MIRA INFORM REPORT

Report Date :

22.05.2008

IDENTIFICATION DETAILS

Name :	HAU GIANG PHARMACEUTICAL JS COMPANY
Formerly Known As :	HAU GIANG PHARMACEUTICAL UNITED ENTERPRISES
Registered Office :	No. 288 Bis Nguyen Van Cu Str, Ninh Kieu Dist., Can Tho City, Can Tho province
Country :	Vietnam
Financials (as on) :	31.12.2007
Date of Incorporation :	1974
Com. Reg. No.:	5703000111
Legal Form :	Joint-Stock Company
Line of Business :	Manufacturing many kinds of dosage forms including hard capsules, tablets, coating tablets, soft capsules, etc. Trading in various kinds of pharmaceutical products Producing and trading in equipments to produce pharmaceutical products

RATING & COMMENTS

MIRA’s Rating :

A

RATING		STATUS	PROPOSED CREDIT LINE
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

Status :	Good
Payment Behaviour :	No Complaints
Litigation :	Clear

SUBJECT IDENTIFICATION & LEGAL FORM

English Name	HAU GIANG PHARMACEUTICAL JS COMPANY
Vietnamese Name	CONG TY CO PHAN DUOC PHAM HAU GIANG
Former Name	HAU GIANG PHARMACEUTICAL UNITED ENTERPRISES
Former Vietnamese Name	XI NGHIEP LIEN HIEP DUOC HAU GIANG
Trade Name	DHG PHARMACEUTICAL JOINT – STOCK COMPANY
Current Abbreviate Name	DHG-PHARMA
Former Abbreviate Name	HG-PHARM
Listed on	Ho Chi Minh City Securities Trading Center
Current Type of Business	Joint-Stock Company
Founded	1974
Under management of	Ministry of Health
Re-established	1992
Establishment Decision	No.963/QD-UBT
Issued on	October 15^th, 1992
Issued by	People’s Committee of Can Tho Province
Former business registration	No. 101001
Issued on	October 17^th, 1992
Issued by	Planning and Investment Department of Can Tho City
Equitization Decision	2405/QD-CT.UB
Issued on	August 15^th, 2004
Issued by	People’s Committee of Can Tho Province
New Business Registration	No. 5703000111
Issued on	September 15^th, 2004
Issued by	Planning and Investment Department of Can Tho City
Current Registered Capital	VND 200 Billion
Former Registered Capital	VND 100 Billion
Tax Code	No. 1800156801
Total Employees	Around 2,000 persons
Qualification	Qualified
Note: The subject has just increased capital from 100 Billion VND to 200 Billion VND in January 4^th, 2008.

ADDRESSES

Head Office:
Address	No. 288 Bis Nguyen Van Cu Str, Ninh Kieu Dist., Can Tho City, Can Tho province
Country	Vietnam
Tel	(84-710) 890 802/ 890 074
Fax	(84-710) 895 209
Email	dhgpharma@dhgpharma.com.vn
Former Email	hg-pharm@hcm.vnn.vn
Website	http://www.dhgpharma.com.vn
Former Website	http://www.hgpharm.com.vn
The subject has 18 branches, 20 distribution agents, and many pharmacy stores locating from the North to the South of Vietnam. Following are some of them:
Hochiminh city Branch
Address	No.97-0 Nguyen Duy Duong Str, F9, Dist.5, Hochiminh City, Vietnam
Tel	(84-8) 832 1095
Chief of Branch	Mrs. LAN NGOC VAN
Hanoi Branch
Address	No.89 Nguyen Van Troi Str, Phuong Liet Dist., Thanh Xuan Dist., Hanoi City, Vietnam
Former Address	No.31, Lang Ha Str, Dong Da Dist, Hanoi City, Vietnam
Tax code	No. 1800156801-031
Business Registration	No. 0113005568
Place issue	Planning and Investment Department of Hanoi City
Tel	(84-4) 212 3431
Fax	(84-4) 664 8272
Chief of branch	Mrs. NGUYEN THI BACH HONG
Identity card	No. 360114735
Hai Phong City Branch
Address	No. 4/345, Tran Nguyen Han Str, Le Chan Dist, Hai Phong City
Country	Vietnam
Tax code	No. 1800156801-007
Business Registration	No. 0213001057
Place issue	Planning and Investment Department of Hai Phong City
Tel	(84-31) 327 0046
Chief of branch	Mr. LE THANH HAI
Identity card	No. 100462151
Danang City Branch
Address	No. 225, Ong Ich Khiem Str, Da Nang City, Vietnam
Tax code	No. 1800156801-003
Business Registration	No. 3213000463
Place issue	Planning and Investment Department of Da Nang City
Tel	(84-511) 389 1408
Chief of branch	Mrs. DO THI HA

