Hi.
I'm Vivek Dhawan, CEO, Mega Lifesciences. For a lot of people who are English speaking, we're gonna try and do this in English, right? Because
Yeah.
I can speak Thai, but I would. We probably have a lot of investors from other parts of the world. With me, we have our CFO, Mr. Thomas Abraham, who's along with me. I have finance head, the Deputy CFO and our Head of IR, Mr. Manoj. Then we have our Vice President, Finance, Mr. Francis Rego. We are four of us joining this call. Without spending any more time, let's begin the call. I'm going to let Manoj give you the background because I'm sure all of you have seen the MD&A. Before I go into further details of how the year looks like, the year ahead and what we see going forward, I would probably like Mr. Manoj to give some details.
If you have more questions.
Mm-hmm.
We can follow up with that a little later. Manoj, over to you. Thank you, everybody. Please, Manoj. Yeah.
Thank you very much, sir. Good afternoon and a warm welcome to everyone for the third quarter 2022 earnings call. I will first take you through the synopsis of nine months 2022 performance. Our overall revenue has been at THB 11.8 billion in nine months 2022, reflecting our overall growth of 8.6% YOY. The branded business revenue has been at THB 5,991 million, representing a growth of 14.3% YOY. The branded business has grown because of strong consumer demand for our branded products. All the regions performed well. Southeast Asia contributed to the maximum. The distribution business has been at THB 5,568 million, which has grown by 3.4% YOY.
Despite the challenges we had in Myanmar, still we have been able to maintain the sales of our distribution business. In terms of gross margins, our overall gross margins have been at THB 52.48 million. And gross margin as a percentage to the revenue has improved to 44.5% in nine months 2022 as compared to 41.4% in nine months 2021. The improvement in the overall gross margin is primarily coming because of the growth in branded business, because branded business has grown at over 14% as compared to distribution business.
The branded business gross margins also have remained healthy at 67.6%, which has reflected the overall improvement in gross margins for nine months 2022 as compared to nine months 2021. The distribution business gross margins have remained steady. Normalized distribution gross margins have been at 17.8% nine months 2022, as against 17.2% in nine months 2021. The SG&A has remained steady at 26.8% in terms of value, THB 3,167 million, as compared to 26.4% in nine months 2021. Our reported net profits have been at THB 1,840 million, reflecting a growth of 27.3% in nine months 2021.
The adjusted net profits have been at THB 1,881 million, reflecting a growth of 34.6%. The adjustments mainly are pertaining to the Forex gain losses and the losses arising on account of new businesses. Overall, in synopsis for nine months 2021-2022, we have grown our profits primarily, driven by growth in the branded business, and better segmental gross margins and, overall, stable SG&A. Our operating cash flows for nine months 2022 have been at THB 974 million, which represents 53% of the net profits. The operating cash flows are likely to improve by year-end. We continue to remain a net cash company with a strong balance sheet.
We have spent around THB 243 million towards CapEx in nine months 2022, which is mainly towards expansion of our manufacturing facilities and capacity expansion in our manufacturing plant in Thailand. Out of THB 243 million, THB 190 million has been spent towards that. Going forward, we expect the CapEx to be around THB 475 million, which is primarily coming from Thailand and Indonesian plant. In Thailand, we expect to spend THB 268 million further for consolidating our manufacturing operations and capacity expansion, and THB 46 million baht towards EHD. In Indonesian plant, we expect to spend THB 161 million baht, which is towards adding new dosage forms, warehouse and plant upgradation for our newly acquired Indonesian manufacturing facility.
We have in all planned to launch 16 products overall, out of which 11 products we have already launched in nine months, 2022. Also giving you a very short synopsis of our quarter three 2022 performance. Overall, our revenue has been at THB 4,052 million, representing a growth of 1.3% YOY. The branded business revenue has been at THB 2,034 million, and it has remained flat. This is in comparison to the best performing quarter, which was third quarter, 2021 in terms of revenue. We have still been able to maintain the levels of sales the branded business made last year.
