MINISTRY OF EDUCATION AND TRAINING

UEH UNIVERSITY – BUSINESS SCHOOL

SCHOOL OF FINANCE

VALUATION OF DHG PHARMACEUTICAL

JOINT STOCK COMPANY

Subject: Corporate Valuation

Instructor: Ms. Tu Thi Kim Thoa, Ph.D

Class code: 25D1FIN50505301
Class: K48 – FNC01 – Group 7

Ho Chi Minh City – May 2025

 MEMBER AND CONTRIBUTION ASSESSMENT
Full name Student ID Contribution

Phùng Thị Phương Thảo 31221024093 100%

Hồ Trần Tú Linh 31221021568 100%

Trương Khánh Linh 31221024012 100%

Nguyễn Thị Kim Thoa 31221026671 100%

Trần Như Quỳnh 31221022685 100%

 SPECIAL THANKS
We would like to express our sincere and deepest gratitude to Ms. Tu Thi Kim Thoa, PhD. , Senior Lecturer
on the subject of Corporation Valuation, Faculty of Finance, University of Economics Ho Chi Minh City
(UEH) for providing us with excellent instructions and deep knowledge that served as the foundation to
apply for our group report on “Valuation of DHG Pharmaceutical joint stock company”. During the process
of preparing this report, it is difficult to avoid shortcomings and limitations. We hope you can provide
feedback so that we can gain experience and improve in future projects.
 LIST OF ABRREVIATIONS
DHG: Duoc Hau Giang Joint Stock Company
HOSE: Ho Chi Minh Stock Exchange
OTC pharma: Over the counter pharmaceutical
EBITDA: Earning before interest, tax, depreciation and amortization
R&D: Research and development
M&A: Merger and acquisition
OEM: Original equipment manufacturer
GDP: Gross domestic product
CAPM: Capital Asset Pricing Model
WACC: Weighted Average Cost of Capital
FCFF: Free Cash Flow to the Firm
EPS: Earnings Per Share
GMP: Good Manufacturing Practices
FTA: Free Trade Agreement
COGS: Cost of Goods Sold
SG&A: Selling, General and Administrative Expenses
D&A: Depreciation and Amortization
EV: Enterprise Value
DCF: Discounted Cash Flow model
MVEQ: Market Value of Equity
MVIC: Market Value of Invested Capital
TRA: Traphaco Joint Stock Company
 1. EXECUTIVE SUMMARY
We initiate coverage on DHG Pharma (HOSE: DHG) with a BUY
BUY RECOMMENDATION recommendation, based on a 12-month target price of VND 105,898,
representing a 8.17% upside from the current price of VND 99,000 as
Valuation Date 05.05.2025 of May 5, 2025. DHG remains Vietnam’s largest OTC pharmaceutical
Target Price manufacturer with strong financial fundamentals, consistent profitability,
(VND) 107,084 and attractive dividends.
Current Price*
(VND) 99,000 INVESTMENT THESIS HIGHLIGHTS

Upside (%) 8.17% Thesis #1: Market leader in OTC pharmaceuticals with durable
Shares
brand advantage
Outstanding
(million) 130.7
DHG is the largest domestic manufacturer of over-the-counter (OTC)
medicines in Vietnam, holding a leading market share in core
52 Week High
(VND) 116,000 therapeutic areas such as hepatology, respiratory, and vitamin
supplements. With more than 40 years of presence, DHG has
52 Week Low
(VND) 98,000 developed a nationwide distribution network covering 63 provinces and
has consistently ranked in the Top 10 Most Reputable Pharmaceutical
* Closing price as of 05.05.2025 Companies for six consecutive years (2018–2023). DHG's flagship
Figure 1. Summary brands – Naturenz, Hoat Huyet CM3, Hapacol – are deeply entrenched
in consumer perception, providing strong pricing power and high
customer retention. The company’s domestic strength and well-
recognized GMP-certified production facilities position it as a strategic
2020 2021 2022 2023 2024
asset in Vietnam’s growing healthcare landscape.
Revenue
(VND
billion) 4,207 4,522 5,182 5,768 5,714
Thesis #2: Resilient EBITDA margin and stable dividend payout
Rev. Despite macroeconomic challenges, DHG continues to deliver stable
Growth
(%) 7.50 14.60 11.30 -0.9 earnings with EBITDA margins above 17%, highlighting efficient
Adj.
operations. The company maintains a consistent dividend payout of
EBITDA 6,000 VND per share, offering an attractive yield of over 5.5%, making
(VND it an ideal holding for long-term, income-seeking investors.
billion) 830 885 1112 1179 979
Adj. Thesis #3: Strategic positioning for long-term growth
EBITDA
Margin 19.7 19.6 21.5 20.4 17.1 With a strong domestic base, DHG is actively exploring opportunities in
Figure 2. Financial Data R&D digitalization, export market expansion, and potential healthcare
M&A. These strategies support sustainable long-term growth, while the
company's low-beta profile ensures resilience against broader market
fluctuations.
2. BUSINESS OVERVIEW
DHG Pharmaceutical Joint Stock Company (DHG) is one of the leading
pharmaceutical companies in Vietnam. The company's predecessor
was the 2/9 State-owned Pharmaceutical Enterprise, established on
September 2, 1974. After several changes in name and form of
operation, on September 2, 2004, Hau Giang Pharmaceutical Joint
Stock Enterprise was equitized and renamed DHG Pharmaceutical Joint
Stock Company.
2.1. Business Lines
DHG Pharma's core business lines include the manufacturing and
trading of pharmaceuticals, health supplements, and cosmeceuticals. In
addition, the company engages in other activities such as contract
processing, raw material trading, and OEM services (Figure 1)
In which
• Pharmaceutical contributes 87%
• Health supplement and cosmeceutical contributes 8%
Figure 4. Business lines • Other business lines contribute 5%
breakdown
2.2. Core values
Hau Giang Pharmaceutical operates based on core values including
quality, safety and effectiveness, clearly demonstrated in each product
that meets international standards and strict control processes. The
company focuses on promoting knowledge and innovation, creating a
favorable environment for research and development to meet the
increasing demands of the market.
In addition, Hau Giang Pharmaceutical promotes social responsibility,
environmental protection and building sustainable cooperative
relationships with partners. With the goal of serving the community, the
company implements many health care programs and develops
essential products, contributing to improving the quality of people's lives.
2.3. Major shareholder DHG
Taisho Pharmaceutical (51.01%): This is a large Japanese
pharmaceutical company, specializing in healthcare products and OTC
(over-the-counter) drugs. Owning more than 50% of shares makes
Taisho the controlling shareholder, with the power to decide on major
Figure 5. Statistics of major strategies and operations of DHG.
shareholders of DHG
State Capital Investment Corporation (43.31%): This is the
representative of the Vietnamese State in managing capital in
enterprises. SCIC plays the role of the second largest shareholder,
protecting the interests of the State and maintaining influence at DHG.
FTIF - Templeton Frontier Markets Fund (2.83%): An international
investment fund specializing in frontier markets, in which Vietnam is an
attractive destination due to its long-term growth potential.
Norges Bank (1.98%): The Central Bank of Norway, which manages
 the Government Pension Fund Global. The presence of Norges Bank shows
that DHG Pharma attracts the attention of international institutional investors.

