Maintain the "overweight" rating. The performance was in line with expectations, the main business showed signs of bottoming out and rebounding, and the company accelerated the transformation of the medical and health industry to look for growth points. We maintain the company's 2016-18 EPS forecast of 0.1max 0.13max 0.15 yuan, in view of the company's health care layout is expected to land, give a certain valuation premium, maintain the target price of 16.6 yuan, corresponding to 128x PE in 2017.
Revenue and net profit rose both during the reporting period, and the main business showed signs of bottoming out. 1) 2016H1 realized revenue of 190 million yuan (+ 22.88%), operating profit of 29 million yuan (+ 60.05%) and net profit of 21 million yuan (+ 27.56%). Both revenue and net profit increased and maintained a relatively rapid growth rate, mainly due to the substantial increase in domestic sales revenue (+ 139.13%) caused by the development of online channels and the development of emerging markets. 2) Q2 revenue is 97 million yuan (+ 7.17%), Q1 revenue is 97 million yuan (+ 43.96%), the substantial increase is mainly due to the improvement of R & D ability to enhance product bargaining power and good revenue, and a low base in the same period. Overall, the main business shows signs of bottoming out and picking up.
The extension of the industrial chain makes the profit level improve steadily and the cost is controlled properly. 1) the overall gross profit margin is 30.28% (+ 3.7pct), which mainly benefits from the cost reduction caused by the extension of the upstream industrial chain. 2) the sales / management expense rate is 3.31% (+ 0.3pct) / 12.09% (- 0.41pct), the cost is properly controlled, and the expense rate is stable. As a result, the net interest rate is 12.86%, an increase of 2.21pct over the same period.
We will improve the structure of the industrial chain and accelerate the transformation of the health care industry. 1) during the reporting period, the company infiltrated into the upstream industrial chain, mastered the development and application of the source of raw materials, reduced production costs and controlled product quality, and is expected to steadily improve profitability. 2) steady progress in the main business at the same time, the company accelerates the transformation of the health care industry and looks for new profit points. Bang Jie International, a great grandson company, completed its registration in Hong Kong during the reporting period, and it is expected that the landing of overseas medical projects will be accelerated. 3) We estimate that the net profit of Q1-3 company in 2016 is about 36 million yuan (+ 29.35%).
Risk tips: downstream demand is low, the transformation of the health care industry is not as expected, and so on.