Distribution business has been at THB 1,928 million, which grew at 3.3% despite the ongoing challenges in Myanmar. Overall, our gross margins have been at THB 1,864 million, which is 46% of the operating revenue as against 43.3% in third quarter 2021. The branded business gross margins remained healthy at 67%. The distribution business gross margins, normalized, have been at 19.6% as against 17%. Mainly coming from the principal mix. The overall SG&A has remained steady at 27% for both the periods, third quarter 2022 and third quarter 2021.
Our reported net profits for third quarter 2022 has been at THB 658 million, representing a growth of 7.7% and 690 million adjusted net profits representing a growth of 26.2%. This is in very brief, but synopsis of financials for nine months 2022 and third quarter 2022. Now we may open the forum for Q&A. I would request to state your name and your company while you're raising your questions. Thank you very much to everyone for your participation. Thank you.
Thank you, Manoj. We can take questions now, or I can give you a little quick brief if you like, and then we can open it up.
Yeah.
A very short one. Manoj has covered most of the things. I think our medium-term guidance still remains that in the next five years, that 2025 will double our bottom line. We did THB 1,200-something million in 2019, and we expect to do at least THB 2,400-THB 2,500 million, something like that. Above that, we are aiming for. We are still confident of achieving that in spite of all that happening around us. That's the first thing. Please remember that we were at THB 1,200 million in 2019, right? It's a big, big difference. We were planning to do that in five years. We are very close to it, and we'll get there in spite of all the troubles that you see around us.
Number two, in 2022, remaining period, we said that before, we are still saying mid- to single-digit, mid-single-digit growth. I think we stand by it. We should achieve an overall mid-single-digit growth, and we should have double-digit growth in profits. I think those two things have a very high likelihood of happening in the remaining part of the year. That's number two. Number three, 2023, we are still projecting that our branded business will grow from mid- to high single-digit. That's one. Distribution business has a possibility of taking a hit because not largely at the bottom line, but largely on the top line because of the consumer business and the scenario in Myanmar, which is unpredictable. I cannot make guesses, but we are very well prepared. We are very tight.
We are very efficient. In spite of all that, the pharma business will do fine. The consumer business can have an impact. We are looking at all possibilities and let's see how things look like. We are not going to project anything on the distribution business at the moment. The branded business still has got high single-digit growth possibilities in the year 2023. These are three key factors I wanted to tell you, and then I say why. In spite of the COVID impact going away, in spite of vitamin C, D, et cetera, not growing at the rate they were growing, they are still maintaining a new high, number one, compared to 2019.
Number two, a lot of our other business, whether it's herbal, whether it is supplement, whether it is our OTC drugs and our pure pharmaceuticals are taking off and growing and doing far better than they were doing during COVID time. We have a strong balance of both. That's a very good sign. At the same time, we have a strong pipeline of 186 products. 186 products, out of which 58 products are pending registration, 128 are under development. There are probably new trials about 37 or when we say consumer health and prescriptions about 143 and over the counter in the consumer health is about six. We have a nice strong pipeline of drugs and new products coming in.
With that, we believe with all this happening and the work we are doing, the possibility of achieving THB 2.5 billion in 2025 remains very, very high, right? I mean, I'm sure you have a lot of questions in your head. Thai baht does affect our profitability and Thai baht has helped us, but at the same time, the mix of products, the branded business, the growth in manufacturing, a lot of other things have also contributed to our growth in profitability. The baht has an impact, but so does many other factors that have impacted our business, right? Our branded business growth largely in the last quarter, in the nine months, has been because also our hospital business has grown. Also our over-the-counter drugs have grown. Also our other supplements other than COVID supplements have grown.
It's across the board. It's not the COVID business is growing the way you saw in 2021 or early 2022, but still it's staying strong. Overall, we are doing better than we thought or anybody thought we would, right? Distribution business has the same story. Vietnam, Cambodia are doing very well, still doing well because we largely do pharmaceuticals. Myanmar with their country's economic situation we are in, we are still in good shape. We are committed to Myanmar. We are not going anywhere, and we believe in the long run, we still have a great opportunity to succeed in the country as things get changed and turn around. By the time we are watching and doing what is best in the market to ensure growth and maintaining what we have at hand, right?