DIRECTORS

1. NAME	Mrs. PHAM THI VIET NGA
Position	General Director and Chairwoman
Hand Phone	++84 913 973 126
Qualification	Doctor
Date of birth	December 20^th, 1951
ID Number	361139945
Resident	No.118/1 - 30/4 Str., Hung Loi ward, Ninh Kieu dist., Can Tho City
Nationality	Vietnamese
2. NAME	Mrs. LE MINH HONG
Position	Deputy General Director
Qualification	Pharmacist, Bachelor of Economics
Date of Birth	March 24^th, 1959
Resident	288 Bis/17, Nguyen Van Cu Str, Ninh Kieu Dist., Can Tho City
Nationality	Vietnamese
Direct contact phone	(84-710) 890 790
3. NAME	Mr. LE CHANH DAO
Position	Deputy General Director
Qualification	Pharmacist, Master of Economics
Date of Birth	July 2^nd, 1959
Resident	288/18 Bis Nguyen Van Cu Str, An Hoa Ward, Can Tho City
Nationality	Vietnamese
Office Tel	(84-710) 890 094

BUSINESS NATURE AND ACTIVITIES

The subject focuses on the following lines of business:

· Manufacturing many kinds of dosage forms including hard capsules, tablets, coating tablets, soft capsules, etc. The subject has achieved certificates of GMP-ASEAN, GLP-ASEAN, GSP-ASEAN with quality assurance system complying with ISO 9001:2000.

· Trading in various kinds of pharmaceutical products

· Consultant service on medical and pharmaceutical. Bonded warehouse and rental service, maintaining and repairing goods, packages

· Producing and trading in equipments to produce pharmaceutical products

IMPORT & EXPORT ACTIVITIES

IMPORT: The subject imports many different kinds of pharmaceutical products from China, India, USA, Spain and Europe such as France, Germany, etc.

EXPORT: The subject exports pharmaceutical products to Moldova, Ukraina, Russia, Mongolia, Rumani, Cambodia, Laos and Korea..etc

BANKERS

1. VIETCOMBANK (CAN THO BRANCH)
Address	No.7 Hoa Binh Avenue, Can Tho City, Can Tho Province
Country	Vietnam
Tel	(84-710) 820445
Fax No	(84-710) 820694
Telex	VCBCT VT
SWIFT	BFTVVNVX 001
USD Account	0111370007798
2. INDUSTRIAL & COMMERCIAL BANK OF VIETNAM (CAN THO BRANCH)
Address	No. 9, Phan Dinh Phung Str., Can Tho City, Can Tho Province
Country	Vietnam
Tel	(84-710) 820875
3. VIETNAM INTERNATIONAL COMMERCIAL JS BANK (CAN THO BRANCH)
Address	No. 19-21, Tran Van Kheo, Ninh Kieu Dist., Can Tho City, Can Tho Province
Country	Vietnam
Tel	(84-710) 765995
Fax	(84-710) 765939

