Event: The company publishes annual and quarterly reports
The company announced that it achieved operating income of 3.687 billion yuan for the full year of 2016, an increase of 11.64% over the previous year, a net profit of 385 million yuan, an increase of 103.22% over the previous year, and net profit after deduction of 368 million yuan, an increase of 114.74% over the previous year. In the first quarter of 2017, the company achieved operating income of 931 million yuan, an increase of 26.37% over the previous year, achieved net profit of 100 million yuan, an increase of 22.27% over the previous year, and achieved net profit of 93.35 million yuan after deduction, an increase of 17.88% over the previous year.
The core products of the pharmaceutical industry are growing steadily
In 2016, the company's pharmaceutical industry revenue was 3.188 billion yuan, an increase of 4.47% over the previous year. Among them, the revenue from the prescription drug business was 2,893 billion yuan, an increase of 4.55% over the previous year, and the OTC business revenue was 294 million yuan, an increase of 3.23% over the previous year. ② The revenue from major anti-tumor drugs in prescriptions was 1,880 million yuan, an increase of 10.68% over the previous year. Among them, sales of the core product, Eddy, increased 13%, and the estimated revenue revenue was 1,21.3 billion yuan. The annual revenue of cardiovascular and cerebrovascular products was 516 million yuan, an increase of 3.69% over the previous year; the annual revenue of gynecological products was 298 million yuan, an increase of 1.21% over the previous year
New medical insurance adjustments, benefits from multiple exclusive products
The medical insurance catalogue was adjusted in 2017, and the restrictions on indications were lifted for Lobatin and Compound Pancreas capsules. Four exclusive products were newly added to the medical insurance catalogue: Ayu Capsules, Liqi Revitalizing Blood Drops, DanDengtong Brain Drops, and Gynecological Medication Medication Pills. Robloplin's 2016 revenue was 361 million yuan, an increase of about 40% over the previous year. With the lifting of the restrictions on indications this time, plus the company's strong academic promotion, it is expected that the growth rate will continue to be around 40% in the future. In 2016, the revenue of Compound Balm capsules was 242 million yuan, an increase of about 10% over the previous year. The total revenue of the other four products in 2016 was 13.83 million yuan, and new medical insurance companies are expected to gain an incremental market.
Medical services expand, and future profit contributions will gradually increase
Health service revenue in 2016 was 495 million yuan, an increase of 98% over the previous year. During the reporting period, the company had 3 hospitals including Guannan Hospital, Chaoyang Hospital and Bijie Hospital, 27 oncology treatment centers, and 6 doctor groups. Guannan Hospital and Chaoyang Hospital achieved net profits of 3038 million yuan and 3101 million yuan respectively.
Expected results for 17-19 were 0.64 yuan/share, 0.80 yuan/share, and 0.99 yuan/share respectively
We expect EPS for 16-18 to be 0.64/0.80/0.99 yuan/share respectively (2016 EPS was 0.49 yuan/share), and the current price corresponding to PE is 26/20/16 times, maintaining the “buy” rating.
Risk warning
Risk of price reduction in tenders for core products; risk of unsuccessful mergers and acquisitions.