Other than that, I'm sure, I mean, the FATF and all the other authorities are well aware. The impact is limited. Myanmar, I've seen that before. It was already under all kinds of restrictions when we started in 2011, 2015, till it got out of it and things got better. It has not impacted because our business is actually pharmaceutical. We are doing clean business, and I think the impact on our business is very limited. We continue to fund, source money through the banks and continue to repay, et cetera, for our pharmaceutical business that we are doing in Myanmar.
The guidance has also come out from the Myanmar government central bank, as well as the facts that we hear around you, which I'm sure all of you have a lot of knowledge. If you need more information on that separately, either Manoj or Francis can take you through, because this is a long requirement list as you can see. Myanmar is going to be an issue, and it's gonna remain till situation improves. But as I said, we are monitoring carefully and we still have a very good head start because we have great brand, we have products that are known for 25 years. We have local companies and generic brands. Our business is not only high-end, most expensive.
I think in this scenario, well-known products, respected products, people who take it regularly have a chance to at least continue, if not grow your businesses. We stand in a stronger position in Myanmar than probably many other people. That's what our belief is based on the model we have in place. Yeah. Indonesia, very good. We have got a lot of products approved now. We have a lot of oncology drugs coming out, and we are hoping to see better years coming ahead because of the pipeline we have and the products we have in hand. But we always told you, Indonesia is a five-year story. It won't happen by 2027. We have a target of getting to $30 million, which we are very confident of achieving with the pipeline we have and the work we are doing in the country.
Please give us time. Drugs take time, and it's gonna take some time to get that movement to happen, but there are good things happening and good growth happening in that area. CBD, let's not talk about it too much. It's all over the streets. Mega has products ready, but under the new regulations, we shall see what happens. It's not something that we are very concerned about and not something that we are very much in a hurry to launch till we have clarity, till we have the right product. We are ready. As the laws get more clear, we will be in a position to launch and supply to the Thai market. Other than that, I think most of it is well explained in our MD&A.
If you have any questions that go beyond what we have covered and things you want to know more about, which we can talk about now, we open the floor to Q&A. I have nothing more to add. The manufacturing facilities and all capacity expansion, Manoj explained already what we are doing in Thailand and Indonesia. It's part of the requirement, GMP facility improvement, efficiency improvement, and we are doing a lot of work in that area. ESG, we have also just got our THSI. We got listed in it and the top 170 company in the country. So I think all those things are moving in the right direction. The factory's also done a lot of work in solar and energy savings, in efficiency in many, many areas. At the same time, improving outputs and growing our production capability.
All that work continues, and we are, as I said, confident of delivering our plans for 2025. 2023 is still, in our plan, a growth plan. We're still going to grow our branded business between the high single-digit range, somewhere there. Ladies on call, thank you so much. Please, you can dial in and ask the question. As Manoj said, give us your name, your organization, and we shall try and answer those questions as best as we can. Thank you very much. Over to you.
Hello.
Hi.
Hi, this is Thanapol from CGS-CIMB. Thank you for your presentation. I have a quick question pertaining to your distribution business in the third quarter. First-
Yeah.
If you look at your MD&A, it says that the gross margin for the segment was 24.5%, which is, you know, highly unusual for the business. Is there any particular reason for this, and what is the level that we can expect going forward? If I may ask a follow-up question, we know that the government is not giving out import licenses in Myanmar. I would like to have some more color on the demand situation in Myanmar. If the government does, you know, allow imports again, do you think there will be demand to support whatever your clients are importing into Myanmar? Thank you.
I think the pharma demand is still there because these are chronic disease areas, and people have diabetes, heart disease still continue, and they continue to buy brands they know. I think the pharma demand is still there, and we don't cover 70-60 million population in the country. Our probably customer base lies with 4%, 5%, 10% of the country. I think the pharma demand is still there. Is there an impact? Yeah. People will move to cheaper products. People will drop down a level. All these things will happen. Companies who are there, who've been there long term, have products available regularly, and pharmaceutical licenses are still available, so we are still able to import, number one. On the consumer side, there are bits and pieces.
