Market corrects actively, but VHM VNM VRE boost index, TRA - A stock each day


- Vn-Index traded sideway rather actively in morning, and increased well in the afternoon.
- Banking and oil&gas sectors correct by reducing slightly.
- VHM/VNM/VRE contribute 65% to Vn-Index increase.
- Liquidity continue to increase: 46% higher than 20-day average, and 4% higher than last trading day.
- Foreigners net buy in 8 consecutive days, mostly on VNM (81 bill) VRE (36 bill) but they also sell much HPG (46 bill).


- 10-year US government bond yield reduced by ~20 basic point in a month to 2.96%. The reason can be from less trade war tenssion, so investors buy more risky assets rather than bonds.
- USD/CNY exchnage rate reduced 1.7% to 6.84 after stopped trade war between US and China.

- USD/VND exchange rate also reduced to 23,255


Business model:
- Unlike other pharmaceutical companies, TRA started its business from traditional medicine (or eastern medicone) based on high technology. 2 prominent products are: Boganic (boosting liver function) and brain hemorrhoids, accounting for 50% revenue. After that, TRA gradually expanded to western medicine.
- TRA currently owns 4 plants all meeting GMP-WHO standard: 2 western medicine plants in Hanoi and Hung Yen, 1 traditional medicine (or CNC plant), and Sapa plant supplying raw materials for CNC plant. All plants are operating at ~ 60% capacity. And, the western pharmaceutical plant in Hanoi just comes into operation in early 2018 with investment capital of ~ 483 bill.
- TRA’s competitive advantage is that they can provide ~70% raw materials themselves for production (while others almost import 100%).
- TRA distributes 80% through OTC channel (selling through agents, private pharmacies, hospital pharmacies, self-distribution companies, supermarkets, retail stores ...) based on its nation-while distribution network. TRA's market is more concentrated in the North with 62% revenue.

Investment catalysts:
- Industry volume growth ~8.5%/year as 1) pharmaceutical industry is defensive and less affected by business cycle, and 2) drug consumption per capita in VN  remains very low compared with other countries.
- However, raw material price has increased since end of 2017, making profit margin slightly reduced.
- In addition, Hung Yen plant just comes into production in early 2018, which will cause many expenses to increase sharply such as: labor, depreciation, selling expenses… while revenue at initial stage is not enough to offset. Therefore, TRA’s prospects will be better from 2H 2019 when revenue of this new plant reached breakeven point.

Financial Statement Analysis:
Good financial position based on low borrowing balance at ~200 bill, high enough cash balance ~170 bill, very low liabilities to equity ratio ~032, and positive cash flow from operation in all years. In general, all pharmaceutical companies often have good financial positions.