Main points of investment
Event
One day after the suspension of trading, the company announced yesterday night that it had transferred all its shares in three property subsidiaries, namely Qianjiang Zhongzhu 100%, Yangjiang Haohui 100% and Chenzhou Gaoshi Weiye 51%, to Zhuhai Zhongzhu Group, a major shareholder, at a total price of 490 million yuan. In addition, Zhongzhu Zhengtai Medical Co., Ltd., a wholly owned subsidiary of the company, plans to acquire the SCM-198 new drug project owned by Fudan University, with a total cost of 150 million yuan, of which the early technology transfer fee (8 patent transfers) is 18 million yuan, and the follow-up development milestone payment is 132 million yuan. At the same time, it acquires 65% equity interest in Lu'an Development Zone Hospital with a total price of 36.86 million yuan.
Transfer all shares of three real estate subsidiaries and divest non-core assets
In 2016, the overall situation of China's real estate market is that the core first-and second-tier and surrounding cities lead the rise in turn, and the inventory pressure in some second-tier and most third-and fourth-tier cities is still severe. The company transferred 100% of the three real estate subsidiaries Qianjiang Zhongzhu, 100% of Yangjiang Haohui and 51% of Chenzhou Gaoshi Weiye to the major shareholder Zhongzhu Group, all of which belonged to the company's third-and fourth-tier urban real estate and infrastructure projects. According to our calculation, after this transfer, the listing will clear 840 million of the real estate inventory, and the company will also receive a pre-tax income of about 79 million yuan, greatly optimizing the balance sheet of listed companies and freeing up the cage for the transformation of the medical and health industry. At present, the company's remaining real estate business is concentrated in Shenzhen, Zhuhai and other first-tier and high-quality second-tier cities, quality and anti-policy, market risk ability has been greatly improved.
The transfer of the company's real estate sector of the three non-core assets, but also the practice and realization of listed companies gradually peel off non-core assets, strengthen the transformation of medical health commitment and determination. Since the end of last year, the company has transferred non-core assets to the major shareholder Zhongzhu Group many times, including the transfer of four building materials, real estate marketing, landscaping and decoration engineering subsidiaries in December last year, and the divestiture of the company's 70% stake in Hongrun Feng Coal Industry at the beginning of this year, reflecting the major shareholder Zhongzhu Group's determination to support listed companies in the transformation of medical care.
The balance sheet was swapped for birds, and the hospital was determined to make a big health transition after buying medicine.
Last year, the company announced the acquisition of Shenzhen Integrated Medical with 1.9 billion yuan, and completed the delivery of assets at the beginning of this year, thus obtaining the opportunity to enter the field of high-end radiotherapy medical devices and opening the company's access to the radiation medical service market. Last month, it was announced that Harbin Jiarun Hospital, a private tertiary general hospital, would jointly build a tumor radiotherapy center. We expect that by the end of 2018, the company will jointly operate 50 oncology centers (about 28 listed companies by the end of 2015). The pace of the company's transformation of medical care has been accelerated. This time, it spent 150 million yuan to acquire the new drug project of motherwort (SCM-198) of Fudan University, and bought 65% of the shares in the hospital of Lu'an Development Zone at a total price of 36.86 million yuan.
Motherwort alkaloid (SCM-198) has been proved to be effective in reducing blood fat and treating cerebral apoplexy. It is a global exclusive class I new drug. After nearly 10 years of scientific research by Zhu Yili team of Fudan University, it has basically completed preclinical research and development, and has successively won the national "major new drug creation" science and technology major projects "Eleventh five-year Plan" and "Twelfth five-year Plan". In 2012, it was awarded by the Ministry of Science and Technology and the State Administration of traditional Chinese Medicine as one of the original Class I new drugs of the "Triple" project. Most of the 150 million yuan acquisition funds of the company adopt milestone payment, which can effectively reduce the risk of new drug research and development. The acquisition of 65% equity in the hospital of Lu'an Development Zone will help the company quickly distribute the market of Lu'an tumor treatment business and enter the field of Lu'an tumor treatment.
Profit forecast and valuation
Profit forecast: in view of the fact that the company transferred some of its real estate assets and obtained a pre-tax income of 79 million, we correspondingly raised this year's real estate sector profit forecast of 60 million yuan (calculated at 25% corporate income tax), and made a small revision to the balance sheet. The profit forecast for the medical sector remains unchanged.
Medical sector: the main business of integrated medical care comes from two parts of business: medical cooperation is divided into income and medical equipment sales (gamma knife, ultrasonic liver cirrhosis detector). 1. Medical cooperation is divided into 28 contracted and operating projects in 2016, with cooperation income of about 233 million yuan in 2015 (226 million yuan in 2014), average revenue of each project is about 8 million, and operating profit margin is about 35%. We predict that the number of contracted and operating projects from 2015 to 2018 will be 35-40-50, and the contributed operating income will be 2.8 million 3.2 / 400 million yuan respectively. The contribution profit is about 0.98 pound 1.12 / 140 million yuan.
2. Medical device sales: from 2016 to 2018, it is predicted that the sales volume of liver cirrhosis detector will be 350 / 550, the unit price is about 380000 yuan, and the contribution sales will be 1.3 pound 1.7 / 210 million yuan. Gamma knife respectively assumes the sale of 1 / 1 / 1 gamma knife, with a unit price of 6.4 million / unit. Together, the two will contribute 1.4 million 1.8 / 220 million yuan in equipment sales income, because the liver cirrhosis detector is the company's own intellectual property products. The gross profit margin is relatively high, we predict that the net profit on sales is about 40%, and the net profit contribution is about 0.56 Universe 0.72 / 88 million yuan. We expect the revenue from 2016 to 2018 to be 4.2 yuan per 620 million yuan and the net profit to be 1.5 yuan 1.8 per 230 million yuan, slightly exceeding the promise of integrated medical performance.
Real estate sector: the company's real estate business also includes reserve projects in places such as Zhuhai and Shenzhen, and the company's strategic transformation of tumor diagnosis and treatment services. We do not think the company will invest more resources in real estate. Considering the huge increase in house prices in Shenzhen and Zhuhai, we predict that the business revenue of the real estate sector from 2016 to 2018 will be 10jump 15 / 1.5 billion yuan. The net profit is about 1.9 pound 2.0 / 200 million yuan (refer to the 13% net profit margin of Vanke and Poly Real Estate)
From 2016 to 2018, we forecast that Zhongzhu Medical's revenue will be 14.2 yuan RMB 20.0 / 2.08 billion, and its net profit will be 3.4 pm 3.8 / 430 million yuan, equivalent to EPS0.47/0.54/0.60 yuan per share, and the current price will correspond to PE57/50/45X.
Valuation discussion: we maintain the company's target stock price of 37 yuan, corresponding to next year's PE valuation of 68 times, the current medical device (SW) industry as a whole PE (TTM) 69 times, comparable company Xinghe Biological PE (2016 consistent forecast) is about 80 times, considering the company's non-public offering financing of 1.3 billion yuan and future real estate to provide sufficient cash flow for the development of the medical sector, we think the target price of 37 yuan in the next 12 months is reasonable.
Risk hint
The expansion speed of tumor center is lower than expected, and there is a risk of integrated medical integration.