Three quarterly reports are in line with expectations

The operating income from January to September 2016 was 1.005 billion yuan, an increase of 11.51% over the same period last year; the net profit belonging to listed companies was 316 million yuan, up 10.29% from the same period last year; and earnings per share was 0.53 yuan, in line with the forecast of the third quarterly report. In a single quarter, the revenue in the third quarter was 332 million yuan, an increase of 16.53% over the same period last year; the net profit of the company belonging to the boss was 89 million yuan, an increase of 34.75% over the same period last year, with varying degrees of improvement quarter by quarter. It is predicted that the growth range of net profit belonging to listed companies for the whole year is-10-20%.

The consolidation of related party transactions has led to a substantial improvement in performance and smooth progress in new drug research and development.

In the first half of the year, the listed company paid 59.0655 million yuan from Sanjin Group to acquire its subsidiaries Guilin Jinke canned Food Co., Ltd. And Guilin Jinke Health products Co., Ltd., which began to be included in the consolidated statement in July. Guilin Jinke Health products Co., Ltd. is committed to the development of natural nutrition and health food, the main products are watermelon frost mouth treasure, watermelon cream toothpaste, jade leaf cool sugar, Yimeikang capsule, ginkgo tea, Sanqing tea and so on, which enrich the product line of listed companies and help the company to build a large health industry chain. The company's acquisition of Guilin Jinke canned Food Co., Ltd. is mainly focused on the plot and plant where the plant is located, providing conditions for the company to expand production.

In the first half of 2016, the company further improved the official Weibo Corp, Wechat and other new media publicity platforms of Sanjin tablets, Guilin Watermelon Cream and other brands, set up an e-commerce department, and innovated marketing models. New drug research and development of recombinant anti-EGFR human-mouse chimeric monoclonal antibody injection, Sanjin Fuyan tablets, modafinil and other original new drug projects are progressing smoothly.

Profit forecast and investment advice

We forecast earnings per share from 2016 to 2018 to be 0.72,0.78 and 0.85 yuan respectively, corresponding to 26 times, 24 times and 22.5 times PE, respectively, with a "recommended" rating.

Risk hint

1, the risk of raising the price of low-cost drugs, 2, the risk of rising cost of raw materials, 3, drug safety events, etc.