Licenses come and there are other methodology that approvals that the government is allowing to do, which we are working on. A lot of our partners have local manufacturing as well and they're looking at other methodology, I think, so that will also probably come back in some sense. As I said, Myanmar distribution has an impact and a large impact probably it will be consumer health, consumer area, FMCG. We need to see what happens. We can't tell you exactly. So far, the impact has not been bad, but going forward, how much of it will be impacted, we need to see. There are licenses, there are border trade licenses being granted. There are, you know, local manufacturing licenses being made. I think there are multiple options that companies are working at.
They are brand owners, we are distributors, so as and when there are solutions that arise, and I think we are working on it, we believe it shall continue. Demand is an issue of income, right? As GDP drops, income drops, and the disposable money in the pocket drops. Definitely it's gonna affect demand. The largest effect will be goods that you don't need, right? There will be some products getting affected, some may be less affected, some may be more affected until the demand situation changes. There is gonna be an impact, and that's why we see, we have clearly said distribution is gonna drop in the years to come. While our branded business, we are only giving you a guidance on the branded business.
We are not giving you a guidance on the distribution business for 2023. Having said that, the impact on the bottom line is very negligible because what contributed out of the consumer business was very small compared to our brand and our pharma business. We see the impact being limited at the moment, and it may be in some ways compensated by our growth in other markets in the branded business. That's our view for the year or two years going forward. One or two years, Myanmar, we are leaving it and keeping ourselves tight, preparing ourselves to stay there and be ready for changes that happen. That's my feedback. If there's anything I missed on your question, let me know.
The gross margins.
Yeah.
Gross margins, yes. On the gross margins front, we have explained in our MD&A that our normalized gross margins have been around 17%, similar to the levels we have seen earlier. In quarter three, what had happened was, there was a huge backlog of dollars which we had to clear. We were able to secure dollars and make the remittances for those dollars. As per the accounting rules, the losses arising on account of foreign exchange are recorded under the Forex line. We have been able to recover these amounts from our principals because the Forex doesn't belong to Mega, it belongs to the principals.
The Forex recoveries have been recorded under the revenue line, which has ultimately flown down to the gross margins. That's why gross margin looking very high. The corresponding cost of that is being recorded under the Forex line. Net-net impact is still the same. It is only a line-wise reporting which we have clarified in our MD&A. Overall, as we explained, we have normalized the gross margins of distribution business and they are at very similar levels what we have seen historically for distribution business. Thank you.
Thank you.
Hello.
Hi.
This is Pattadol from Thanachart. May I ask more about the outlook of the gross margin of the distribution business? If I get this right, we should assume the normalized level of gross margin for distribution of around, let's say, 17%-18% over the next year. I'm not sure if I get this right.
Yeah, you are correct. I think that's what we also guide, 17.8%. 19.9% because of the old, then the model change. It's in the range of 17.5%, right? I think that's what we said, 17%-18%. You have said it correctly. I think we are saying 17.5%, if I see somewhere in the MD&A or somewhere. Between 17% and 18%, you're absolutely correct. After the correction was done in Philippines and some countries where the model changed, right, then it got corrected and now it's sitting in that 17% or 18% range. You're right. Yes, correct.
Thank you. About the Q3 results. Should we subtract, I mean, for the bottom line that we see of around THB 650 million. Should we subtract out the difference between the reported gross margin and the normalized gross margin of the distribution business out from the bottom line to see the real operation of Mega in Q3?
No, you should not, because the real operational results of the company is reported in the profit after tax. What is not reported correctly is the gross margin. If you want to look at the gross margins correctly, you should reduce that extra gross margins of the gross margin. That's why we say actually the reported gross margin is 19.5%, but the real normalized gross margin is 17.5% for 17.8% for distribution business. But the profitability and everything else is correct. It's just that, you know, because, I mean, Manoj explained. Is that clear or you still need clarification?
Yeah. It's quite clear, but my question is that for the re-reported Q3, we saw that Mega had a FX loss of around, if I'm not wrong, around THB 10 million. From what you said, it seems like the FX loss supposed to be much bigger because you have to record the FX loss from Myanmar currency. The fact that the FX loss was just around THB 10 million, that is because you also had the FX gain from the Thai baht as you are right.
