The three-quarter report continued to show high growth.
The company announced its 2016 three-quarter report: revenue of 612 million yuan, net profit of 113 million yuan, net profit after deduction of 111 million yuan, up 28.49%, 132.10%, and 142.47% respectively; in line with our expectations, the company expects net profit of 14,055-171.78 million yuan for the full year of 2016, an increase of 80%-120% over the previous year, continuing the high growth trend.
Traditional Chinese medicine preparations continue to improve.
We expect revenue growth of traditional Chinese medicine formulations to be around 20%: the upward shift in the overall price system of the main variety, Wang's Baochi Pill (low price drug, independent pricing), is progressing steadily, and revenue is expected to be relatively stable during the reporting period; Ji Desheng Snake tablets have also made considerable price increases, and revenue is expected to increase by more than 30%. As a national basic drug, Zhengchai Hudrink granules still have a lot of room for expansion in the future, and is expected to achieve rapid growth in the future as tenders are promoted. At the same time, the company implemented marketing reforms to increase coverage of the blank market, which is expected to help traditional Chinese medicine formulations achieve a second leap forward.
Sulfur-free tablets are ready to go.
The company focuses on “authentic medicinal herbs plus sulfur-free tablets” and invests in Longxi Baohetang and Baohetang (Bozhou) companies to enter the field of sulfur-free large-scale tablet processing. Currently, the two companies have initial sulfur-free tablet processing capabilities. The Bohetang Bozhou Phase II project is progressing, which will significantly increase production capacity; Longxi Baohetang is stepping up factory certification and is expected to achieve revenue within the year. In the future, authentic medicinal herbs and sulfur-free tablets are expected to become profit growth points for the company's traditional Chinese medicine. At the same time, they are of great significance for the company to lay out the entire traditional Chinese medicine industry chain and consolidate the main traditional Chinese medicine business.
Promote the acquisition of Alpha Pharmaceuticals to increase performance, and there are continuing expectations of extension.
We expect Dongli Enterprise Management Q3 to decline month-on-month, but it is likely that it will still be able to fulfill its performance promise throughout the year. The company announced that it plans to acquire 100% of Alpha Pharmaceutical's shares, and is currently carrying out related additional audits and evaluations. It is expected that the merger of the acquisitions can be completed early next year. The company has used this to quickly enter the core industry chain of atorvastatin calcium and rosevastatin calcium APIs, perfecting the company's raw materials and intermediates layout, and will significantly increase the company's performance. Adhering to the “one master, two wings” development strategy, the company continues to have an epitaxial future in the fields of traditional Chinese medicine, specialty chemicals, biopharmaceuticals, and even big health. It is expected that its performance will continue to grow at a high level throughout the year and maintain its “buy” rating.
The company's 2016-2018 EPS is expected to be 0.40, 0.54, and 0.67 yuan respectively, and the corresponding PE is 58, 42, and 34 times respectively. The company's high annual performance growth is relatively certain. Maintaining the “buy” rating Risk warning: M&A progress is lower than expected, and marketing reforms are lower than expected