SHAREHOLDERS

The subject was a State owned enterprise. It has just been equitized to be joint stock company in 2004. Following is its shareholders as of March 3^rd 2007: (value of each share is 10,000 VND)
Following is the subject found shareholders:
I. State Owned Shares:
Shares	4,420,000 Shares
II. Private Shares:
1.NAME	Mrs. PHAM THI VIET NGA
Position	General Director and Chairman
Qualification	Pharmacist and Doctor of Economics
Date of birth	December 20^th, 1951
ID Number	361139945
Issued on	June 01^st, 1998
Issued by	Police Station of Can Tho City
Resident	No.118/1 - 30/4 Str., Hung Loi ward, Ninh Kieu dist., Can Tho City
Nationality	Vietnamese
Contact No.	++84 913 973 126
Values	29,000 Shares
2. NAME	Mrs. LE MINH HONG
Position	Deputy General Director
Qualification	Pharmacist, Bachelor of Economics
Date of Birth	March 24^th, 1959
Resident	288 Bis/17, Nguyen Van Cu Str, Ninh Kieu Dist., Can Tho City
Nationality	Vietnamese
Direct contact phone	(84-710) 890 790
Values	15,934 Shares
3. NAME	Mr. LE CHANH DAO
Position	Deputy General Director
Qualification	Pharmacist, Master of Economics
Date of Birth	July 2^nd, 1959
Resident	288/18 Bis Nguyen Van Cu Str, An Hoa Ward, Can Tho City
Nationality	Vietnamese
Office Tel	(84-710) 890 094
Values	11,872 Shares
4. NAME	Mr. PHAM HUU LAP
Position	Shareholder
Qualification	Master of Economics
Office Tel	(84-710) 890 032
Date of Birth	October 30^th, 1973
Resident	178/46/11A, 3/2 Str, Can Tho City
Nationality	Vietnamese
Values	11,971 Shares
5. NAME	Mrs. NGUYEN THI HONG LOAN
Position	Chairman of Labor Union
Office Tel	(84-710) 893 507
Date of Birth	September 14^th, 1958
Resident	369/11, Loi Nguyen B Str, Hung Loi ward, Can Tho City
Nationality	Vietnamese
Values	7,638 Shares
6. NAME	Mrs. DIEP BICH HUONG
Position	Shareholder
Date of Birth	September 18^th, 1962
Resident	139 Nguyen Van Cu Str, Can Tho City
Office Tel	(84-710) 891 433
Nationality	Vietnamese
Values	6,826 Shares
7. NAME	Mrs. NGUYEN NGOC DIEP
Position	Shareholder
Resident	No. 5/8C – 30/4 Str, Xuan Khanh ward, Can Tho City
Nationality	Vietnamese
Values	6,495 Shares
8. NAME	Mrs. HA MY DUNG
Position	Shareholder
Date of Birth	October 5^th, 1968
Office Tel	(84-710) 890 314
Resident	288/33 Nguyen Van Cu Str, Ninh Kieu Dist., Can Tho City
Nationality	Vietnamese
Values	7,096 Shares
9. NAME	ASIA VALUE INVESTMENT LTD
Address	Room 1703, Flr 17, Sunwah building, No.115 Nguyen Hue Str, Dist 1, Hochiminh city
Nationality	Vietnamese
Values	29,098 Shares
III. Staffs in the company.
Values	770,838 Shares
IV. Outside shareholders:
Values	4,683,232 Shares

PAYMENT HISTORY AND EXPERIENCES

Trade Morality	Good
Liquidity	Fairly prompt
Previous Payments	Above average
Current Payment status	Fairly prompt
Current Financial Situation	Fairly good
Legal Action	No recorded
Bankruptcy	No recorded
Public opinion	Good
Mode of payment	L/C, T/T
Sale methods	Directly export and though its agents network.

