Incidents:
On February 7, 2017, Kirschner wire products developed by American Precifit MedicalLtd, a wholly-owned subsidiary of the participating company Yushi Medical, passed the US Food and Drug Administration certification, that is, FDA510 (K) certification. The product products are mainly used for human fracture fixation, bone structure reconstruction, and orthopedic implant assisted fixation.
Reviews:
The approval of the FDA certification this time shows the company's determination to work hard in the big health business field. The termination of the merger and acquisition will not change the Big Health transformation strategy, and the “aluminum processing+big health” dual business strategy is progressing steadily. Joining Yusi Medical is an important decision to transform the company's big health business. Obtaining FDA certification this time indicates that Precifit Medical Ltd has the ability to apply for US FDA certification for orthopedic products, and establish an international quality system. The products are expected to be sold domestically after being certified by the China Food and Drug Administration. At the same time, it is expected that Precifit Medical Ltd will also implement other FDA product certifications in 2017, and the big health business layout will continue to advance. Furthermore, in February 2016, the company increased its capital by 40 million yuan. After FDA registration and certification, the company will make up the remaining 25 million yuan in capital increase, and the shareholding ratio of Usi Medical will increase to 25%.
The strategic layout of the “aluminum processing+big health” dual business continues to advance
Big Health Business: In addition to medical devices, the company's Big Health business will also form a horizontal “pharmaceutical factory cleaning+hospital cleaning+food cleaning” and a vertical “pharmaceutical machinery equipment+turnkey design+project construction” business layout in the field of clean engineering.
Aluminum processing business: The company's aluminum processing business Baotou Changalu's “aluminum water-ingotou-aluminum sheet with foil” model continues to control costs. The Changshu headquarters and Shandong Xinheyuan auto parts industry chains have expanded, and products have begun to shift from being priced per ton to per kilogram, and the added value of the product has increased.
We expect the company's EPS from 2016 to 2018 to be 0.21/0.33/0.49 yuan, respectively, and the PE corresponding to the current stock price is 43x/27 x /19 x, respectively. The implementation of the company's medical device certification is an important advance in the company's Big Health strategy. It reflects the will and determination of the company's “aluminum processing+big health” dual business strategy. It is worth looking forward to the company's continuing to deepen the Big Health business layout in the future, and it is worth looking forward to maintaining the “buy” rating.
Risk warning: aluminum prices fall short of expectations