Other shareholders (0.87%)

2.4. Sales structure
Retail Channel
In 2024, DHG Pharma continued to maintain its leading position in the
retail channel (excluding vaccines), with revenue reaching VND 4,675
billion in 2024, far surpassing its next competitors such as Company A
Figure 6. Leading Corporation -
(and Company B). Despite the general market facing difficulties due to
Retail
weak purchasing power and unfavorable economic conditions, DHG still
maintains its No. 1 position thanks to its brand reputation and extensive
distribution network.
The Hospital Channel
Although still in a modest position compared to leading companies such
as Company A and Company B, DHG has risen 6 places compared to
the previous year, showing a positive signal about the expansion
strategy in this segment.
Figure 7. Leading Corporation This result is achieved thanks to the company owning a production line
– Hospital that meets Japan-GMP and EU-GMP standards - key factors that help
DHG gradually increase its presence in hospitals. This is one of the
segments with long-term and stable growth potential.
Modern Trade (MTC) continued to grow by nearly 49%, reflecting the
effectiveness of the strategy of expanding into the modern retail system.
Although it currently accounts for only 5% of revenue, this trend will help
DHG keep up with changes in modern consumer behavior and tastes.
Export revenue increased by 9.2%, contributing about 3% of total
revenue, creating a foundation for the strategy of expanding into
international markets in the future.
In addition, the company continues to maintain supporting activities
such as processing, raw material trading, OEM and other services.
3. INDUSTRY OVERVIEW

Serving as a vital bridge to ensure timely and safe access to medical

products, the pharmaceutical, medical device, and healthcare sectors
play an important role in delivering medical advances and cutting - edge
technologies to communities. These sectors are essential drivers of a
nation's comprehensive development, they not only stimulate economic
growth but also safeguard the most fundamental asset of society, which
is human health.
In recent years, Vietnam's pharmaceutical market value experienced a
dramatic growth from $3.4 billion in 2015 to nearly $7 billion in 2023.
According to the 2023 report by IQVIA (formerly IMS), the overall
pharmaceutical market experienced a growth rate of 8%. IQVIA projects
Figure 8. Aging index from
that Vietnam’s pharmaceutical industry will continue its upward
2019 to 2023
trajectory, with a compound annual growth rate of 6% to 8% between
 2023 and 2028. During this period, the healthcare expense per person
is expected to grow from $237 to $328. As of now, Vietnam holds the
position of the second largest pharmaceutical market in Southeast Asia,
trailing only Indonesia.
3.1. Demand drivers
Economic and income growth: The GDP growth rate in 2024 is
forecast at 6.8% and the growth target in 2025 is at 6.5 to 7%, with GDP
per person increasing from 4,300 USD in 2023 to an expected 4,900
USD in 2025, which will increase people's ability to spend on health.
People's increasing awareness of health issues: According to
Figure 9. Population Roland Berger's 2023 study, 78% of respondents are willing to spend
structure by age 2023 more on health care products and services, reflecting the trend of
increasing consumption in this sector (Figure 8, 9).
Population aging trend: Vietnam is currently one of the countries with
the fastest aging population in the world, with a population of more than
100 million people, the number of people aged 60 and over accounted
for 13.9% in 2023 and by 2050, this number is forecast to increase to
more than 25% (Figure 6). In 2036, Vietnam will enter the aging
population period, transitioning from an "aging" society to an "old"
society. Elderly people often have a higher demand for pharmaceuticals
and health care services, due to the effects of the aging process and
related health problems.
Figure 10. Numbers of
medical visits covered by The incidence of non-communicable diseases is increasing:
health insurance over the Hospital reports show that 65-75% of patients have non-communicable
period 2020-6T2024 diseases, leading to the need for long - term medication.
3.2. Supply drivers
New points in the amended Pharmacy Law such as: Prioritize
reforming administrative procedures in licensing drug circulation and
import, helping to shorten the time to bring drugs to market, implement
investment incentive policies to encourage businesses to switch from
importing to domestic drug production, build a legal corridor for new
business models such as pharmacy chains and online drug sales, to
expand distribution and ensure quality, clearly define the rights and
Figure 11. Healthcare responsibilities of foreign-invested pharmaceutical enterprises, creating
expenditure conditions for distribution and technology transfer, manage drug prices
in accordance with the Law on Prices, publicize wholesale prices to limit
price increases through intermediaries and protect consumers.
Incentives from new-generation free trade agreements (FTA): With
the signing of free trade agreements, domestic pharmaceutical
enterprises have the opportunity to export to countries in the region and
around the world, strengthening the distribution network. In addition,
FTA helps the Vietnamese pharmaceutical industry increase its access
to capital, develop technology and train high-quality human resources.
Figure 12. Health insurance
coverage during the period
2020-2024F
 4. COMPETITIVE POSITIONING

Criteria DHG Pharma Competitors

DHG is the largest OTC pharmaceutical manufacturer in Vietnam

Factory certified with (Vietnam report 2022, 2023)