FINANCIAL DATA

BALANCE SHEET
Unit: VND 1,000,000
Balance Sheet Date	31/12/2007	31/12/2006	31/12/2005	31/12/2004
Number of week	52	52	52	52
ASSETS
A. Current assets & Short term Investment	674,440	333,095	228,197	161,664
I. Cash and cash equivalents	63,854	35,002	35,466	20,727
II. Short term investment	123,463	0	0	0
III. Receivables	250,370	167,105	79,040	49,777
1. Receivables from customers	-	154,257	64,575	39,366
2. Prepaid for providers	-	11,263	6,405	2,043
3. Value-added tax deducted	-	466	0	0
4. Internal receivables	-	0	0	7,960
5. Other receivables	-	1,619	8,060	408
6. Provision for bad receivables	-	-500	0	0
IV. Inventory	232,398	121,353	113,322	90,538
1. Purchased goods in transit
-	0	0	0
2. Inventory raw materials	-	0	0	36,442
3. Inventory appliance	-	0	0	0
4. Cost for production and business in process	-	0	0	7,815
5. Inventory finished products	-	0	0	38,416
6. Inventory cargoes	232,398	121,853	113,322	7,865
7. Entrusted goods for sale	-	0	0	0
8. Provision for devaluation of stocks	-	-500	0	0
V. Other current assets	4,355	9,635	369	622
1. Advances
-	0	0	395
2. Prepaid expenses	-	6,280	369	197
3. Pending expenses for transfer	-	0	0	0
4. Pending assets	-	3,355	0	0
5. Hypothecation, collateral and short run collateral	-	0	0	30
VI. Administrative	-	0	0	0
B. Fixed assets & Long term investment	268,421	149,752	64,060	54,995
I. Fixed assets	216,567	143,167	55,348	52,020
1. Tangible fixed assets	111,295	81,120	46,332	41,480
+ Original cost	-	115,899	69,789	53,195
+ Accumulated depreciation value	-	-34,779	-23,457	-11,715
2. Fixed assets of financing credit	0	0	0	0
3. Intangible fixed assets	105,272	62,047	9,016	10,540
+ Original cost	-	62,047	9,016	10,540
+ Accumulated depreciation value	-	0	0	0
II. Long term investment	38,225	1,609	122	23
1. Long-term securities investment	-	0	0	0
2. Joint-venture capital contribution	-	0	0	23
3. Other long-term investment	-	1,609	122	0
4. Provision for long-term investment devaluation	-	0	0	0
III. Capital construction in process	12,214	4,976	1,644	2,952
IV. Other	1,415	0	6,946	0
TOTAL ASSETS	942,861	482,847	292,257	216,659
LIABILITIES
A. Payables	292,412	312,406	161,290	120,810
I. Short term payables	291,598	291,128	138,523	100,505
1.Short-term borrowings	-	167,870	73,362	53,941
2. Due long-term liabilities	-	0	0	0
3. Payable to seller	-	18,478	16,286	14,831
4. Prepayment of buyer	-	169	163	373
5. Taxes and accounts dutiable	-	357	674	-1,560
6. Employee payments	-	32,548	13,494	7,075
7. Internal payments	-	0	0	0
8. Other payables	-	71,706	34,544	25,845
II. Long term payables	814	21,278	0	0
1. Long-term borrowing	-	0	0	0
2. Long-term loans	-	0	0	0
III. Other liabilities	-	0	22,767	20,305
1. Disbursement payable	-	0	22,767	20,305
2. Pending assets	-	0	0	0
3. Receipts long-term collateral and deposit	-	0	0	0
B. Owner’s Equity	650,449	170,441	130,967	95,849
I. Capital and Funds	634,620	161,306	130,653	96,560
1. Working capital	200,000	80,000	80,000	80,000
2. Differences from assets revaluation	-	0	0	0
3. Exchange rate differences	-	0	0	29
4. Business development fund	55,768	52,598	12,197	0
5. Reserved fund	-	11,795	400	0
6. Retained profit	378,852	16,913	38,056	16,531
7. Construction capital sources	-	0	0	0
II. Other administrative and fund sources	15,829	9,135	314	-711
1. Provident funds for unemployment	-	0	0	0
2. Welfare and reward funds	15,829	9,135	314	-711
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	942,861	482,847	292,257	216,659

PROFIT & LOSE ACCOUNTS

Description	FY 2007	FY 2006	FY 2005	FY 2004
Total revenue	1,285,210	873,072	556,190	452,196
Deductions Items	15,930	4,880	2,159	1,449
1. Net revenue	1,269,280	868,192	554,031	450,747
2. Original rate of goods for sale	601,278	402,747	299,403	282,552
3. Combined Profit	668,002	465,445	254,628	168,195
4. Sales costs	469,189	311,953	155,063	113,569
5. Enterprise administrative costs	60,319	55,881	39,787	19,259
6. Net income from business activity	138,494	97,611	59,778	35,367
Income from financial activities	5,789	514	406	281
Costs of financial activities	17,381	11,214	5,684	2,979
7. Net income from financial operation	-11,592	-10,700	-5,278	-2,698
Irregular income	1,351	1,406	1,187	243
Irregular expenditure	1,161	1,257	308	0
8. Irregular Profit	190	149	879	243
9. Total pre-tax profit	127,092	87,060	55,379	32,912
10. Income tax	0	17,412	11,077	9,215
11. After tax profit	127,092	69,648	44,302	23,697

FINANCIAL FACTORS

Description	FY 2007	FY 2006	FY 2005	FY 2004
Current Liquidity Ratio	2.31	1.14	1.65	1.61
Quick Liquidity Ratio	1.52	0.73	0.83	0.71
Inventory Circle	3.40	3.43	2.94	4.00
Average Receivable Period (days)	72.00	70.25	52.07	40.31
Utilizing Asset performance	1.35	1.80	1.90	2.08
Liabilities / Total Assets (%)	31.01	64.70	55.19	55.76
Liabilities / Owner’s Equity (%)	44.96	183.29	123.15	126.04
Income before tax/Total assets (%) ROA	13.48	18.03	18.95	15.19
Income before tax / Owner’s Equity (%) ROE	19.54	51.08	42.28	34.34
Income before tax/Total revenues (%) NPM	9.89	9.97	9.96	7.28
Gross profit /Total revenues (%) GPM	51.98	53.31	45.78	37.20

INTERPRETATION ON THE SCORES

DHG PHARMACEUTICAL JOINT – STOCK COMPANY (DHG-PHARMA) is one of the most traditional medicine manufacturers in the South of Vietnam. It is now expanding its activities and products nationwide. The subject has a wide distribution network including 18 branches, 20 distribution agents and many pharmacy stores locating from the North to the South of Vietnam.

