The company is a famous enterprise with decades of development history integrating energy development, catering, information product display, and digital imaging technology. The company is actively seeking new transformation directions in order to resolve the current difficulties in the operation of its main coal and coking business. The company is optimistic about the future development prospects of the pharmaceutical industry and has set a strategic goal for transforming pharmaceuticals. Through major asset restructuring, assets with weak profitability were put away, high-quality pharmaceutical assets were injected into Nanjing Warwick Pharmaceutical, and the second transformation began. We gave the company a rating for the first time we bought it, with a target price of 22.40 yuan.
Key points to support ratings
Divest bad assets and get rid of the burden of loss. After this transformation, the company sold its coal and other businesses, which had poor profitability and uncertain development prospects, as a whole, while injecting medical and pharmaceutical industry assets with strong profitability and broad prospects for development, to transform the main business of listed companies, fundamentally improve operating conditions, and improve the quality of the company's assets.
Nanjing Warwick Pharmaceutical has high growth potential and the prospects for its industry are broad. Warwick Pharmaceutical was founded in 2000 and focuses on drug research and development, clinical CRO and other technologies. The company has more than 70 Chinese invention patents and 2 PCT international patents, creating a strict intellectual property fortress. National policies to promote the development of innovative drugs, high-quality generic drugs, and the introduction of a drug marketing license holder system are conducive to the sustainable and healthy development of Warwick Pharmaceuticals. At the same time, based on its existing business, the company is actively expanding downstream of the industrial chain, striving to develop clinical CRO service business through bundled sales of clinical approval documents, and is vigorously developing new customers and markets based on this.
Two major strategic investors were introduced to help the company fully transform. Liyi Investment and Ruidong Capital have good resources and experience in the pharmaceutical industry and capital market. They will continue to recommend the company's assets and participate in the management of subsequent global mergers and acquisitions, help listed companies integrate merger and acquisition resources, and promote the transformation of listed companies into pharmaceutical R&D and biopharmaceutical industries, thus helping listed companies carry out mixed ownership reforms.
The main risks faced by ratings
The results of the integration did not meet the expectations of mergers and acquisitions; Warwick Pharmaceutical's R&D failed, and R&D results could not be converted in a timely manner.
valuations
Through this major asset restructuring, the company put out loss-making assets, introduced high-quality pharmaceutical assets, and opened up space for expansion in the pharmaceutical sector by two major strategic investors. Based on Warwick Pharmaceuticals' performance commitments, we estimate the company's earnings per share for 2016-2018 after restructuring and supporting financing to be $0.28, $0.36, and $0.42. Given the stable performance and high growth of Nanjing Warwick Pharmaceutical, there is huge room for extension of listed companies. Referring to the price-earnings ratio of listed companies in the same industry, we gave the company a price-earnings ratio of 80 times its 2016 net profit, corresponding to a target price of 22.40 yuan. First-time coverage gives a buying rating.