Japanese GMP DHG is the largest OTC pharmaceutical manufacturer in Vietnam,
Distribution network
known for its Japan GMP-certified manufacturing system. It has
>30,000 pharmacies
maintained its leadership in the Vietnamese pharmaceutical industry for
Preferred supplier at
28 consecutive years by revenue and profit, and according to IMS Q4
pharmacies & hospitals
2024, it ranks among the top three companies with the largest market
Continuous "High-
share and holds the number one position in the retail channel (excluding
Quality Vietnamese
vaccines). DHG’s strong performance is supported by both a significant
Product" certification
market share, benefiting from economies of scale, and the largest
Figure 13. DHG Competitive distribution network in the country, serving over 30,000 retail
Advantages pharmacies nationwide across all 64 provinces, covering urban and
rural areas.
Most Reputable Pharmaceutical
TOP 3 Companies (Ranked #1 for 6 High customer stickiness thanks to strong brand and reputation
consecutive years)
DHG is Vietnam’s leading pharmaceutical brand, consistently ranked #1
Best-Governed Listed Companies among the Top 10 Most Reputable Pharmaceutical Companies for six
TOP 3
in ASEAN (ACGS) consecutive years and honored with the Vietnamese High-Quality
Goods Award for 27 consecutive years, reflecting strong consumer trust.
Leading Brands VCCI / VBCSD
TOP 25
– 3 consecutive years
The company also demonstrates excellent corporate governance, being
listed among Forbes’ Top 50 Best Listed Companies in Vietnam for 11
Figure 14. DHG Brand years and ranked in the Top 3 Best-Governed Listed Companies in
Reputation & Rankings ASEAN by ACGS. This solid reputation fosters strong loyalty from
pharmacies, hospitals, and consumers.
Insourcing by customers is infeasible
It is nearly impossible for pharmacies or hospitals to build
pharmaceutical manufacturing capabilities to replace DHG. They would
require substantial capital (VNVND500–1,000 billion), a GMP-certified
factory, a highly specialized workforce, and an independent distribution
network. Even large chains like Long Chau or Pharmacity would need
to control over 25–30% of the domestic OTC market to break even - an
unrealistic target given the fragmented market and strict regulatory
environment. As a result, DHG faces minimal risk of losing key
customers.
DHG has entrenched key customers and strategic partners
Strategic shareholder Taisho (Japan), with a 51% ownership stake,
Figure 15. Profitability ratios brings advanced technology, Japan GMP standards, and export
of DHG from 2020 to 2025 opportunities, enhancing brand credibility. At the same time, long-term
contracts with major pharmacy chains such as Long Chau, Pharmacity,
and An Khang ensure stable distribution channels and minimize
competitive risks.

5. FINANCIAL ANALYSIS
 FINANCIAL RATIOS
HISTORICAL FORCASTED
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Profitability
Gross margin 48.23% 47.98% 48.28% 46.73% 43.76% 47.00% 47.00% 47.00% 47.00% 47.00%
EBITDA margin 18.90% 18.88% 21.10% 19.31% 16.03% 19.39% 19.37% 19.36% 19.35% 19.34%
Operating margin 19.00% 19.15% 21.15% 19.38% 17.25% 19.19% 19.19% 19.19% 19.19% 19.19%
Net profit margin 17.00% 16.96% 18.96% 17.50% 13.80% 17.31% 17.30% 17.29% 17.28% 17.27%
Return on Assets 27.28% 27.59% 32.21% 23.19% 21.58% 17.11% 18.39% 19.83% 21.31% 22.82%
Return on Equity 17.90% 17.90% 20.66% 18.09% 16.47% 22.60% 24.88% 27.59% 30.55% 33.77%
EPS 4,884 5,193 6,782 6,714 5,157 6,921 7,434 8,024 8,620 9,218
Activity
Receivables days 46.96 42.07 39.77 48.19 45.04 256.51 256.70 256.88 257.04 257.17
Inventory days 155.38 188.26 188.94 210.22 148.52 177.65 177.65 177.65 177.65 177.65
Payables days 47.40 35.30 55.00 29.80 22.20 37.61 37.61 37.61 37.61 37.61
Liquidity
Current ratio 170.75% 209.93% 224.60% 197.90% 100.82% 306.09% 269.44% 234.54% 203.06% 174.33%
Quick ratio 69.37% 68.19% 70.34% 68.51% 38.38% 194.14% 157.49% 122.58% 91.11% 62.38%
Cash ratio 8.95% 5.72% 4.19% 7.92% 3.51% 138.76% 102.11% 67.20% 35.73% 7.00%
Financial leverage
Long - term Debt/
Equity 1.77% 1.76% 1.52% 1.41% 1.81% 1.99% 2.15% 2.33% 2.60% 2.92%
Long - term Debt/
Assets 2.69% 2.71% 2.37% 1.80% 2.37% 1.51% 1.59% 1.67% 1.81% 1.97%
Total Debt/ Equity 24.65% 21.74% 20.43% 25.91% 45.53% 32.07% 35.29% 39.10% 43.34% 47.99%
Interest Coverage 50.87 63.47 78.74 32.91 33.97 43.62 43.62 43.62 43.62 43.62
Figure 16. Some key financial ratios
Profitability
DHG illustrates a healthy and steadily improving profitability profile. The
company has maintained strong gross margins, which indicates that its
core operations are efficient and that it can preserve value despite
fluctuations in input costs. The consistency of the operating margin
reflects its ability to control overhead and operating expenses,
suggesting a well-structured cost base.
Meanwhile, the net profit margin, which takes into account all expenses
including taxes and interest, has improved over time, showing enhanced
bottom-line performance. This suggests that not only is the company
generating strong revenues, but it is also translating a significant portion
Figure 17. ROA and ROE of DHG of those revenues into actual profit, which is a critical indicator of
from 2020 to 2025 business health and shareholder value creation.
In terms of returns, both ROA and ROE show a consistent upward trend.
ROA indicates DHG’s efficiency in using its asset base to generate
 earnings, while ROE reveals how well the company is generating profits
from shareholders’ investments. The steady rise in these two ratios
indicates better utilization of capital and resources over time. A rising
ROE, in particular, is often seen as a sign of good management
performance and effective reinvestment strategies.
Together, these trends suggest that DHG is not just maintaining
profitability, but actively enhancing it through smart resource allocation,
margin improvement, and disciplined cost management.
Efficiency

Figure 18. DHG’s earning per Receivable days remain stable and relatively low from 2020 to 2023,
share from 2020 to 2025 ranging between 39 and 48 days, indicating strong collection practices
and efficient cash conversion. However, starting in 2024, there is a
significant and sudden increase in receivable days, jumping above 250
days and remaining elevated through 2029. This sharp rise may reflect
a strategic decision to offer longer payment terms to distributors or
institutional clients, or a potential delay in cash collections. While the
company’s liquidity position appears strong enough to absorb this shift
in the short term, this trend could become a risk factor if not managed
carefully, as prolonged receivable cycles can pressure cash flow and
impact funding for operations or reinvestment.

