Announcement: according to the notice on improving the Price Management of low-cost drugs issued by the National Development and Reform Commission on May 8, 2014, the company produces Chongganling tablets, Xiaoyan Lidan tablets, Banlangen granules, Lizhong pills, Buzhong Yiqi pills, Tongxuan Lifei pills, Juhong pills, Niuhuang jiedu pills, Yinqiao jiedu pills, Yinqiao jiedu granules, Liuwei Dihuang pills and Huodan pills. Enter the "list of low-cost drugs within the pricing range of the National Development and Reform Commission" (referred to as the "list of low-cost drugs"). The above products of the company have been listed in the national essential medicine catalogue and medical insurance catalogue. The content of this circular clearly defines the improvement of the price management of low-cost drugs, that is, "for drugs with relatively low daily costs (low-cost drugs) within the current range of government-guided prices, the maximum retail price set by the government shall be abolished, and within the standard of daily average cost, specific purchase and sales prices shall be set by producers and operators according to drug production costs, market supply and demand and competition conditions."
The prices of 12 traditional medicines are expected to rise in volume, and the profit margin will exceed expectations. The 12 products selected by the company in the "low-cost Drug list" originally had lower sales prices in the market, which were quite different from those calculated according to the average daily cost of the products. According to the spirit of the notice, the company intends to increase the prices of the above products. The price increase will stimulate the sales enthusiasm of the channel merchants, contribute to the expansion of the product market, and related drugs will also be more widely used. With the policy dividend, the company's traditional medicine prices are expected to rise, profitability and performance growth will exceed expectations. Plum tree planting and deep processing business has entered a good situation. Huaqing Garden, which is 45% owned by the company, now grows more than 4000 mu of plum trees, and has basically signed an one-to-one land lease and use agreement with local farmers, which is protected by law. It is estimated that at least 45 tons of high-purity natural dextroborneol will be produced in 2016. The current price of 95-98% pure dextroborneol is at least 3000 yuan / kg, and demand is seriously in short supply. The project has been included in the sailing plan of Guangdong Province, and it is a key project for the second greening and building of green GDP in Guangdong Province. it has won the full support of governments at all levels in Guangdong Province and local farmers, and enjoys the reduction and reduction of VAT, income tax and other concessions.
Antineoplastic drugs are the growth point of long-term profit. The company has joined hands with Da to enter the anti-tumor nano-drugs. the pre-clinical results show that the drug has a good effect on breast cancer, cervical cancer, liver cancer, lung cancer and other tumors, and has low toxicity, so it has a very great application prospect. While improving the company's core competitiveness, independent innovation ability and development stamina, create a new profit growth point.
Risk hint: plum tree planting and natural borneol extraction and sales are lower than expected.
Profit forecast and valuation. As the time and extent of the company's price increase have yet to be determined, we will not change our profit forecast for the time being, that is, the company's EPS for 2014-2016 will be 0.29RMB / 0.37RMB / 0.54RMB. At the same time, firmly optimistic about the company's natural borneol planting / deep processing business and the prospect of intervention in new areas of anti-cancer, maintain the "buy" rating, the target price is 16.2 yuan.