Correct. You're right.
Yeah.
We also get FX gain from Thai baht. Yeah, that's why. You should also realize that most of the FX losses in Myanmar, which is occurring because of principals that we distribute.
Yeah
Funds don't belong to us. We recover it from the principals. There are two aspects to this. One is the cost of that Forex loss, we get it recovered, but it goes into the revenue side. That is a model change that has happened. You're again right, because, the Forex losses reported in Myanmar is getting set off with the Forex gains we made in Thailand or other countries. You are right. Yeah. Thanks.
Thank you. Thank you.
In net real effect it'll be 17.5 not 19.
Yeah. Same. No change. Harry, you are on mute.
You have a hand up, but we can't.
You have to unmute yourself.
Hi.
Speaking, yeah.
Hi.
Yeah.
Hi.
Thanks. Thank you very much for the opportunity. I had two questions really. One is related to the branded business. If you could just help me understand, like, which elements within the branded business were growing the fastest and which ones were sort of below average in terms of growth? That's the first question, please.
I don't think we declare any product-wise growth, but what we are trying to explain that in spite of COVID-related products.
Declining.
Declining. Which have declined. They are not at that same level, let's put it the other way.
Yeah.
It's not what it used to be. If you looked at third quarter in 2021, there's a huge quarter, right? Because COVID was at its peak. C, D, zinc, we have a lot of products which are all treated with that factor. They are not at that level. They have come down, but they have not yet come down to the 2019 level. We also have Cofin and Loreze and Zyrine and so many other products which are over the counter or which we call self-meds, depending on the regulation in the country. Then we have a whole pharma business in the market which has also shown growth. Overall, across the board, some things have flattened out and the others have grown. We have seen.
Declined.
Some have declined, but lower than.
Lower.
Lower. Flattened meaning lower than they were at that period. We expected that. We are not saying that we can continue growth of 30s, 40% of vitamin C. It won't happen. A lot of people came in and went out and thing. It's still at a much higher level than the 2019 levels of vitamin C. That's the guidance that we've been offering that this is going to happen. What does it mean when this tapers out, there are a lot of other products that people were not buying, not using, not doing anything about pain, back pain, allergy, et cetera, et cetera, and all the other products. We have also seen growth and so has the rebound in the hospital business, where hospital business.
Mm-hmm
Operation, surgeries, consumption has also gone up. Put that together, we have seen a growth in the branded business.
Okay.
In spite of them declining, right? In spite of that. Group of it could be four, five, six products depending on the country, what is what. In that range that have seen a decline.
Okay. Would it be right to think that more like this, the growth in third quarter 2022 or the nine-month period has been more pharma and OTC as opposed to nutraceutical supplement business?
I think there's both. Only exclude the immunity related products. That's all. The rest have also grown. It's not.
Okay.
It's not just pharma, it's also.
Okay.
Other than immunity, let's put it that way. If you want to define that group. I mean, we don't do that, but let's say people consider them as immunity products.
COVID-friendly. Yeah.
I would call them immunity or COVID.
COVID-friendly.
People-
Okay
Consider them as COVID-related kind of products. Yes.
Okay. That's really helpful, thank you. Then are there any products that you've seen sort of lower demand for as kind of affordability and maybe inflation impact the consumer?
Not really. I think we have not done that. We've always priced our product for what is right in the market, and we are not doing something just because to make it affordable and gain more share. It has to be a strategy, right? We have products which are cheap. We have multivitamins that are very, very low priced, and they are targeted that way. We have products that are targeted at the high end, and they're different. It doesn't depend on today where the problem has gone down in pricing.
Mm.
There may be some areas where we may want to relook at in the market, but just to lower prices that we think we can gain share doesn't happen.
Okay.
'Cause everybody else will lower. If the market drops, everybody else will say, "Let me set prices at discounted so I can get some share back from somebody else." You think we are the only one? No, we are not the only one. That's not gonna change the consumer just because it's cheap, let me buy more.
Okay.
