Contrary to the perception of the market: Shinsei is the core subsidiary of Asia Pacific, and the market has always positioned the source of new students only as a CRO company that relies on the growth of government park projects, and questions the sustainability of its business model and the ability to grow the company's performance, so the company has the lowest valuation among several CRO enterprises. We believe that the source of new students is not a CRO enterprise in the traditional sense, but an operation platform of the whole industry chain of pharmaceutical R & D services, which integrates various resources of "government, industry and medical R & D funding" and earns profits beyond pharmaceutical R & D services through cooperative development (risk share) with pharmaceutical companies.
There are three platforms in Xinshengyuan new drug R & D industry chain: preclinical drug research and development CRO working platform, clinical consistency evaluation platform, drug promotion service platform in the process of drug re-evaluation. The first platform is the company's main source of revenue and profit in the past few years, the latter two are important increments since 2016, and the third is the biggest feature that distinguishes the company from other CRO companies. The core of the new drug clinical research and promotion service platform built by Xinshengyuan is to rely on the Health and Family Planning Commission's "Science and Technology Action Plan for the Prevention and treatment of Major Diseases" to help pharmaceutical companies promote drugs in clinical institutions in the process of re-evaluation of listed drugs in the fourth phase of clinic. cultivate doctors' medication habits, sign service agreements or cooperate in the mode of joint development, which is favored by doctors and pharmaceutical companies. In terms of consistency evaluation platform, the company cooperates with well-known institutions at home and abroad, and has obtained the list of some large pharmaceutical companies.
The bidding of the Asia-Pacific parent company has made good progress, has a strong synergy with new sources, and its performance rebounded sharply in 2017. After self-adjustment and making use of the resources and advantages of new students, Asia-Pacific Pharmaceutical has made significant progress in research and development and pharmaceutical sales. Sales at the hospital side are growing rapidly. The company announced that nine new provinces won the bid in 2016. We expect this profit contribution to be reflected in 2017, and the parent company's profit is expected to be about 70 million, with a year-on-year growth rate of about 40% (after deducting the impact of financial expenses).
Investment advice: the company's net profit from 2016 to 2018 is expected to be 1.21,2.27 and 301 million yuan respectively, with growth rates of 118%, 87% and 32% respectively, corresponding to PE of 70X, 38X and 28X respectively. We believe that the market does not fully understand the business model of new sources, nor does it recognize the synergy between the parent company and new sources. The new source business model is unique, the barrier is high, the growth is good, should obtain the valuation level at least with the industry, maintains the "highly recommended" rating.
Risk Tip: the company's business expansion is not as expected.