Figure 19. DHG’s activity from Inventory days remain high throughout the period, increasing slightly
2020 to 2025 from 155 in 2020 to around 177 days in the later forecast years. This
suggests DHG operates with a relatively high level of inventory, possibly
due to the nature of pharmaceutical production. While this ensures
supply continuity and service reliability, it may also tie up working capital
and affect inventory turnover efficiency.
Payable days remain fairly consistent from 2025 onward at around 37
days, after gradually decreasing from 2020 to 2024. This stability
suggests that DHG maintains a disciplined approach to settling supplier
obligations, contributing to good vendor relationships and reliable
supply chain management.
Figure 20. DHG’s liquidity ratio Liquidity
from 2020 to 2025
DHG has consistently demonstrated a solid liquidity position, which
indicates a strong ability to meet its short-term obligations. The
company’s quick ratio has remained comfortably above industry
benchmarks, signifying that it maintains an adequate buffer of liquid
assets such as cash, receivables, and other near-cash items relative to
its current liabilities. This is an important indicator of financial prudence,
as it ensures that DHG can cover its immediate liabilities even without
relying on inventory sales.
The cash ratio, although slightly more volatile over time, still suggests a
Figure 21. DHG’s capital healthy level of pure cash and cash equivalents available for immediate
use. This means the company is not over-reliant on receivables or other
structure from 2020 to 2025
current assets to manage its day-to-day obligations. The ability to keep
both quick and cash ratios at satisfactory levels shows that DHG
exercises disciplined cash management and is well-prepared to
respond to short-term operational or market disruptions.
 These strong liquidity metrics reflect positively on the company’s
financial flexibility and operational discipline. Even in the context of
extended receivables (as discussed above efficiency ratios), DHG’s
overall current asset position remains strong, reinforcing the view that
the company is not under immediate financial strain. This financial
strength allows DHG to pursue growth opportunities or manage
seasonal fluctuations in demand without having to incur short-term debt.
Financial leverage
DHG operates with a low-debt capital structure, which highlights the
company’s conservative approach to financing. Throughout the review
period, both the long-term debt-to-equity ratio and the total debt-to-
equity ratio remained at low levels. This shows that DHG prefers using
internal funds and equity capital to support business expansion, rather
Figure 22. Adjustments for than relying on external borrowing. Such a strategy significantly reduces
normalizing balance sheet
financial risk and makes the company more resilient in periods of high
interest rates or economic downturns.
The company’s interest coverage ratio has remained consistently high,
underscoring its strong ability to service debt from its operating income.
This ratio is a critical measure of financial health, especially during times
of economic uncertainty or when credit conditions tighten. High interest
coverage signals to investors and lenders that the company generates
more than enough earnings to comfortably meet its debt obligations.

6. VALUATION We conduct both an intrinsic and relative valutaion to arrive at a 12-

month target price of VND107,084 per share, a 8.17% upside from
DHG’s closing price of VND99,000 on May 5, 2025. Our methodology
assigns a weighting of 80% on our DCF and a 20% weight on our
comparable company analysis (Figure 37). We place greater emphasis
on the DCF method due to the unique position of DHG in Vietnam’s
pharmaceutical industry. As one of the largest and most established
domestic pharmaceutical companies, DHG maintains stable cash flows,
high profit margins, and conservative financial management, making it
well-suited for a cash flow-driven valuation approach. Meanwhile, the
Vietnamese pharmaceutical sector still lacks a sufficient number of
publicly listed companies with comparable scale, product portfolio, or
market share, which limits the reliability of peer-based valuation.
6.1. DCF VALUATION
Normalizing Balance Sheet
Balance sheet is an important financial statement that reflects the assets,
liabilities and equity of a business at a certain point in time. However,
this report in the original accounting may not reflect the company’s true
financial position and ongoing operational reality. Normalization ensures
comparability across companies and periods, providing a more accurate
Figure 23. Adjustments for foundation for valuation techniques like discounted cash flow or market
normalizing income statement multiples. By presenting a clearer picture of the company's sustainable
financial health, normalized balance sheets help investors and analysts
make better-informed decisions.
Current assets
In DHG, current assets include cash and cash equivalents, short-term financial investments, short-term
receivables, inventories and other short-term assets. We realized that among them, short-term financial
investments which consist of held-to-maturity investments are nonoperating asset (Figure 22). As they are
financial instruments held to earn interest or preserve excess cash. In addition, in short term receivables, there
are 3 items that are classified as nonoperating assets, that is short-term loan receivables, other short-term
receivables, provision for short term doubtful debt. To be specific, in the notes to financial statement of DHG, it
shows that other short-term receivables include accruals of interest income and receivables from employees.
Hence, they are all nonoperating items by definition and should be removed from the historical balance sheet.
Non-current assets
Regarding non-current assets, there are 3 items that we considered to remove as they are nonoperating items.
That is long-term receivables, investment property, and long-term financial instruments (Figure 22). They do
not contribute directly to the core revenue-generating activities of the business. Instead, they represent financial
or investment-related activities.
Normalizing Income Statement
Financial Income – Expense
Financial income, including interest income, foreign exchange gains, dividends, and gains from investment
disposals, was entirely excluded (subtracted) from 2021 onward. These items are considered non-operating
income and not reflective of the company’s core business activities, hence removed to avoid distorting the
operational results.
Financial expenses were adjusted by adding back items such as foreign exchange losses, provisions for
impairment of long-term investments, and losses from investment disposals. These are non-recurring or non-
operational costs and were excluded to better assess the company’s true operating performance. Only interest
expense was retained, as it is a recurring and necessary cost of financing business operations.
Other Income – Expense
For other income, the adjustment sheet subtracts the proceeds from technology-transfer projects, Income from
receiving support from related parties (Note 41), and gains on fixed-asset disposals because these cash flows
are episodic and unrelated to DHG Pharma’s core pharmaceuticals business. Once those items are stripped
out, the normalized statement shows only a small, fairly steady stream (approximately VND 2–3 billion a year)
that can be viewed as recurring ancillary revenue.
For other expenses, the adjustment adds back extraordinary other expenses including supporting fee for
business households, losses due to fair value revaluation of liquidating assets on Fuji Medic, loss on disposal
of fixed assets, loss due to early termination of land lease contract, expenses due to impacts of Covid-19. These
are non-recurring and exceptional expenses that would distort the true performance if left in. However, even
after adjustments, DHG still shows a fairly large other expenses figure in the normalized income statement.
This suggests the company has ongoing non-core costs.
Adjustments to financial and other income/expenses affect accounting profit before tax, thereby altering the
income tax expense. The tax rate, calculated as income tax expense divided by accounting profit before tax, is
then applied to the revised profit to estimate the adjusted tax expense, ensuring accurate reflection in net profit
after tax.
Pro-forma assumptions
Income statement assumptions
1. Revenues are projected to grow by 7%, 7.5%, 8%, 7.5%, and 7% annually from 2025 to 2029. This growth
is driven by (1) its strong domestic brand portfolio in OTC products; and (2) the new EU-GMP-certified
Betalactam plant, which boosts both capacity and export potential.
2. For 2025, COGS, SG&A and financial expenses are modeled as an average of the past five years percent
of revenue. For the next four years in our forecast, the ratios remain constant.
3. Interest expense are modeled as an average of the past five years percent of financial expense
4. Tax rate is modeled as an average of the past five years’s effective tax rate and remains the same throughout
the forecast period.
Balance sheet assumptions
1. Short-term receivables, inventories, other short-term assets, CapEx, D&A, long-term assets in progress,
other long-term assets remain at historical average percent of sales.
2. Short-term trade payables, short term loans, other short-term liabilities and long-term liabilities remain at
historical average percent of sales.
3. Dividend distribution and appropriation of funds ratio remain at historical average percent of net income.
PRO-FORMA INCOME STATEMENT

