Event

Release the 2016 semi-annual report

During the reporting period, operating income was 117 million yuan, an increase of 22.67% over the same period last year, operating profit was 28.465 million yuan, up 19.26% over the same period last year, and net profit was 25.493 million yuan, an increase of 21.32% over the same period last year, and 17.31% after deducting non-recurrent profits and losses.

Brief comment

Income growth exceeded 20%, and gross profit margin increased by 1.37 percentage points to 52.66%.

Total revenue in the first half of the year rose 22.67% from a year earlier, up from 18.3% in 2012, 19.2% in 2014 and 12.65% in 2014. In terms of products, the revenue of boiling drying / granulation series was 19.26 million yuan, up 26.4% from the same period last year, and that of cleaning series was 19.3 million yuan, up 65% from the same period last year. The gross profit margin in the first half of the year was 52.66%, up 1.37 percentage points from the first half of 2015 and up from 49.73% in the same period in 2014.

The rate of expenses increased to 26.52% during the period driven by the growth of sales and administrative expenses.

During the reporting period, sales expenses were 12.465 million yuan, an increase of 65.2% over the same period last year, due to increases in table consolidation, promotion expenses, salaries and benefits of Canaan Lemite in Beijing, and management expenses were 19.594 million yuan, an increase of 20.6% over the same period last year, due to increases in wages, benefits and R & D expenses. Financial expenses-1.081 million yuan, a decrease of 300000 yuan over the same period last year. The total cost during the period was 30.98 million yuan, an increase of 34.7% over the same period last year, and the rate of expenses during the period was 26.52%, an increase of 2.1% over the same period in 2015.

Endogenesis and epitaxy at the same time to improve the ability of solid preparation solution provider

The solid preparation production line includes pretreatment, granulation, total mixing, transportation, molding, packaging and other links. Canaan is one of the few domestic suppliers that can provide three granulation processes. At the end of 2015, the company acquired Beijing Lemite (55%) to increase the supply capacity of pre-processing equipment; in 2016, the company plans to acquire Kaixinlong Pharmaceutical Machinery (55%) with cash to improve the back-end molding link; acquire Xiao Jiang Machinery Technology (51%). Improve the back-end packaging link; non-public offering plans to invest in intelligent traditional Chinese medicine extraction production line projects. The company completes and improves the overall solution capability of solid preparations through independent research and development, fund-raising projects and continuous extension.

Non-public offering input Intelligent traditional Chinese Medicine extraction production Line and Industry 4.0 Experimental Center

The company plans to develop no more than 10 million shares and raise no more than 349 million yuan, and plans to invest in the intelligent traditional Chinese medicine extraction production line project and the manufacturing equipment industry 4.0 experimental center. The former is aimed at large proprietary Chinese medicine pharmaceutical enterprises and food and health products production enterprises, which is expected to increase annual income by 200 million yuan and net profit of 40 million yuan, while the latter will carry out prospective research on pharmaceutical equipment. Approval has been obtained for the company's non-public offering in mid-July.

The growth potential of small companies in large industries is worth looking forward to.

According to the data of the National Bureau of Statistics, the pharmaceutical industry purchases more than 100 billion yuan of equipment and tools every year, and the company's revenue was only 217 million yuan in 2015. Through the development of both endogenous and epitaxial development, the company will have the ability to provide the whole line of pharmaceutical technology, and the future growth potential is worth looking forward to.

Profit forecast and investment suggestion

From January to July 2016, the total investment in fixed assets in the pharmaceutical manufacturing industry was 335.2 billion yuan, an increase of 11.3% over the same period last year, which was 8.3% higher than that of the manufacturing industry as a whole, and the downstream demand was relatively good. The simultaneous development of endogenesis and epitaxy will enhance the company's ability to provide solid preparation solutions, which is conducive to winning the system and the whole line project. Beijing Lemite promised that the net profit after deduction from 2016 to 2018 was 625,781 and 9.76 million yuan respectively, while Kaixinlong and Xiaoliang Machinery promised an average annual performance of 4.625 million yuan and 4.4 million yuan respectively in 2016-2018. We estimate that the company's net profit from 2016 to 2018 will be 6377 yuan, 8092 yuan and 100.16 million yuan respectively, corresponding to 0.54,0.69 and 0.85 yuan EPS, respectively.