The dynamic consumers in the market are going to switch brands. If there's a group of people who switch brands and go to the cheapest brand, they do it anyway. There's a group of loyal people who buy your brand regularly because they get the right price. Trying to market your business only to the people you want to switch, then that's your strategy because the people you want to switch are much higher. That way if you say that, I'm sure there are much more cheaper vitamin Cs in Thailand than Mega.
Mm-hmm.
Everybody should move to them because they're the cheapest.
Okay. I mean, you'd say that basically the products that you're selling, the demand is not that sensitive to any price changes?
I mean, there are price changes, but they're not designed only for this reason.
Mm-hmm.
They are strategically designed and want to stay with that price. Sometimes we want to gain share. Sometimes we also want to make sure that the impact on the end price is much lower because the cost in the local market is not gone up that high. Even though the currency has gone up, our salaries, our advertising, our expenses are in the local currency. I think we price the product based on the potential where we are targeting. Pricing is a very big part of the strategy. It's not only based on today, I'm losing shares, so let me drop my market price, and I can gain more share. It's not always correlated.
Mm-hmm. Okay.
It's not one, it's not one to one, right? At least that is not what we are seeing in the market.
Okay, that's helpful. Thank you. The second question is just related to branded margins. I know these have been quite high. You know, this year they've been very high. But just curious, like I think there was a little bit of a drop in the third quarter 2022, not a big drop, but just wanted to understand what your outlook is for those margins like over the next year or two.
I think we only give a guide of the 63%-65%. Some changes happen because of exchange, sometime material costs that we are carrying forward, we have acquired early, or sometimes it is also the product mix. In that period, if we are doing some very high-end pharma products where we have a higher margin, then the margins will look a little bit different. Overall, I think we remain between 63% and 65%, right?
Yeah.
I doubt we'll guide anything above that.
More sustainable. Okay. The last question, sorry, is just on the FX impact. Like, if we look at the revenue growth in brands, what would be the impact of Thai baht depreciation on those numbers?
Thai baht depreciation. I don't know what is the number, 3%-4% Thai baht appreciation.
Yeah. The impact would be 3%-4% on the bottom line. You're talking about brand growth next year or this year?
Well, I meant this year, but also next year as well.
Yeah, I think the baht how it's gonna behave is up to everybody to guess. As of this year, I think the impact on bottom line would be to the extent of approximately 4%. That's our estimate, because it's a complex thing to really put a finger on.
Mm-hmm.
We deal with 35 different countries, currencies, and we also spend many of the SG&A in baht in many of the foreign countries. It's not only just the revenue getting, you know, you know, increased, but the expenses also go up. The net impact of all that, we think it's approximately 3%-4%. That is our best estimate, as of now. Thanks.
Great. Thank you very much.
Mm-hmm.
Well done. If there are no more questions, we can con-
Sorry, I had one more follow-up, if that's all right.
Yeah. Sure.
Thanks. It's just related to the goodwill on the balance sheet. I noticed there's been some mild volatility in it, and I think it's been increasing the last few quarters, and I just wanna understand what that's related to.
What's that? Sorry. Can you come again? We're unclear.
Sure. It's just related to the goodwill on the balance sheet, which I think has been.
Goodwill.
increasing over the last few quarters.
Okay.
Not by much.
We've done in Indonesia, in Malaysia, all that, you know, so positions.
Compared to the last two periods, what we are seeing is mainly coming because of the Thai baht depreciation.
Yeah.
Okay. That's just FX. Okay, great. Thank you.
Yes. Yes, please.
All right. If there are no other questions, thank you. Thanks for joining us today. I'll-
Thank you very much.
Yeah.
No, I don't have anything to add. I think it's been. Thank you very much for all your support.
Yeah.
Belief and in the business, in the management and what we are trying to do. I think you have to believe that it's gonna. It's a tough year. Everybody's having a tough time, but we believe we're in the right space. We are doing the right things. The future is definitely there in the markets where we are building our brands. Having a reasonable sizable business with the pharmaceutical, consumer health, and all the rest of things that we are doing, building a brand that people love, people feel good about and use regularly, and helping people to stay healthy. Our mission stays alive. We continue to build a brand that people love. We Care for Your Wellness is our real commitment to the world where we are in. Once again, thank you, and we hope to see you again next quarter.
Sorry.
