Items:
The company released its three-quarter report for 2016, with operating income of 593 million yuan, an increase of 98.62% over the same period last year, and net profit belonging to shareholders of listed companies was 86 million yuan, an increase of 98.36% over the same period last year. Q3 revenue and net profit were 1.66 yuan and 22 million yuan respectively, an increase of 67.60% and 86.47% over the same period last year. The company expects net profit to grow by 90-130% for the whole of 2016.
Comments:
The growth rate of the parent company's preparation business declined month-on-month. During the reporting period, the operating income of the parent company was 79 million yuan, with a month-on-month decline in growth rate (208 million yuan in the medium report). It is expected that the price of the company's preparation products will be reduced by bidding, coupled with poor sales of APIs, declining growth of non-antibiotic preparations and other factors. The gross profit margin was about 40.31% in the third quarter, which remained basically stable. It is expected that with the promotion of sales work in the new bid-winning provinces and cities, low-cost drug procurement provinces and cities in the first half of the year, the growth of preparation business will still pick up.
The growth of new students is basically stable, and the performance is expected to exceed the quota for the whole year. During the reporting period, the operating income of new students is expected to be about 87 million yuan, which is basically stable, and the net profit in the first three quarters is expected to be about 85 million yuan. It is a high probability event that the annual performance commitment has been exceeded (106 million yuan). In the medium term, CFDA has issued a number of specific policies on consistency evaluation, and it is expected that 2017-18 will be the time window for the explosive growth of clinical demand. The company's preclinical business platform is strong and clinical business is gradually improving, and it is expected to achieve rapid growth with the help of this industry dividend.
The additional issuance has been successfully completed and the long-term development pattern has been established. On September 14, the company announced the completion of the issuance of additional shares, raising 1.297 billion yuan for Xinfeng 100% equity acquisition project, Wuhan Optical Valley new drug research and development service platform construction project, and CRO business network construction project. We believe that the completion of this additional offering will establish the company's long-term development pattern, preparation business will continue to grow under the listing of new varieties and sales promotion, and new sources will bring rapid growth of CRO business and R & D coordination. And is expected to share the market share of consistent evaluation.
The preparation business strives for progress in a steady manner. During the reporting period, the company's linezolid raw materials and preparations, valsartan amlodipine tablets, repaglinide tablets, cefixime capsules, esomeprazole magnesium enteric-coated pellets capsules, dexketoprofen sustained-release patches and other varieties obtained clinical approvals. the company participated in a number of provincial base drug projects, non-base drug project bidding work, a total of 9 provinces in the new bid, while entering 12 provinces of low-cost drug procurement. The modern preparation medicine project of Shaoxing Binhai New Town has completed the land purchase and the project environmental assessment.
Risk factors. The progress of research and development was lower than expected, the price of drugs was reduced by bidding, and the growth of new students fell short of expectations.
For the first time, coverage gives a "buy" rating. The growth of the company's antibiotic preparations has gradually stabilized, the proportion of non-antibiotic preparations has gradually increased, the overall gross profit margin is on an upward trend, and the new source CRO business continues to grow. The 2016-2018 EPS forecast is 0.47 PE 0.77 EPS 1.09 yuan, the reference comparable company gives 2017 55 times PE, the target price 42.35 yuan, the first coverage is given a "buy" rating.
