminh city, instead of producing separately of each company and to push the industry to new level, meeting the demand of the market. Formerly, the subject has a joint venture company with “Roussel Vietnam”, which was a joint-venture between Sapharco (40% shares) and Roussel Uclaf Corporation of France (60% shares). Currently, the subject has bought all shares of that joint venture and it becomes a subsidiary of Sapharco. On June 24^th 2004, the subject built a factory in VSIP Binh Duong province. This factory named Roussel VN and it has total investment capital of 45 billion VND. The subject’s factory has area of 6,800 m^2. Besides traditional products (cortibion, diantavic, idarac...), the subject will produce medicines under concession of Aventis Pharma SA (France) and produce domestic medicines named Roussel VN (self-study). The subject is a big medicine importer and distributor in Hochiminh city. The subject has a long term operation on medical field. Up to now, it has established a wide distribution network in all over the country. The subject still has close relations with more than 40 large hospitals locating in Hochiminh city and provinces, 1,500 private pharmacies, and 100 pharmaceutical factories in Vietnam. The subject holds 13- 15% of the whole Vietnam pharmaceutical market share. In foreign trade, Sapharco has relations with about 150 leader pharmaceutical and instrument companies of USA, Germany, Canada, Japan, Switzerland, Australia and Korea. The subject's pharmaceutical materials and products are exported to South Africa, Cambodia and Laos. Now production is added in the subject activities. In 2007, the revenue of the subject was about VND 1,500 billion. The facilities of the subject are relatively good. Its management capacity is rather good. The activities of the subject are busy. Over the past ten years, Sapharco has been the leading revenue unit in Vietnam pharmaceutical field. In general, the subject is on the way to development. Its future prospect seems bright. It has capacity to meet the financial commitments, no caution needed for the business transactions
The company has ADEQUATE capacity to meet financial commitments.

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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