Pro-forma Income Statement

HISTORICAL FORCASTED
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Net revenue from goods sold and services
rendered 3,756 4,003 4,676 5,015 4,885 5,227 5,619 6,068 6,523 6,980
Cost of sales (1,944) (2,082) (2,419) (2,672) (2,747) (2,770) (2,978) (3,216) (3,458) (3,700)
Gross profit from goods sold and services
rendered 1,811 1,921 2,257 2,344 2,138 2,456 2,641 2,852 3,066 3,280
Financial income 0.001 0.012 0 0 0 0 0 0 0 0
Financial expenses (95) (94) (87) (81) (78) (104) (112) (121) (130) (139)
- In which: Interest expense 14 12 13 30 25 23 25 27 29 31
Share of net losses from joint-ventures,
associates (0.501) 0 0 0 0 0 0 0 0 0
Selling expenses (699) (803) (913) (978) (905) (1,006) (1,081) (1,168) (1,256) (1,343)
General and administration expenses (303) (257) (268) (313) (313) (344) (369) (399) (429) (459)
Operating profit 714 767 989 972 843 1,003 1,078 1,164 1,252 1,339
Other income 3 2 2 3 3 3 3 3 3 3
Other expenses (7) (13) (4) (7) (63) (7) (7) (7) (7) (7)
Accounting profit before tax 710 756 987 969 783 1,013 1,089 1,175 1,262 1,350
Income tax expense (71) (77) (100) (91) (109) (109) (117) (126) (135) (145)
Net profit after corporate income tax 639 679 887 878 674 905 972 1,049 1,127 1,205
(in billion VND)
Figure 24. Pro-forma income statement of DHG
PRO-FORMA BALANCE SHEET

PRO-FROMA BALANCE SHEET

HISTORICAL FORCASTED

2,020 2,021 2,022 2,023 2,024 2,025 2,026 2,027 2,028 2,029
ASSETS

A. CURRENT ASSETS 1,394 1,591 1,823 2,354 1,805 3,687 3,489 3,280 3,052 2,804
I. Cash and cash
equivalents 73 43 34 94 63 1,671 1,322 940 537 113
III. Short-term
receivables 483 461 509 662 603 636 684 738 794 849

IV. Inventories 827 1,073 1,251 1,535 1,115 1,348 1,449 1,565 1,683 1,801
V. Other short-term
assets 11 13 28 63 24 31 33 36 39 42
B. NON-CURRENT
ASSETS 947 870 930 1,432 1,320 1,602 1,797 2,009 2,236 2,478

II. Fixed assets 849 768 787 816 1,196 1,361 1,538 1,730 1,936 2,156
IV. Long-term assets in
progress 66 70 93 554 49 183 197 213 229 245
VI. Other long-term
assets 31 33 50 63 75 58 62 67 72 77
TOTAL ASSETS 2,341 2,461 2,753 3,786 3,125 5,288 5,286 5,289 5,289 5,282
TOTAL RESOURCES

C. LIABILITIES 879 825 877 1,258 1,864 1,284 1,379 1,487 1,599 1,713

I. Current liabilities 816 758 812 1,189 1,790 1,204 1,295 1,398 1,503 1,608
1. Short-term trade
payables 252 201 364 218 167 285 307 331 356 381

2. Short-term loans 212 207 115 572 650 397 427 461 496 530
3. Other Short-term
Liabilities 352 349 332 399 973 522 561 606 651 697

II. Long-term Liabilities 63 67 65 68 74 80 84 88 96 104

1. Long-term liabilities 63 67 65 68 74 80 84 88 96 104

D. EQUITY 3,568 3,793 4,292 4,853 4,095 4,004 3,907 3,802 3,689 3,569

I. Owner’s equity 3,568 3,793 4,292 4,853 4,095 4,004 3,907 3,802 3,689 3,569
1. Owner’s contributed
capital 1,307 1,307 1,307 1,307 1,307 1,307 1,307 1,307 1,307 1,307
- Ordinary shares carrying
voting rights 1,307 1,307 1,307 1,307 1,307 1,307 1,307 1,307 1,307 1,307

2. Share premium 7 7 7 7 7 7 7 7 7 7
3. Investment and
development fund 1,480 1,669 1,959 2,458 2,458 2,458 2,458 2,458 2,458 2,458

4. Retained earnings 770 807 1,018 1,081 322 232 135 30 (83) (203)
5. Non-controlling
interests 4 3 0 0 0 0 0 0 0 0
TOTAL RESOURCES 4,448 4,618 5,168 6,110 5,959 5,288 5,286 5,289 5,289 5,282
(in billion VND)
Figure 25. Pro-forma balance sheet of DHG
 Cost of equity
The cost of equity reflects the minimum rate of return that investors
COST OF EQUITY require to invest in a company's stock. Here, we use the CAPM model
to estimate the cost of equity for DHG. Firstly, risk-free rate is obtained
Risk- free rate 3.17% from the 10-year Vietnamese government bonds yield, which is 3.15%.
Secondly, the daily closing price of DHG shares and the VN Index
Beta 0.63 market index is collected and the daily rate of return will be calculated
from those prices. After having the return rate result, the beta is
Market Return 13.44% calculated by running the linear regression of DHG’s return against the
VN index return. In our case, beta of DHG is 0.63, indicating that the
Market risk premium 10.27% stock is less volatile than the market. Then the expected daily market
return E(Rm) is 0.05%. Then we annualize it to get the annual E(Rm) of
Cost of equity 9.36%
13.44%. Applying the CAPM model, we will have a cost of equity of
approximately 9.64%. (Figure 26)
Figure 26. DHG’s cost of
equity Cost of debt
The cost of debt is calculated as the ratio of interest expense to total
COST OF DEBT interest-bearing debt, specifically 3.82%. After adjusting for an effective
tax rate, the after-tax cost of debt is 3.06%, reflecting the actual cost the
Interest Expense 24,810,529,888 company incurs on its borrowings. (Figure 27)

