Key points of investment:
Profits are growing rapidly:
The company's turnover in 2016 increased 13.8% to about 417 million yuan, gross profit increased 18.3% to about 137 million yuan, and net profit was 3.05 million yuan, an increase of 41.2% over the previous year. EPS: 0.03 yuan. The gross margin was 32.7%, an increase of 1.2% over the same period last year. The main reason was the rapid growth of varieties with high gross margins such as Concuilla.
Rapid growth of new products:
Jinhuo Pharmaceutical is actively introducing new products. The probiotic Kangcula for children, coconut water from the Australian weight loss brand FATBLASTER (FATBLASTER), and DHA for pregnant women are all new products that the company has focused on developing, and the growth rate is impressive. Kangcuile's sales reached RMB 52.97 million, an increase of 25.4% over the same period last year. Kangcuile will also grow rapidly. The growth in the first half of the year was slightly lower than expected, mainly due to insufficient supply capacity. With the rapid growth of Concuile, production capacity growth was slow, causing some suppliers to be undersupplied. Currently, companies and manufacturers are actively communicating to resolve production capacity issues. As the shortage of production capacity is solved, this product will also usher in high growth.
Benefiting from the liberalization of the two-child policy:
The new products the company focuses on developing, probiotics and DHA will all benefit from the liberalization of the two-child policy. The company's brand effect and high quality will promote rapid sales growth. Judging from the current response from obstetrics and gynecology departments in various regions, the birth of two children far exceeded expectations, and the company will continue to benefit.
The registration certificate for Niancian has been obtained, and sales are growing rapidly:
The registration certificate for Nenjian Kawanbei loquat cream is exchanged once every 5 years, and I already got the registration certificate in the first half of the year. Purchases resumed and expanded the market on a large scale in May. Sales of Nenjian Kawanbei loquat cream were about RMB 236 million, up 47.6% from the same period last year. Growth will also be rapid in the second half of the year.
Pay attention again and give a highly recommended rating. Target price is HK$2.16:
The company's 2016-2017 EPS is expected to be 0.078 yuan and 0.106 yuan respectively. The current stock price corresponds to PE 14 and 10 times, respectively. The company's product line is gradually being enriched, and the contribution of its own products has increased. We are also firmly optimistic about the company's development prospects after mergers and acquisitions, giving it a “Highly Recommended” rating. The target price is HK$2.16, which corresponds to PEG of 0.44 in 2017, which has room for an increase of 63.6% from the current price.