Investment summary.

Jingfeng Pharmaceutical has a total of 19 products in the national health insurance catalogue, of which 4 are new or new indications, which will be beneficial to the company's product expansion. Elemene is expected to grow into an important variety by virtue of its excellent quality and exclusive advantages. At the same time, the company's product line is rich, the competition pattern is good, the marketing ability is outstanding, we are optimistic about the company's development prospects. Give it a valuation of 26 times 2017 earnings per share, with a target price of 12.5 yuan, with a "buy" rating for the first time. (current price as of March 2).

Elemene may grow into a blockbuster variety.

Jingfeng Pharmaceutical recently announced that a total of 19 products from its holding subsidiaries have entered the 2017 national health insurance catalogue. Western medicine products include elemene injection, sodium hyaluronate, etc., while traditional Chinese medicine products include Xinnaoning capsule. Among them, there are 4 new or new indications. They are: national exclusive varieties of elemene injection (class B) and elemene oral milk (class B), national exclusive varieties of analgesic Huoluo tincture (class B), pemetrexed (class B).

Overall, Jingfeng Medicine is one of the main beneficiaries of the adjustment of the national medical insurance catalogue. The company's elemene injection is exclusive in liposome form, and elemene oral milk is also exclusive. They are all unilateral preparations of anticancer active ingredients extracted from Zingiberaceae plant Wenyujin (warm zedoary turmeric). Its molecular structure is clear, similar to paclitaxel anti-tumor plant drugs, but there is no toxic group, and the molecular weight of paclitaxel is only 1x4% metabolized through the lungs. Although the product has obvious advantages, the sales of elemene are still small at present, and there is more than ten times room for improvement compared with the paclitaxel market.

In addition, since the integration of elemene into the company in 2015, sales have increased by about 150%, highlighting the company's excellent marketing ability. According to the past catalogue adjustment, if the new variety has the characteristics of both marketing advantages and high quality and high price, it is expected to quickly grow into a blockbuster variety with a scale of more than 1 billion. We believe that elemene is likely to create another Jingfeng and become the core growth driving force of the company.

The competitive advantage of the company has been enhanced.

After the integration in the past few years, Jingfeng Pharmaceutical has become a pharmaceutical company specializing in cardiovascular and cerebrovascular, anti-tumor, orthopedic and other fields of prescription drugs. Specifically, the company has constructed product lines and marketing and other multiple advantages.

First of all, the company not only enriches the product line through epitaxial mergers and acquisitions, but also vigorously strengthens independent research and development. By mid-2016, the company has applied for 19 varieties, 24 clinical varieties and 37 clinical approvals. It is also worth mentioning that in addition to elemene, many varieties, including Xinnaoning capsule, Tongdi capsule, Fuping capsule, analgesic Huoluo tincture, Jinji pill and so on, are also exclusive varieties or dosage forms of the company. Shenxiong glucose injection, sodium hyaluronate injection and other competitors are less, the competition pattern is better. Secondly, the company has outstanding marketing advantages, its senior management team is mostly from Yibai, Guizhou, are shareholders of the company, and have more than 20 years of industry experience. Moreover, at present, the company's marketing network has been basically covered in 31 provinces and municipalities directly under the Central Government. Through academic promotion and pipeline sinking, the core variety of the company is expected to continue to grow in the future.

Risk.

The progress of new product research and development is not as expected.

The integration is not as expected.

The price of the product has been greatly reduced.