Interest Bearing Debt 649,913,916,414 WACC

The company’s capital structure consists of 34.02% interest-bearing
Income Tax Expense 108,688,525,392 debt and 65.98% equity. The weighted average cost of capital (WACC)
is based on the weights and respective costs, with an after-tax cost of
Income Before Tax 782,921,410,226 debt of 3.06% and a cost of equity of 4.01%, resulting in a WACC of
3.69%. This rate is used as the discount rate for cash flow valuation,
Effective Tax Rate 13.88%
representing the company’s overall cost of capital. (Figure 28)

Cost of debt 3.82% Terminal growth

To estimate DHG’s terminal growth rate for DCF valuation, we consider
Cost of debt after tax 3.29%
both its historical performance and future prospects. As Vietnam’s
Figure 27. DHG’s cost of debt largest pharmaceutical company, DHG has shown strong short-term
profit growth of 10–12% per year. However, this is expected to slow as
WACC CALCULATION the market matures. The company’s revenue is well-diversified across
Interest Bearing OTC products (45–55%), prescription drugs (25–35%), and
Debt 649,913,916,414
exports/others (10–20%), providing a stable base for long-term growth.
Market
Structural drivers such as a maturing domestic market, expanding
Capitalization 13,078,267,989,988
export potential, and strategic support from Taisho support sustainable
Weight of debt 4.73% performance. Based on segment contributions and expected growth
rates, we apply a blended terminal growth rate of 2.45%
Weight of equity 95.27%
DCF Valuation
Cost of debt 3.82%
With the 5-period projections of net profit after tax, we start calculate
Cost of equity 9.36% the FCFF of the firm. Then we discount these cash flows at DHG’s
Effective tax rate 13.88%
WACC of 9.07% and the terminal value is obtained with an expected
sustainable growth rate of 2.45%. Cash and cash equivalents are then
WACC 9.07% added back to the enterprise value and debt is subtracted from
Figure 28. DHG’s cost of enterprise value to arrive at the equity value. Finally, we reach the share
capital price of VND113,257 per share (Figure 29).
FREE CASH FLOW

HISTORICAL FORCASTED
(in billion VND) 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Net profit after tax 639 679 887 878 674 905 972 1,049 1,127 1,205
Depreciation 83 73 67 76 167 109 117 126 136 145
Capital expenditure 116 65 153 181 713 274 294 318 342 365
Net working capital 578 833 1,011 1,164 15 2,482 2,194 1,881 1,549 1,196
Change in NWC (75) 255 178 153 (1,150) 2,467 (288) (313) (332) (354)
FCFF 681 432 622 620 1,278 (1,727) 1,083 1,170 1,253 1,339
Terminal value 20,708
EV 15,395
Cash and cash equivalents 63
Debt 650
Equity value 14,808
Share outstanding
(shares) 130,746,071
Share price (VND) 113,257
Figure 29. DCF valuation of DHG
6.2. RELATIVE VALUATION
Choosing the guideline company
When selecting a guideline company for evaluating DHG, among all the listed pharmaceutical companies, we
believe Traphaco Joint Stock Company (HOSE: TRA) serves as a suitable benchmark. Both companies operate
within the same sector, which is Health Care, Pharmaceuticals, Biotechnology and Life Sciences, the
information is collected through audited financial statements, ensuring reliable and comparable data. While
DHG has a larger scale with 2,789 employees and a broader product range that includes pharmaceuticals, food
supplements, and pharmaceutical cosmetics, TRA provides a relevant comparison point with its focused
business activities in medicinal herb processing and pharmaceutical manufacturing. TRA’s more streamlined
operations and smaller scale (1,011 employees) make it an appropriate guideline company to assess DHG’s
efficiency, growth potential, and market positioning within the industry.

Traphaco Joint Stock Company DHG Pharmaceutical Joint Stock Company

(HOSE: TRA) (HOSE: DHG)
Information source Using audited financial statements Using audited financial statements

Business sector Health Care/ Pharmaceuticals, Biotechnology Health Care/ Pharmaceuticals, Biotechnology &
& Life Sciences/ Pharmaceuticals Life Sciences/ Pharmaceuticals

Business activities Purchasing, planting, processing medicinal Production and distribution of pharmaceuticals,
herbs, manufacturing and trading food supplements, and pharmaceutical
pharmaceuticals, chemicals and medical cosmetics
equipment and supplies, compounding
prescription drugs.
Scale 1011 employees 2789 employees
Figure 30. General information about DHG and TRA
Displaying the information
To calculate the basic financial indicators, we use the information in DHG and TRA’s balance sheet of the first
quarter of 2025 and 2024 income statement. The following table were computed to assess scale, profitability,
and efficiency:
Tangible Total Gross Pretax
Assets Assets Employees Sales Profit EBITDA EBIT Income
TRA
(Guideline Company) 426,891 1,574,117 1011 2,052,291 941,526 808,938 324,641 324,641
DHG
(Subject Company) 1,023,546 2,633,931 2789 5,914,923 2,137,766 2,062,014 782,921 782,921
(in billion VND)
Figure 31. Basic financial ratios of subject and guideline company.
The financial comparison highlights DHG’s clear advantages in scale, profitability, and operational efficiency
over TRA. DHG’s total assets and workforce are significantly larger than TRA’s, enabling economies of scale
and broader market reach.
In revenue terms, DHG generates nearly 2.9 times more sales than TRA, reflecting its diversified product mix.
Profitability is also markedly stronger: DHG’s gross profit, EBITDA, and EBIT all more than double those of
TRA, indicating more efficient cost management and better margin control.
For long term growth, we collect the data of both subject and guideline company in the last 3 years, computing
the growth of each year and take the average as follow:

LONG TERM GROWTH

Gross Pretax
Sales Profit EBITDA EBIT Income Net Income Assets Equity
TRA
(Guideline Company) -7.21% -15.33% 55.61% 1.65% -66.41% -86.45% 2.94% 6.39%
DHG
(Subject Company) 5.19% -2.48% 2.04% 0.61% 0.61% -12.10% 10.03% -1.27%
Figure 32. Long term growth of subject and guideline company.
Looking at the long-term growth figures, DHG shows a relatively steady and reliable performance. Sales have
grown by just over 5%, and while net income dipped slightly, the company has maintained stable operating
profits and steadily grown its asset base. This suggests a business that’s been expanding at a manageable
pace, even if margins have come under a bit of pressure.
On the other hand, TRA’s performance has fluctuated. Despite an impressive jump in EBITDA, the company
has seen a decline in sales, gross profit, and especially net income, which dropped sharply. These swings
suggest TRA may be facing deeper operational challenges or market headwinds. In contrast, DHG looks like a
more stable and better-positioned business over the long run.
LONG TERM MARGINS
LATEST 12 MONTHS MARGIN (% SALE) (%SALES)
Gross Pretax Net
Profit EBITDA EBIT Income Income Gross Profit EBITDA EBIT Pretax Income
TRA
(Guideline Company) 40.11% 34.46% 0.49% 0.56% -2.31% 45.16% 30.32% 8.03% 8.11%
DHG
(Subject Company) 43.76% 41.61% 17.25% 16.03% 13.80% 46.23% 40.91% 19.23% 18.78%
Figure 33. Latest 12 months margin and long term margin of subject and guideline company.
We can clearly see DHG outweighs TRA across all margins, with higher gross profit and much stronger EBITDA
and EBIT margins, showing better efficiency and profitability both recently and over the long term.
 Sales/ Current Quick WC/ Inv Debt/
Assets ratio Ratio Sales Turn. Total Debt Common Equity Equity
TRA
(Guideline Company) 1.52 1.60 0.86 0.15 2.82 585,787,851,557 1,344,165,273,240 0.44
DHG
(Subject Company) 1.78 1.53 0.50 0.12 -2.07 1,182,862,892,836 4,115,860,794,192 0.29
Figure 34. Basic financial ratios of subject and guideline company.
Considering the efficiency, DHG generates more sales per asset and has better inventory turnover, indicating
efficient operations. Besides, although TRA has a slightly better quick ratio, but DHG’s lower debt to equity
ratio points to a more conservative financial structure and lower risk overall.
Estimate the value of subject company
Calculating the market value of equity (MVEq) and market value of investing capital (MVIC)
The price is collected before the valuation day, which is May 10th. The price for DHG was 99,840 VND and
74,700 VND for TRA.

MVIC/ MVEq/
Debt/
MVEq MVIC MVEq Employees Revenue EBITDA EBIT Pretax Income Book Value
TRA
(Guideline Company) 3,130 3,337 19.47% 3,300,603,716 1.63 4.13 10.28 9.64 2.10
DHG
(Subject Company) 13,078 13,486 9.04% 4,835,351,805 2.28 6.54 17.22 16.70 3.18
Figure 35. Market value of equity and market value of investing capital of subject and guideline
company.
Adjusting the guideline multiples for difference in growth rate
The P/E ratio of Traphaco is obtained from Vietstock. We estimate that the long-term growth rate of TRA will
be 1%, reflecting its relatively mature business model and limited expansion momentum. While TRA remains
one of the leading pharmaceutical companies in Vietnam, its product portfolio is heavily concentrated in
traditional herbal medicine, a segment with slower market expansion compared to modern pharmaceuticals.
Moreover, TRA’s historical revenue and net profit growth over the past few years have been modest, typically
ranging from 1% to 3% annually, and there is limited evidence of aggressive scaling or international expansion.
Whereas, the estimated long-term growth rate for DHG is 2.45% as mentioned above. Therefore, the P/E
multiple is adjusted to 17.77 for DHG.

Original P/E of TRA 14.13

Growth rate TRA 1.00%

Growth rate DHG 2.45%

Adjusted P/E of DHG 17.77

Figure 36. Adjusted P/E multiple
Adjusting for the difference in company size
As shown above, there is also a huge difference between the firm size of TRA and DHG. We also take it into
consideration for adjustments to better reflect the value of DHG. As smaller company is more risky and tend
to have lower pricing multiples. Therefore we calculate the scale risk discount for DHG and arrive at a 1.45%
discount (using formula shown in appendix 3).
Adjusting the base multiple
We choose the MVIC/Sales to estimate the value of DHG. Using formula shown in appendix 3, we get the
adjusted MVIC/Sales for DHG is 1.89. As a result, the equity value of DHG is around 10,773 billion VND with
the price of 82,393 VND per share.
6.3. CONCLUSION

Share price Weight

Discounted cash flows method 113,257 80%

Relative method 82,393 20%

Target price 107,084

Current price 99,000

% upside 8.17%
Figure 37. Target price of DHG

7. INVESTMENT RISK
DHG faces multiple investment risks arising from macroeconomic pressures, regulatory changes, intense
market competition, and sensitivity to key valuation assumptions. These factors collectively pose challenges to
its growth prospects and financial performance.
Macroeconomic Risk
Vietnam’s pharmaceutical market, although resilient, is not immune to broader macroeconomic pressures.
Persistently high inflation or future economic slowdowns could weaken consumer purchasing power, particularly
in rural or lower-income segments that contribute significantly to OTC revenue. This could reduce demand for
discretionary health supplements and branded generics, potentially affecting top-line growth. Additionally,
currency volatility or changes in trade policies may disrupt input cost stability for imported materials and
packaging.
Regulatory and Policy Risk
The pharmaceutical industry in Vietnam is tightly regulated, and any changes in government policy such as
price caps, tender reforms, or stricter quality control mandates could negatively impact DHG’s margins and
market access. Furthermore, delays in product registration or changes in Good Manufacturing Practices (GMP)
certification processes may hinder the rollout of new products or exports, especially to high-standard markets
like Japan.
Competitive Risk
DHG operates in a competitive domestic market with increasing participation from multinational pharmaceutical
companies and local players upgrading their capabilities. The company’s leading position in the OTC segment
is being challenged by aggressive pricing and marketing strategies from both international and domestic brands.
Sustaining market share will require continuous investment in R&D, brand development, and customer retention,
which could pressure margins.
Sensitivity analysis
DHG’s share price shows considerable sensitivity to changes in terminal growth rate and weighted average
cost of capital (WACC). Based on the sensitivity analysis from the FCFF data, the estimated share price is
approximately 90,000 VND at a terminal growth rate of 2.5% and WACC of 9.0%. If the terminal growth rate
declines by 0.5% to 2.0%, with WACC constant, the share price falls to about 83,000 VND, representing a
decrease of nearly 8%. Similarly, an increase in WACC by 0.5% to 9.5%, holding terminal growth steady at
2.5%, leads to a share price decline to around 82,800 VND, roughly an 8% drop. The combined impact of both
a 0.5% decrease in terminal growth and a 0.5% increase in WACC results in a more significant drop to
approximately 75,500 VND, or a total decline of about 16%. These fluctuations demonstrate the material effect
that shifts in key financial assumptions can have on DHG’s market valuation and investor returns. To mitigate
these risks, the company should focus on optimizing its capital structure, diversifying funding sources, and
actively monitoring macroeconomic and industry developments to adjust its growth strategy accordingly,
thereby supporting sustainable long-term value creation.