Formerly, the subject was a State owned enterprise. It was set up in 1974 and has been under the direct management of the Ministry of Health since then. The subject was equitized in 2004 to be a joint-stock company with the registered capital of VND 80 Billion. The subject’s shares have just been listed on Ho Chi Minh City Securities Trading Center. Its stock code is DHG and market value is higher than nominal value about 26 times. The subject has issued more 20 Billion VND on June 20^th 2007 and in Jan 8^th, 2008, the Subject has increased to 200 billion VND.

During its development, the subject has got many achievements. It was granted certificate of ISO 9001: 2000 from BVQI dated on march 10^th, 1999. Besides, it also achieved certificates of GMP, GLP, GSP-ASEAN. Now, the subject is building a factory that meet standard of GMP-WHO.

The subject manufactures and trades in about 250 kinds of pharmaceutical products, some of them are famous ones such as: HAPOCOL, EYELIGHT, CEFUROXIM, KLAMENTIN, CHOLIVER, EUGICA, etc. And its product, which is more and more trustful for customers, is not only good in quality but also sold at reasonable price. At present, the subject’s production value is accounted for 10 percent of the whole country’s production value.

The subject’s products can compete with the foreign ones. At present, its products, CHOLIVER and EUGICA, are exported to many countries in the world such as: Cambodia, Laos, and Eastern European countries (Ukraine, Moldova, Russia, etc). The export turnover in 2005 was USD 481,000. In near future, the export turnover will be increased hard.

The subject is considered as the leading pharmaceutical company in Vietnam. Its premise & facility are good. The subject has re-organized its structure to be more active and more effective. Currently, it is one of the most effective enterprises of the Ministry of Health. Its turnover & profit are remarkable. Total value of product manufactured by the subject occupies 10% of total value of product manufactured by pharmaceutical companies in Vietnam. The total revenue increases year after year, especially after equitization. Its total revenue in 2005 was VND 554 billions, up 122 percent against 2004. The turnover of 2006 was 868,192 million VND, up 56.70% against 2005. Its total export volume attained 746,908 USD. Its products are mainly exported to Moldova, Ukraina, Laos, Campuchia, Mongolia, Korea. It plans to enter the markets of East Europe, EU and ASEAN countries.

The subject is respected good by shareholders and investors. The dividend in 2005 and 2006 was 25%. Financial situation of the subject is fairly good. The liquidity of 2006 was a bit decreased compared to 2005. The average receive period was increased to 70 days. This thing made cash and cash equivalents of the end 2006 were not higher than that in 2005. In 2006, total assets were about higher two times than that in 2005. The assets were funded much by liabilities. The liabilities/total assets ratio was increased but it still safe for creditors and owners. The profitability was improved. One capital unit of owners made a half capital unit of profit.

The subject’s business result is good because of good management capacity. Mrs. PHAM THI VIET NGA is dynamic and creative person. She was assigned to the director of Hau Giang United Pharmaceutical Factory, precursor of the subject, in 1998. At that time, this company was in the bank of bankruptcy. Thanks to determination and suitable policy, she and the subject have current remarkable achievements. She has been awarded to be one of 100 excellent businessman of Vietnam in 2006. In last March 8, she was granted “Gold Rose – 2006” award.

Beside business operation, the subject also participates in many social operations. In 2005, the subject contributed VND 2 Billion for charity operation, financed USD 10,000 for 7 hospitals in Hochiminh city, Can Tho city, and Ca Mau province. Therefore, the image, prestige and position of the subject in Vietnam pharmaceutical industry are more and more elevated. The subject has clear development strategy. The management policy is always improved to meet the development and competition. The future prospect of the subject is bright.

In overall, after equitization, the organization structure and management ability of the subject are improved much. Its products have high competitiveness. The quality of its products is improved. The market share is higher. Its distribution network is allocated widely from the North to the South of Vietnam and is operating effectively. The management board always has good policy against sales teams.

The financial situation and operational base of the subject are healthy. The subject has capacity to meet financial commitments. No caution needed for normal business transactions.

The company has STRONG capacity to meet its 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%)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions