MIRA INFORM REPORT

Report Date :

15.02.2008

IDENTIFICATION DETAILS

Name :	HATAY PHARMACEUTICAL JOINT STOCK COMPANY
Registered Office :	No. 80, Quang Trung Str, Ha Dong City, Ha Tay Province
Country :	Vietnam
Financials (as on) :	31.12.2006
Date of Incorporation :	1965
Com. Reg. No.:	0303000015
Legal Form :	Joint Stock Company
Line of Business :	Manufacturing, Trading and Import – Export of Medicines, Material for Medicine Producing and Health Care Equipments.

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			HATAY PHARMACEUTICAL JOINT STOCK COMPANY
Vietnamese name			CONG TY CO PHAN DUOC PHAM HA TAY
Trade Name			HATAPHAR
Originally Founded			1965
Equitization			December 2000
Current type of business			Joint stock company
Former type of business			State owned company
Current business registration			No. 0303000015
Issued on			October 1^st , 2001
Issued by			Ha Tay Department of Planning and Investment
Former business registration			No. 104378
Issued on			April 8^th 1993
Issued by			Ha Tay Department of Planning and Investment
Current Registered Capital			VND 37,500,000,000
Tax code			0500391400
Total Employees			950 persons (including staffs and workers)
Qualification			Normal
Note: The subject increased its registered capital to 37,500 million VND in 2007.
ADDRESSES
Head Office:
Address	No. 80, Quang Trung Str, Ha Dong City, Ha Tay province
Country	Vietnam
Tel	(84-34) 824685 / 824489 / 516101
Fax	(84-34) 829054
Email	hataphar@fpt.com
Website	www.hataphar.com.vn
05 Pharmaceutical manufacturing factories:
Address	La Khe village, Van Khe commune, Ha Dong City, Ha Tay province
Country	Vietnam
Import – Export Branch in Hanoi city
Address	No. 8, alley 10/1, Hoang Ngoc Phach Str, Dong Da Dist, Hanoi city
Country	Vietnam
Tel	(84-4) 7763171
Fax	(84-4) 7763172
Manager	Mr. Hoang Van The
Besides, the subject also has a system of agents and distributing centers in many cities and provinces of Vietnam, such as Hochiminh city, Hai Phong, Da Nang cities, Quang Ninh, Bac Ninh, Tuyen Quang, Thai Nguyen provinces.
DIRECTORS
1. NAME	Mr. LE VAN LO
Position	General Director
Date of birth	June 9^th 1951
Qualification	Pharmacist
ID No.	110007031
Resident	Alley 6, Le Trong Tan Str, Van Khe commune, Ha Dong City, Ha Tay province
Nationality	Vietnamese
Office tell	(84-34) 824685
Private Tel	(84-34) 826284
Inauguration day	1986
2. NAME	Mr. LE XUAN THANG
Position	Deputy Director
Qualification	Pharmacist
Date of birth	February 16^th 1973
Resident	Van Khe commune, Ha Dong City, Ha Tay Province
Nationality	Vietnamese
Office tel	(84-34) 516 101
Cell phone	++84 912100968
Inauguration day	2005
BUSINESS NATURE AND ACTIVITIES
The subject focuses on manufacturing, trading and import – export of medicines, material for medicine producing and health care equipments.
IMPORT & EXPORT ACTIVITIES
IMPORT: The subject imports nearly 100% from China, Taiwan, Germany, Korea, France, India, the United Kingdom, Australia, Japan, etc.
EXPORT: The subject’s now are not exported. They are all for domestic demand.
BANKERS
1. INDUSTRIAL AND COMMERCIAL BANK OF VIETNAM (HATAY BRANCH)
Address	No. 269 Quang Trung Str, Ha Dong City, Ha Tay province
Country	Vietnam
Tel	(84-34) 824797
SWIFT	CBVVNVX320
Account	102010000237170
Note: At 269 Quang trung Str., Ha Tay, there is only Industrial and Commercial Bank of Vietnam – Ha Tay Branch. The subject does not have account at Vietcombank.
2. BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM (HATAY BRANCH)
Address	No.197, Quang Trung Str, Ha Dong City, Ha Tay Province
Country	Vietnam
Tel	(84-34) 821 139
Fax	(84-34) 827 896
Account No.	45010000000116
SHAREHOLDER
The subject is a joint stock company. Following is its founders:
1. NAME	Mr. LE VAN LO
Position	General director
Resident	Van Khe commune, Ha Dong City, Ha Tay province
Contribution shares	19,016 shares
2. NAME	Mr. NGO VAN CHINH
Position	Shareholder
Resident	Ha Dong City, Ha Tay province
Contribution shares	3,400 shares
3. NAME	Mr. NGUYEN VAN MINH
Position	Shareholder
Resident	Van Khe commune, Ha Dong City, Ha Tay province
Contribution shares	3,400 shares
4. NAME	Mrs. DUONG THUY LAN
Position	Shareholder
Resident	Ha Dong City, Ha Tay province
Contribution shares	4,028 shares
5. NAME	Other shareholders
Contribution shares	270,750 shares
PAYMENT HISTORY AND EXPERIENCES
Trade Morality		Fairly good
Liquidity		Fairly prompt
Previous Payments		Average
Current Payment Status		Above average
Past Financial Situation		Above average
Current Financial Situation		Developing
Illegal action		Recorded
Bankruptcy		No recorded
Reputation		Normal
Modes of payment		Direct payment or through its corresponding banks, L/C or T/T
Sales methods		Directly to clients or through its agent system across the country
Note: On September 1^st 2006, the subject was fined 10.5 million VND (660 USD) by inspectors of the Ministry of Science and Technology for its unhealthy competition.
FINANCIAL DATA
BALANCE SHEET
Unit: Million VND
Balance Sheet Date				31/12/2006	31/12/2005	31/12/2004
Number of Weeks				52	52	52
ASSETS
A. Current assets & Short term Investment				133,425	97,148	79,026
I. Cash and cash equivalents				8,720	7,367	2,415
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				40,572	17,474	15,293
1. Receivables from customers				27,610	16,122	14,140
2. Prepaid for providers				10,851	0	0
3. Value-added tax deducted				0	0	0
4. Internal receivables				0	0	0
5. Other receivables				2,111	1,352	1,153
6. Provision for bad receivables				0	0	0
IV. Inventory				83,943	71,856	60,874
1. Purchased goods in transit				0	0	0
2. Inventory raw materials				0	31,042	29,405
3. Inventory appliances				0	62	38
4. Cost of production and business in process				0	0	0
5. Inventory finished products				0	0	0
6. Inventory cargoes				83,943	40,752	31,431
7. Entrusted goods for sale				0	0	0
8. Provision for devaluation of stocks				0	0	0
V. Other current assets				190	451	444
1. Advances				190	451	444
2. Prepaid expenses				0	0	0
3. Pending expenses for transfer				0	0	0
4. Pending assets				0	0	0
5. Hypothecation, 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				23,713	21,503	16,143
I. Fixed assets				23,713	11,901	16,143
1. Tangible fixed assets				23,713	11,901	16,143
+ Original cost				74,103	51,274	44,158
+ Accumulated depreciation value				-50,390	-39,373	-28,015
2. Fixed assets of financing credit				0	0	0
+ Original cost				0	0	0
+ Accumulated depreciation value				0	0	0
3. Intangible fixed assets				0	0	0
+ Original cost				0	0	0
+ Accumulated depreciation value				0	0	0
II. Long term investment				0	0	0
1. Long-term securities investment				0	0	0
2. Joint-venture capital contribution				0	0	0
3. Other long-term investment				0	0	0
4. Provision for long-term investment devaluation				0	0	0
III. Capital construction in process				0	9,602	0
IV. Other				0	0	0
TOTAL ASSETS				157,138	118,651	95,169
LIABILITIES
A. Payables				109,153	95,410	77,872
I. Short term payables				94,560	81,468	68,218
1. Short-term borrowings				63,049	68,132	46,732
2. Due long-term liabilities				0	0	0
3. Payable to seller				19,288	8,474	16,208
4. Prepayment of buyer				9,144	0	0
5. Taxes and accounts dutiable				492	90	887
6. Employee payments				1,928	1,866	1,588
7. Internal payments				0	0	0
8. Other payables				659	2,906	2,803
II. Long term payables				14,593	13,942	9,654
1. Long-term borrowing				14,593	13,942	9,654
2. Long-term loans				0	0	0
III. Other liabilities				0	0	0
1. Disbursement payable				0	0	0
2. Pending assets				0	0	0
3. Receipts long-term collateral and deposit				0	0	0
B. Owner’s Equity				47,985	23,241	17,297
I. Capital and Funds				47,889	23,032	17,148
1. Paid-in capital				31,710	13,795	8,411
2. Differences from assets revaluation				0	0	0
3. Exchange rate differences				0	0	0
4. Business development fund				429	252	223
5. Reserved fund				842	842	788
6. Retained profit				9,524	8,143	7,726
7. Construction capital sources				5,384	0	0
II. Other administrative and fund sources				96	209	149
1. Provident funds for unemployment				0	0	0
2. Welfare and reward funds				96	209	149
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				157,138	118,651	95,169
PROFIT & LOSE ACCOUNTS
Description				FY 2006	FY 2005	FY 2004
Total revenue				408,545	322,973	244,251
Deductions Items				4,581	3,941	1,937
- Discount				0	0	0
- Devaluation of sale price				4,581	3,941	1,937
- Return of sold goods				0	0	0
- Turnover tax, excise tax, import and export duties to be paid				0	0	0
1. Net revenue				403,964	319,032	242,314
2. Original rate of goods for sale				355,638	278,907	209,861
3. Combined Profit				48,326	40,125	32,453
4. Sales costs				12,967	14,290	11,457
5. Enterprise administrative costs				17,441	16,787	12,412
6. Net income from business activity				17,918	9,048	8,584
Income from financial activities				0	0	0
Costs for financial activities				7,336	0	0
7. Net income from financial operation				-7,336	0	0
Irregular income				0	0	0
Irregular expenditure				0	0	0
8. Irregular Profit				0	0	0
9. Total pre-tax profit				10,582	9,048	8,584
10. Income tax				1,058	905	858
11. After tax profit				9,524	8,143	7,726
FINANCIAL FACTORS
Description				FY 2006	FY 2005	FY 2004
Current liquidity ratio				1.41	1.19	1.16
Quick Liquidity ratio				0.52	0.31	0.27
Inventory circle				4.57	4.20	3.45