Terminal growth

3.45% 2.95% 2.45% 1.95% 1.45%

11.07% 91,442 86,006 81,200 76,922 73,088

10.07% 108,948 101,548 95,120 89,484 84,501

WACC

9.07% 132,755 122,238 113,310 105,636 98,969

8.07% 166,959 151,093 138,051 127,139 117,876

7.07% 220,180 194,064 173,600 157,133 143,596

Figure 38. Sensitivity analysis of price to terminal growth and WACC
APPENDIX
1. COST OF EQUITY
𝐸(𝑅𝑖) = 𝑅𝑓 + 𝛽 . 𝑅𝑃𝑚
𝐸(𝑅𝑖): cost of equity
𝑅𝑓 : risk- free rate - typically 10-year yield on government bonds.
β: beta - measures the DHG stock's volatility relative to the market.
𝑅𝑃𝑚 : Market Risk Premium – the excess return over the risk-free rate.
2. COST OF CAPITAL
𝐸 𝐷
𝑊𝐴𝐶𝐶 = ( × 𝐸(𝑅𝑖)) + ( × 𝑟𝐷 × (1 − 𝑡))
𝐷+𝐸 𝐷+𝐸

𝑊𝐴𝐶𝐶: Cost of capital

𝐸: Value of equity
𝐷: Value of debt
𝐸(𝑅𝑖): 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑒𝑞𝑢𝑖𝑡𝑦
𝑟𝐷 : 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑑𝑒𝑏𝑡
3. ESTIMATING THE VALUE OF COMPANY USING DCF METHOD
𝑛
𝐹𝐶𝐹𝐹𝑡 𝑇𝑉
𝐸𝑞𝑢𝑖𝑡𝑦 𝑣𝑎𝑙𝑢𝑒 = ∑ 𝑡
+ − 𝑁𝑒𝑡 𝑑𝑒𝑏𝑡
(1 + 𝑊𝐴𝐶𝐶) (1 + 𝑊𝐴𝐶𝐶)𝑛
𝑡=1

𝐹𝐶𝐹𝐹𝑛 × (1 + 𝑔)
𝑇𝑒𝑟𝑚𝑖𝑛𝑎𝑙 𝑣𝑎𝑙𝑢𝑒 =
(𝑊𝐴𝐶𝐶 − 𝑔)
𝐹𝐶𝐹𝐹: Free Cash Flow to the Firm
𝑊𝐴𝐶𝐶: Cost of capital
𝑇𝑉: 𝑇𝑒𝑟𝑚𝑖𝑛𝑎𝑙 𝑣𝑎𝑙𝑢𝑒
𝑔: 𝑇𝑒𝑟𝑚𝑖𝑛𝑎𝑙 𝑔𝑟𝑜𝑤𝑡ℎ 𝑜𝑓 𝑡ℎ𝑒 𝑓𝑖𝑟𝑚
4. ESTIMATING THE VALUE OF SUBJECT COMPANY
𝑀𝑉𝐸𝑞 = Number of shares outstanding × market price
𝑀𝑉𝐼𝐶 = 𝑀𝑉𝐸𝑞 + Interest-bearing debt
Adjusting the guideline multiples for size
1
𝑀𝑢𝑙𝑡𝑖𝑝𝑙𝑒𝑎𝑑𝑗𝑢𝑠𝑡𝑒𝑑 =
1
+ 𝑔𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑙 + 𝑔𝑎𝑑𝑗𝑢𝑠𝑡𝑒𝑑
𝑀𝑢𝑙𝑡𝑖𝑝𝑙𝑒𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑙

Adjusting for the impact of company size

1 1
𝑠𝑖𝑧𝑒 𝑟𝑖𝑠𝑘 𝑝𝑟𝑒𝑚𝑖𝑢𝑚 = 𝑃/𝐸 − 𝑃/𝐸
𝑎𝑑𝑗𝑢𝑠𝑡𝑒𝑑

Adjusting MVIC/EBIT
1
𝑀𝑉𝐼𝐶/𝐸𝐵𝐼𝑇𝑎𝑑𝑗𝑢𝑠𝑡𝑒𝑑 = 1
+ (Equity/MVIC x size risk premium)
𝑀𝑉𝐼𝐶/𝐸𝐵𝐼𝑇𝑔𝑢𝑖𝑑𝑒𝑙𝑖𝑛𝑒

Adjusting MVIC/Sales
1
𝑀𝑉𝐼𝐶/𝑆𝑎𝑙𝑒𝑠𝑎𝑑𝑗𝑢𝑠𝑡𝑒𝑑 = 1
+ (Sales/EBIT x Equity/MVIC x size risk premium)
𝑀𝑉𝐼𝐶/𝑆𝑎𝑙𝑒𝑠𝑔𝑢𝑖𝑑𝑒𝑙𝑖𝑛𝑒

Calculating price
 𝑀𝑉𝐼𝐶
𝐸𝑞𝑢𝑖𝑡𝑦 𝑣𝑎𝑙𝑢𝑒𝑠𝑢𝑏𝑗𝑒𝑐𝑡 = 𝑆𝑎𝑙𝑒𝑠 × 𝑆𝑎𝑙𝑒𝑠𝑠𝑢𝑏𝑗𝑒𝑐𝑡 − 𝐷𝑒𝑏𝑡𝑠𝑢𝑏𝑗𝑒𝑐𝑡
𝑔𝑢𝑖𝑑𝑒𝑙𝑖𝑛𝑒

𝐸𝑞𝑢𝑖𝑡𝑦 𝑣𝑎𝑙𝑢𝑒
𝑃𝑟𝑖𝑐𝑒 =
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔
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