Core ideas:
Event: the company released a three-quarter report, showing a 47.08% drop in net profit compared with the same period last year. The company released its third-quarter results. In the first three quarters, the operating income, net profit and deduction of non-return net profit were 1.327 billion yuan, 76.78 million yuan and 57.76 million yuan, respectively, up 21.56% from the same period last year, down 47.08% and 56.21% respectively. There is still downward pressure on third-quarter results.
Traditional Chinese medicine is expected to decline significantly, dragging down the overall performance.
The company's traditional Chinese medicine includes antiviral oral liquid, orange series and Banlangen granules. In the first three quarters, the business income of this sector reached 372 million yuan, down 39.01% from the same period last year. In order to adapt to the better development of the country's business policy, the company changed its past dealer model to a direct-controlled terminal model, but there is downward pressure on short-term performance.
Prepared slices and show Hubei Tianji, the booming industry is expanding healthily.
Prepared slices of traditional Chinese medicine is the most prosperous subdivision of the pharmaceutical industry, with an income of 378 million yuan, an increase of 59.21% over the same period last year. Part of the rapid growth in business comes from the merger of Tianji in Hubei Province. In the first three quarters, Tianji in Hubei achieved an income of 328 million yuan, of which 106 million yuan was earned from prepared slices. The original Anhui Shanghai, the company actively expand sales channels, the construction of "Xiangxue Wisdom Wisdom Union traditional Chinese Medicine preparation Center", to explore and enhance the company's whole industry chain terminal value-added service model.
The continuous layout of the traditional Chinese medicine industry, commercial mergers and acquisitions Zhaoyang biological growth obvious in October, the company and Chongqing signed a strategic cooperation framework agreement, planned to invest 750 million yuan, of which 550 million yuan invested in the establishment of "Yuzi" brand of traditional Chinese medicine, traditional Chinese medicine slices and traditional Chinese medicine formula granule high-quality products. 220 million yuan is invested in "Internet big data diagnosis and analysis platform + intelligent IoT traditional Chinese medicine preparation platform + efficient TCM diagnosis and treatment platform" to create accurate TCM services. The company acquired Zhaoyang Biology in the first half of the year, and the operating income of the circulation business in the first three quarters was 374 million yuan, an increase of 233.45% over the same period last year.
It is expected that the performance in 16-18 years is 0.16,0.30,0.38 yuan per share respectively, and the TCR technology is comparable to the international leader. We expect the company to maintain a "buy" rating at the current share price corresponding to PE88/46/37 times the company's EPS to 0.16, 0.30, and 0.38 yuan in 16-17-18 (EPS is 0.27 in 2015).
Risk suggests that drug research and development is lower than expected; traditional medicine destocking is lower than expected.