Average receive period				36.66	19.99	23.04
Utilizing Asset Performance				2.57	2.69	2.55
Liability/ Total Asset (%)				69.46	80.41	81.82
Liability/ Owner’s equity (%)				227.47	410.52	450.21
Income before tax/ Total asset (%) ROA				6.73	7.63	9.02
Income before tax/ Owner’s equity (%) ROE				22.05	38.93	49.63
Income before tax/ Total revenue (%) NPM				2.59	2.80	3.51
Gross Profit / Total revenue (%) GPM				11.83	12.42	13.29
INTERPRETATION ON THE SCORES
Ha Tay Pharmaceutical Joint stock company was originally founded in 1965 as a State owned company. In December 2000, it was decided to equitize into Joint stock company. And the equitization process of the subject was finished in 2001. At the moment, the subject’s registered capital is VND 37,500 million. The subject focuses on manufacturing, trading and import – export of medicines, material for medicine producing and health care equipments. It is under the management of director, Pharmacist Mr. Le Van Lo. With over 40 years of operation and development, the subject has reached many progresses. When it operated as a state owned company, It always well finished all the targets set by Vietnam Government. It is one of the companies that have high growth rate over the past 10 years. Currently, the subject’s reputation is considered above average. At this moment, the subject’s products are presented in all markets of Vietnam with about nearly 300 types of products, such as medicinal tablets, hard capsule, soft gel, sugar - coated and film - coated tablets, sirup, injectable powder, and so on. Its product has been created trust from customers and the subject has built its trademark in the market. The subject’s products are sold quickly after they are manufactured. In only 2006, the subject has researched and launched in the market about 30 new kinds of products. Especially, its products are recognized to meet the GMP – WHO standard of World Health Organization. In September 21^st2006, the subject was awarded certificate of good manufacturing practices (GMP) by drug department of Vietnam. Besides, during its development, the subject was also granted many awards, such as “Vietnam quality certificate in 2001 and 2004”; “golden ball”, “golden lotus”, and “Vietnam hero” in 2006. The premises and facilities of the subject are fairly standard. The subject’s factories are well equipped with advanced technology and machines of America, Germany, Taiwan, India, China, Korea, etc. The material sources for production are also imported from many countries such as Taiwan, China, Korea, and so on. At present, the subject has 5 factories in Van Khe commune, Ha Dong City. The subject also rents about 5,000 square meters in Phu Lam commune, Ha Dong City and 5 hectares in Hoa Lac, Thach That district, Ha Tay province for expanding operations. The subject’s management capacity is fair. All the members of director board are experienced person in pharmaceutical industry. The staffs’ ability is also fair. The market share of the subject now is fairly large. Its main markets are Northern provinces of Vietnam. Its competitiveness is fairly firm. However, in Vietnam, competition is a fairly dedicate problem for everyone in the market. On August 30^th 2006, the subject was checked by inspectors of the Ministry of Science and Technology of Vietnam. And on September 1^st 2006, the subject was fined 10.5 million VND for its unhealthy competition with its competitor in the market. This event had some impacts on the subject’s brand name. The subject now is operating well. Its financial status is considered stable and healthy. The turnover was increased year after year at stable rate. Annual turnover was increased too. However, the growth rate of profit was lower than that of total assets and equity, so the profitability of 2006 was less than that of 2005. Implementing development strategies, the management board invests much in fixed assets, inventories and boosts sales on credit. In 2006, the shareholder contributed more capital, so the debt ratio became safer for creditors. In 2006, as the subject boosted sales on credit, the average receive period was increased to 36.66 days. In short, Ha Tay Pharmaceutical JSC is operating on the fair scale. Its financial and operational bases are regarded well. Development trend is fairly good. The subject is capable to meet financial commitments. No caution needed for normal business transactions with the subject. The company is expected to be VULNERABLE TO ADVERSE change in circumstances and economic conditions.

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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