[audio distortion], sorry. Sorry just to interrupt. I have two questions, but I think you-
Yes, please.
You did not see it in the message.
Please. Sorry.
The first question I would like to ask about the seasonality effect. Is there any seasonality effect? I remember that fourth quarter should be normally a high season for Mega We Care. Is that true or is that not true?
Sunthorn.
Who is it? Can you ask him to identify?
My name is Sunthorn from Kasikorn Securities.
Oh, okay. Hi. Okay. All right. I think, Khun Sunthorn , you are right, but seasonality is not that much. You know, we have seen Tet, we have seen Chinese New Year, we have seen Songkran. That's where we see seasonality.
Seasonality-
In our business, what is seasonal in us, we don't have a cold and flu product as much. Like if you go to DayQuil, NyQuil one of the big brands, when the hay fever comes, the business goes up. Most of our products, a lot of them are regular products, right? Very few go for the pain product. Loratadine, Loreze. It's not that big, whereas it's so big that allergy is down, so people will not take allergy, but allergy is throughout the year. I don't see a very large impact on our business by seasonality. COVID, if it comes down and the fear goes down, people don't want to build immunity. Yeah, that we have already seen that drop. I don't think.
I think.
There's gonna be an impact.
Yeah. I think we are also looking at the fourth quarter. It used to be the highest quarter.
Yeah.
No, traditionally. That trend has changed now.
Yeah.
I think this year, fourth quarter, we would rather compare it with last year's fourth quarter. We still expect to grow the brands. We are not comparing with the first nine months of the year. We'll be comparing with last year's last quarter, if that's what you're looking for. Thank you. What's our question?
Another one. I would like to ask. I have heard you target Indonesia about $30 million, right? On revenue in 2027. Is that too small? I'm not sure comparing to the Indonesian population around 276 million.
Yeah. When you are sitting at zero, $30 million is also big.
Yeah.
Remember, Indonesia is not an easy market. How many people have succeeded in Indonesia? None. Most people have gone out. You have the Kalbe, the Dexa, the Nexa, the Sanbe, and it's a five-seven company market, right? To break in there and be successful in areas and to make money, the size can be THB 500 million also is too small. You know, but yeah, you're right, it's huge. We have to build a platform. We are now building a strength where we are building a consumer healthcare business, a pure pharma business, both. Building a good pipeline, building good capabilities, building good teams. What we are saying is that in the next five years' time, we should be ready with that. We will keep evaluating.
This is a plan based on what we have in hand. As things improve, we are not stopping there, right? We are building the model. Indonesia is a well-served market, and we have to break in there and make ourselves successful. A profitable company doing at least $30+ million. That's our goal. First step. Step two, 30 can have to become 100 million dollars. On a longer term vision between 2025 and 2030, we are also internally aiming to become anywhere between 70-100 million dollars. Step one is $30 million becoming profitable. Step two is reaching up to $70-$100 million and becoming much bigger in size. In specific areas, not everything. Selecting areas where we can play and win. That's the plan.
By 2030, the plan is to get to 70-100. By 2027, the plan is to get to at least 30 and break even. I think this is a 5-7-year plan where we see that we should be a sizable market player compared to Thailand and everywhere else. Indonesia become a sizable chunk in our business overall. That's the idea. It took us a long time, about 25 years in Thailand, so we are only saying 10 years.
Yeah.
Give us 10 years in Indonesia, not 25.
Okay. Clear. Thank you.
Yeah, Kunchatree, the normalized GPM for distribution business is 17%.
Seventeen.
Yeah. 17. You already answered. Okay. It's already answered. Sorry. Yeah. Thanks. All right.
Any other questions? Sorry.
Since-
Sorry we missed the chat because it didn't come up in the chat. Apologies, Khun Sunthorn. Sorry very much. Sorry.
That's all right.
I think there are not any more questions in the chat also.
Yeah.
We don't have anybody on the line asking more questions. Please, if you have anything, you always know us. You always can call all of us freely. We are very happy to get back to you at any time. Once again, thank you so much.
Thank you.
Hope to see you soon. Thank you.
Yeah.
Thank you.
Thank you.
Thank you.