Main viewpoints
1. Achieve steady growth in performance
During the reporting period, the company achieved operating income of 8.351 billion yuan, a year-on-year increase of 9.97%, which was the same as the growth rate of the industry, and continued to maintain the leading position of the pharmaceutical circulation industry in Zhejiang Province. In terms of business areas, the traditional medicine sales business achieved business income of 7.708 billion yuan, an increase of 9.38% over the same period last year; traditional Chinese medicine sales and medical device sales business achieved business income of 258 million yuan and 357 million yuan, an increase of 12.35% and 23.61% over the same period last year; the medical device business is expected to gradually develop into a new performance growth point for the company in the future.
two。 Asset restructuring is still in progress.
Sinochem Group and Zhejiang SASAC, the former two actual controllers of the company, issued shares to purchase the remaining 50% stake in the core asset Yintte Pharmaceutical Co., Ltd. The fixed increase plan is currently in a state of suspension due to issues such as the expiration of the operating period of the controlling shareholders, and once the relevant matters are dealt with, the company will apply to resume the review as soon as possible. We expect that the completion of the fixed increase plan by the end of this year is still a high probability event, and after the completion of this asset restructuring, the company's governance structure and profitability will be further improved, laying the foundation for the future development of the company.
3. Will benefit from the landing of the "two-vote system"
As the top two leading enterprises in the pharmaceutical circulation industry in Zhejiang Province, the company has achieved full coverage of medical institutions at and above the county level and chain drugstores in the province, and the coverage rate of grass-roots medical institutions has also exceeded 80%. On the one hand, the implementation of the "two-vote system" will help the company to further improve the terminal coverage and expand the voice of the industry, on the other hand, it will also help the company to achieve in-depth cooperation with upstream and downstream enterprises. Exploring new performance growth points is good for the future development of the company in the medium and long term.
4. Investment advice:
We expect the company to achieve operating income of 16.997 billion yuan, 18.679 billion yuan and 20.527 billion yuan from 2016 to 2018. assuming that the company completes the fixed increase plan during the year, it will realize net profit of 78 million yuan, 182 million yuan and 220 million yuan respectively; taking into account the dilution effect, it corresponds to 0.29,0.69 yuan and 0.76 yuan per share, corresponding to PE73 times, 31 times and 28 times. We believe that the company, as the leader of the pharmaceutical circulation industry in Zhejiang Province, will further open up room for increase after the completion of asset restructuring, and is expected to become the biggest beneficiary of the "two-vote system" and continue to maintain the "recommended" rating.
5. Risk Tips:
The risk of increased competition in the industry; the risk that asset restructuring is not as expected.