Core viewpoints
The annual performance grew well, and the net profit was affected by lower gross profit margin and increased expenses. According to the 2016 report, the company achieved operating income of 1.497 billion yuan during the reporting period, an increase of 7.26% over the same period last year, and a net profit of 283 million yuan, an increase of 0.34% over the same period last year, corresponding to EPS0.34 yuan. Over the past 15 years, the company's performance has declined, with year-on-year growth of 16Q1/Q2/Q3 revenue of-6.10%, 0.22% and 4.17% respectively, gradually stopping the decline and rebounding to achieve good growth. The less increase in net profit was mainly affected by the increase in costs and sales expenses. During the reporting period, raw materials and labor costs in the company's product costs increased rapidly, and sales expenses increased due to increased market development efforts (an increase of 9.66% compared with the same period last year).
The main product Tanreqing will become a series of products to promote the company's performance growth. The company carries on the safety re-evaluation and series product development around the core product Tanreqing injection. At present, a trial scheme has been determined for the re-evaluation of the effectiveness of Tanreqing injection in 10,000 cases; in terms of a series of products, Tanreqing capsule has been on the market for 15 years, the oral liquid is in the Ⅲ phase clinical study, and the supplementary approval opinions for children's dosage forms are being improved.
We believe that the launch of a series of products will effectively fill the current gap in the market and promote the company's performance growth.
The product reserve is rich, or it will enter the harvest period. In recent years, proprietary Chinese medicine companies have successively obtained Youxinding capsule, Dinggui Oil soft capsule, Shufeng Zhitong capsule, Huadan Anshen mixture and other new drugs under development. At present, Youxinding capsule is in the stage of IIb clinical research, and the other three varieties are in the stage of Ⅲ clinical research. In terms of antineoplastic drugs, at the end of the 15th, the company increased funding for Shanghai Yizhong Biology to jointly develop "Paclitaxel micelles for injection". In August, 16, the company increased funding for Shanghai Goebard Biology and won the priority to purchase "laminin for injection". At present, both drugs are in phase Ⅲ clinical trials. We believe that the company is studying a relatively rich product line, and most of them are in the late clinical stage, or will soon enter the harvest period.
Financial forecasts and investment suggestions
We expect the company to achieve a net profit of 3.25x340x353 in 2017-2019 (the original forecast for 16-18 net profit is 3.06x326x343 million), corresponding to an EPS of 0.39max 0.41 pound 0.43, with reference to the average valuation of the comparable company, giving the company a 17-year 30 times earnings ratio and a target price of 11.70RMB, maintaining the company's "buy" rating.
Risk hint
If there are adverse reactions in the clinical use of traditional Chinese medicine injection, it will adversely affect the sales of Tanreqing injection.