Performance summary: the company achieved operating income of 730 million yuan in 2015, an increase of 2.4% over the same period last year, and net profit of 25.38 million yuan, down 18% from the same period last year.
Bidding price reduction and non-recurrent gains and losses affect performance. 1) from the perspective of various business sectors, the industrial sector is the main source of performance of the company. Affected by bidding and price reduction, revenue decreased by 4.9% compared with the same period last year, and gross profit margin also declined; due to the general generation business, the commercial sector increased by 13.4% compared with the same period last year. The gross profit margin of this sector is lower and the contribution performance is less; the hotel business is basically the same as in 2014. 2) apart from the slight decline in the main business caused by bidding and price reduction, the provision of 7.34 million yuan in asset impairment loss is the main reason for the sharp decline in the company's net profit. We believe that non-operating factors have a short-term impact on the company's performance and are expected to pick up growth in 2016.
Tiger bone wine to enter the health products market is worth looking forward to. At present, the company has two national first-class new drugs, namely artificial tiger bone powder and Jintiange capsule. 1) Jintiange capsule has a market share of about 35% in osteoporosis, and its sales increased by about 10% in 2015 compared with the same period last year. Sales have declined as a result of bidding and price reduction, and with the strengthening of marketing efforts, it is expected to grow again in 2016; 2) the market has high expectations for artificial tiger bone wine, as the tiger bone powder was previously declared as drugs, so health products need to be re-declared, and successful approval will open up new growth space for the company. 3) at present, the main product of the company is Jintiange capsule, which has a single structure. In addition to increasing R & D investment in new product development, the company is also actively looking for suitable targets to improve product structure.
Epitaxial expansion into orthopedic medical devices and 3D printing. The company intends to acquire and increase capital to acquire 20% equity of Changzhou Huasen and subscribe for 4.76% equity of Huasen 3D. The main results are as follows: 1) Changzhou Huasen's products mainly include trauma and spinal orthopaedic instruments, and the business is coordinated with the company's orthopedic products, which is conducive to extending the company's product line and strengthening the company's advantages in the field of orthopaedics. 2) Watson 3D mainly engaged in 3D printing, providing solutions for personalized medical care, mainly selling 3D printer hardware, and providing orthopedic digital customized solutions for doctors and patients.
Profit forecast and rating: we predict that the diluted EPS of the company from 2016 to 2018 will be 0.14,0.20,0.26 yuan respectively, and the corresponding PE will be 81 times, 58 times and 44 times respectively. Jintiange capsule is expected to return to growth, the market is expected to be approved for artificial tiger bone wine is high, through the fixed increase to intervene in the orthopaedic materials market, and enter the 3D printing will further enhance the company's valuation, the subsequent extension expansion is expected to be strong. Maintain a "buy" rating.
Risk tips: the progress of non-public offerings may be lower than expected; the speed of approval of new products may be lower than expected.
