Main points of investment
The increase in expenses reduced the net profit: in 2015, the company achieved revenue of 820 million yuan, an increase of 4.02% over the same period last year; the net profit of shareholders belonging to listed companies was 10.9115 million yuan, down 88.68% from the same period last year; and the net profit of shareholders belonging to listed companies was 834100 yuan, down 98.92% from the same period last year. We analyze that the decline in the company's profit is mainly due to the increase in three expenses. In 2015, the company's sales expenses, management expenses and financial expenses increased by 24.65%, 26.24% and 291.56% respectively compared with the same period last year: the increase in sales expenses was mainly due to the increase in investment in market development, especially in cosmetics business promotion; the increase in management expenses was due to the increase in R & D expenses, travel expenses and warehousing expenses. The increase in financial expenses was mainly due to an increase in short-term borrowing and a decrease in time deposits.
Oral preparation revenue is solid, injection sales decline: in 2015, the company's pharmaceutical sector achieved revenue of 666 million yuan, down 3.83% from the same period last year. Among them, Zhenyuan capsule and Xinyue capsule improved their performance and market share, achieving revenue of 306 million yuan and 53 million yuan respectively, an increase of 13.36% and 20.92% over the same period last year. Due to the influence of bidding, the revenue of Shengmai injection and Qingkailing injection decreased to varying degrees compared with the same period last year, of which Qingkailing injection achieved revenue of 50.0368 million yuan, down 43.32% from the same period last year, and Shengmai injection achieved revenue of 142 million yuan, down 1.85% from the same period last year.
Ginseng health products and food volume can be expected: in 2015, the company completed 8 new product filing work on the basis of the original 34 ginseng products; ginseng deep processing products achieved sales income of 31.6287 million yuan; ginseng health food began to be sold in August 2015. the main products Red Ginseng Ointment and Red Ginseng extract concentrate achieved sales income of 6.5443 million yuan. The company sets up a holding subsidiary Yisheng Hanshen (Beijing) Biotechnology Co., Ltd., which mainly sells all kinds of products under the brands of "Yisheng", "Yisheng Hanshen" and "Hanshen" to ensure the sales of ginseng and related products. In addition, the company completed more than 1700 mu of non-woodland ginseng planting in 2015; the main part of the civil engineering part of the ginseng processing project was capped at the end of 2015 and is expected to be put into use in September this year.
The cosmetics business is growing rapidly: its sales model mainly adopts the way of joining chain beauty salons and TV shopping. After a year of development, it gradually moves towards the right track and achieves revenue of 109 million yuan. Due to the high promotion expenses in the early stage, the net profit loss is 10.839 million yuan. We expect the cosmetics sector to achieve revenue of 200-300 million yuan and make a profit this year.
Inventory increment: in 2015, the company's inventory reached 1.449 billion yuan, accounting for 55.00% of the total assets, an increase of 6.33% over 2014. In 2015, the company's assets were impaired by 12.8766 million yuan, mainly due to the provision of bad debts and inventory decline losses. We believe that with the increase in inventory, the company is under greater financial pressure, and it is expected to gradually release the inventory pressure through product consumption and production of health products in 2016.
Profit forecast and investment rating: we predict that from 2016 to 2018, the company's operating income will be 1.039 billion yuan, 1.247 billion yuan and 1.497 billion yuan respectively, and the net profit attributed to the shareholders of the listed company will be 136 million yuan, 212 million yuan and 299 million yuan respectively, the corresponding EPS will be 0.41,0.64 yuan and 0.90 yuan respectively, and the corresponding PE will be 31.8,20.4 and 14.5 times respectively. Centering on the development strategy of "building the whole ginseng industry chain", the company gives full play to the synergy of the six plates to promote common development. The ginseng health products sector is expected to become a new profit growth point, and the cosmetics business is expected to be profitable. however, considering the risks reviewed by the CSRC and the financial risks caused by ginseng inventory, we downgraded the company to "overweight".
Risk tips: bidding price reduction risk, ginseng inventory price reduction risk.
