This report is read as follows:
The pressure on the company's performance in 2016 is mainly due to the fact that new business is in the development period. With the completion of new product upgrades and the gradual landing of the project, performance recovery is expected in 2017 and the overweight rating is expected to be maintained.
Main points of investment:
The company's new business has gradually landed, actively layout to find new increments, and maintain the overweight rating. The company predicts that the net profit attributed to the parent company will decline by 020% in 2016, and we expect the actual performance to decline by 10%, which is lower than our previous forecast. Considering the increase in financial and management expenses, the 2016-18 profit forecast EPS0.12 (- 0.02) / 0.14 (- 0.03) / 0.17 (- 0.02) yuan was lowered. The company's new business has gradually landed, and the original business has basically been adjusted, and the performance is expected to recover and maintain the overweight rating in 2017. The average valuation of the medical device sector and the company's performance declined, and the target price was lowered to 17 yuan.
The new business is in the period of cultivation, and part of the original business has been adjusted. In 2016, the product registration of indwelling needle, the upgrading of POCT products and the bidding of hospital PPP project, the new business is in the period of cultivation, and the expenditure on research and market development has increased. After the merger and acquisition of Huiqiao in Guangzhou, the new medical information business is expected to make a net profit of about 17 million yuan for the whole year, but after deducting the financial costs of the merger and acquisition, it is expected to increase the consolidated profit by about 6 million. The revenue of the blood collection system is expected to increase by 10%, but affected by the price reduction through bidding, the profit will increase slightly, with a net profit of about 30 million yuan for the whole year. Some of the original business has also been adjusted: 1) the sale of Hangzhou Longxin's controlling stake; 2) the termination of Weirun Sailun reagent agent; and 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 acquired Huiqiao in Guangzhou and entered medical informatization, benefiting 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. Intravenous indwelling needle was certified by CE in December and began to expand the EU market. In the POCT series, ovulation detectors, fluorescence immunoassay and thrombus elastograph are expected to complete instrument registration and reagent serialization in 2017, and begin to launch to the market. 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.