The tail-warping effect of wholly-owned Hunan Sands Pharmaceutical Co., Ltd. has led to a surge in business volume. At the end of November 2013, the company completed the acquisition of 64.47% of Sands Pharmaceutical, thus owning 100% of its equity. As a result, the company's operating income expanded rapidly during the reporting period, an increase of 326.3% over the same period last year.
The synergy of wholly-owned Hunan Sands Pharmaceutical Co., Ltd. promotes profitability to rise sharply. During the reporting period, the company's gross profit margin was 55.05%, an increase of 3.74% over the same period last year, and the sales / management / financial expense rate was 25.45%, 11.71%, 0.18%, respectively, which was 1.01% lower than that of the same period last year. As a result, the net profit increased by 5.67% to 13.01%, and the net profit increased by 655.62%, far exceeding the growth rate of operating income.
Huaqingyuan won the forest right certificate of plum slice tree base for the first time, which ensured the stability and sustainable development of plum slice planting business. Huaqingyuan specializes in the cultivation and cultivation of plum slices, from which natural right-handed borneol (natural borneol) is extracted to expand its efficient biomedical applications, in which Jiaying Pharmaceutical holds a 45% stake. Huaqing Garden now grows more than 4000 mu of plum trees, basically all of which have signed land lease and use agreements with local farmers one-to-one, which are protected by law. In order to support the stable and sustainable development of the plum tree planting industry, the Meizhou Municipal Government intends to apply for forest warrants for leasing and transferring land for the planting base in stages and batches. This time, there are 823.5 mu of land issued with forest rights certificates, with a service life of 29 years. Huaqing Garden pays a total of 1.2091 million yuan for leasing fees, seedling compensation fees and certification fees, which is equivalent to 50.63 yuan per mu of land. compared with the huge economic value contained in plum trees, it is extremely low. The successive issuance of forest warrants means that in the next 30 years, the management rights, ownership, production, R & D, office and other supporting facilities of Huaqingyuan base will be effectively protected by law, which will lay a solid foundation for the sustainable development of the plum industry.
Risk hint. The lower-than-expected risk of plum tree planting and the extraction and sale of natural borneol.
Profit forecast and valuation. We estimate that the EPS of the company from 2014 to 2016 will be 0.29RMB / 0.37RMB / 0.54RMB, corresponding to PE42.2 / 33.1x / 22.6x. We are optimistic about the prospect of the company's natural borneol planting / deep processing business and its involvement in new anti-cancer areas, maintaining a "buy" rating with a target price of 16.2 yuan.
