This report is read as follows:
The company released its annual report for 2016, with revenue minus 5% and net profit minus 24%, lower than expected. Taking into account the gradual landing of new business, the original business has basically completed the adjustment, 2017 is expected to usher in performance recovery, maintain the overweight rating.
Main points of investment:
In the adjustment period, the new business layout gradually landed, maintaining the overweight rating. In 2016, the company's income was 517 million yuan, minus 5%, the net profit was 30.48 million yuan, and the net profit was reduced by 24%. The financial expenses rose too fast and the performance was lower than expected. Considering that the new business is in the nurturing stage and the financial and management expenses are increasing, the profit forecast EPS for 2017-2018 is lowered to 0.12RMB / 0.16RMB, and the EPS is given to 2019 for the first time. The company's new business has gradually landed, and the original business has basically completed the adjustment. 2017 is expected to usher in performance recovery, maintain the holding rating and maintain the target price of 17 yuan.
The new business is in the period of cultivation, and part of the original business has been adjusted. In 2016, the registration of indwelling needle and thromboelastogram, the upgrading of POCT products and the bidding of hospital PPP project, the new business is in the period of cultivation, and the expense is increasing. After the merger and acquisition of Huiqiao in Guangzhou, the new medical information business has a net profit of about 17.52 million yuan for the whole year, but after deducting the financial costs of mergers and acquisitions, it is expected to increase the consolidated profit by about 10 million. The income from collecting blood vessels increased by 10%, but due to the impact of price reduction through bidding, the net profit dropped to 24.66 million yuan. Some of the original business has also been adjusted: 1) sell the controlling stake of Hangzhou Longxin; 2) the agent of Weirun Sailun reagent is terminated, and the reagent income is reduced by 18%; 3) Guangzhou Ruida agent sales adjustment. The development of new business and the adjustment of old business have put pressure on the company's performance for two consecutive years.
The new business is gradually falling to the ground. The company merges Guangzhou Huiqiao into medical informatization and benefits from the construction of graded diagnosis and treatment system, which is expected to maintain 20% + growth in 2017-18. In the hospital PPP project, Yizhang County Hospital of traditional Chinese Medicine has signed an agreement and set up a joint venture hospital management company, which is expected to start hosting the old hospital district in 2017. In the POCT series, the ovulation detector and fluorescent immunity have been registered, and the thromboelastogram system is expected to complete the reagent serialization by the middle of the year and begin to launch to the market. The indwelling needle is expected to complete the positive pressure and safety registration certification by 2017. The company is also actively looking for extension cooperation opportunities in clinical diagnosis, imaging and anesthesia care.
Risk hints: uncertainty of new business development; risk of price reduction by bidding for blood vessels; extension is lower than expected.