I. Incident Overview
On April 22, 2016, the company released its 2015 annual report. During the reporting period, the company achieved operating income of 6.174 billion yuan, an increase of 26.87% over the same period last year. The main reasons were the good operating conditions of various divisions and the merger of Baisheng Pharmaceutical; net profit attributable to shareholders of listed companies was 6.37 yuan, an increase of 48.33% over the same period last year; net profit after deduction was 638 million yuan, an increase of 53.07% over the same period last year. The profit distribution plan pays a cash dividend of 2 yuan for every 10 shares.
II. Analysis and Judgment
The pharmaceutical sector has a clear strategy, and extended mergers and acquisitions have been very effective
In 2015, the company's extended mergers and acquisitions in the pharmaceutical sector mainly included: 1) The acquisition of Mingxin Pharmaceutical, which took advantage of its product advantages to quickly become the company with the largest market share for tuberculosis drugs. 2) Acquire Baisheng Pharmaceutical and add a pharmaceutical agency business to help the company build whole medicine and break the ceiling restrictions on skin and tuberculosis drugs. At the same time, Baisheng is located in Tibet and has tax and policy advantages. Baisheng is located in Tibet and has tax and policy advantages. It contributed 760 million yuan in revenue throughout 2015, exceeding the commitment of 40 million yuan.
The goal of transforming medicine and health is firm, and they are optimistic about the layout of the field of rehabilitation
After the company proposed the “Greater Huabang Medical Alliance” strategy in early 2015, it successively acquired Tien Hospital, Rhine Hospital in Germany, and Swiss Biology and Life Origin, covering fields such as rehabilitation medicine, stem cells, anti-tumor treatment, Internet medical platforms, medical aesthetics, etc. Among them, rehabilitation medicine is the focus. On the one hand, a regional rehabilitation chain center has been built in Chongqing, and on the other hand, the concept and technology of foreign hospitals have been introduced and replicated in first-tier cities in China, and phased results have been achieved.
The share of agrochemicals has declined markedly, and there is a clear trend of stripping
The share of agrochemical revenue fell to 66.10% from 76.79% in 2014, reflecting the adjustment of the company's strategic focus. The company plans to establish Beijing Yingtai as a comprehensive provider of pesticide raw materials and formulation products serving the global market, make Shandong Fuer a world-class brand manufacturer specializing in fine chemical intermediates, and build Kaisheng New Materials as a manufacturer of new materials and fine chemicals.
Profit forecasting
The company's 2016-2018 EPS is expected to be 0.33 yuan, 0.43 yuan, and 0.57 yuan respectively, and the corresponding PE is 29X, 22X, and 17X respectively. We are optimistic about the company's future development space and potential, and continue to maintain the “Highly Recommended” rating.
Risk warning: Drug price reduction and increased competition in the industry