1.
Forecast Summary
The five-year forecast model for 2026–2030 is built on DHG’s historical performance (2021–
2025) and key pharmaceutical industry trends. Revenue is projected to grow steadily at around
6% per year, supported by stable demand. Gross margin is expected to improve slightly as
COGS decreases from 51.6% to 50.8%, driven by higher production efficiency and an increasing
share of self-manufactured products. SG&A is forecasted to decline gradually from 27% to
26.2%, reflecting better absorption of fixed costs and enhanced cost control through
digitalization. Financial income is expected to rise by 6–7% annually due to stronger cash
reserves and expanding working capital. The effective tax rate is projected to increase from
12.5% to 13% following the expiration of certain tax incentives. Overall, the assumptions
support stable growth in net profit and free cash flow across the forecast period.
2. Explanation & Justification
The 6% revenue growth assumption is consistent with DHG’s recent growth of 5–7% during
2021–2023 and aligns with the long-term expansion of the Vietnamese pharmaceutical industry
(6–8%). As DHG currently operates in a mature stage with limited capacity expansion and no
major M&A activity, the projected rate is realistic and conservative.
Net Revenue Chart
7,000,000,000,000
6,000,000,000,000
5,000,000,000,000
4,000,000,000,000
3,000,000,000,000
2,000,000,000,000
1,000,000,000,000
0
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
The slight reduction in COGS is justified by the rising proportion of high-margin self-
manufactured products, ongoing supply-chain optimization, and efficiency enhancements from
GMP-compliant facilities. The projected yearly decline of 0.1–0.2 percentage points aligns with
historical trends.
COGS Chart
4,000,000,000,000
3,500,000,000,000
3,000,000,000,000
2,500,000,000,000
2,000,000,000,000
1,500,000,000,000
1,000,000,000,000
500,000,000,000
-
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
SG&A is expected to decrease mildly as revenue grows, improving economies of scale. DHG’s
SG&A ratio ranges from 26% to 27%, and digital transformation initiatives will further
strengthen operational efficiency. As marketing intensity in pharmaceuticals is lower than in
FMCG, the SG&A assumptions remain highly reasonable.
SG&A Chart
2,000,000,000,000
1,800,000,000,000
1,600,000,000,000
1,400,000,000,000
1,200,000,000,000
1,000,000,000,000
800,000,000,000
600,000,000,000
400,000,000,000
200,000,000,000
-
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Financial income is projected to increase at 6–7% per year. Given that more than 90% of DHG’s
financial income derives from bank deposits, its growth will primarily follow interest rate
movements and cash balance expansion. The decline in 2023–2024 reflects falling deposit rates;
however, with DHG’s conservative investment approach, financial income is expected to grow
sustainably rather than sharply.
Net Income Chart
1,600,000,000,000
1,400,000,000,000
1,200,000,000,000
1,000,000,000,000
800,000,000,000
600,000,000,000
400,000,000,000
200,000,000,000
-
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
The forecasted rise in the effective tax rate to 13% is consistent with the gradual phase-out of
prior tax incentives.
3. Cost of Capital Justification
The cost of equity, calculated using the CAPM model, is 8.425%, based on a 4.2% risk-free rate,
a beta of 0.65, and a 6.5% market risk premium.
The after-tax cost of debt is 5.80%, reflecting DHG’s actual borrowing costs during 2020–2024.
With a capital structure of 92.47% equity and 7.53% debt, DHG maintains low leverage.
These inputs generate a WACC of 8.227%, which is appropriate for a stable, low-risk
pharmaceutical firm.
4. Evaluation & Recommendation
Overall, the forecast model is conservative, coherent, and strongly supported by historical
performance and industry characteristics. To improve robustness, sensitivity analyses on key
variables such as raw material prices, interest rates, and gross margin shifts should be
incorporated. Adding optimistic and pessimistic scenarios will also help evaluate risks and
strengthen the reliability of the valuation.