Company profile: China Tailing Pharmaceutical Group was founded in 1995. After the divestiture and transformation of its vaccine business, it has been successfully transformed into an integrated pharmaceutical group that develops, produces and sells its own innovative products and promotes third-party innovative drugs. At present, the company's products are involved in oncology, central nervous system, respiratory, liver disease, gynaecology and other treatment fields, with a rich product line.
Successfully transformed into an integrated pharmaceutical group, the reversal trend is obvious: the company was once the largest vaccine distributor in China. However, policy changes had a continuing negative impact on vaccines, and the company withdrew from the vaccine business in 2012. After 3 years of hard work, the company has gradually transformed its business and relied on the rapid growth of Ribao and its own products Shu Si and Zhuo ao to help the company tide over the difficulties. The company made a turnaround in 14 years, and its performance grew by more than 1400% in the first half of 15 years. The company has passed the most difficult period, and the reversal trend at the bottom is obvious.
The echelon of products is rich, and new products are constantly launched: through the divestiture and termination of vaccine business and GSK antibiotic business, the company now forms a series of product groups such as tumors (Ribodo and Xidi), central nervous system diseases (Shu Si, methylphenidate hydrochloride tablets), respiratory diseases (Zhuo ao), liver diseases (pine gardenia pills), gynecological diseases (chloroestradiol) and so on. The company will focus on developing its own products in the future. Potential varieties such as Xidi Ke and Songjia pills are important growth drivers for major diseases such as tumor and liver disease. At the same time, new products will continue to be launched in the next three to five years.
The state-controlled platform helps the company to promote its third-party business: at the beginning of 2015, the company established a joint venture with Sinopharm Group. The two sides will strive to develop the joint venture into a leading enterprise in third-party drug distribution. With the help of Sinopharm Group's sound distribution network and Tailing Pharmaceutical's rich marketing experience, the variety of agents of the joint venture company will be rapidly rich, and the scale of business is expected to grow rapidly.
Cover the buy rating for the first time, with a target price of HK $3:
Starting from 15 years, the company's performance has entered a period of rapid growth. With the continuous introduction of new products, the company will gradually transform into an integrated enterprise of R & D, production and sales of innovative drugs. We expect the company's operating income in 2015, 2016 and 2017 to be 958 million, 1.311 billion and 1.681 billion respectively, an increase of 10.79%, 36.88% and 28.19%, respectively, and three-year net profit of 86 million, 136 million and 181 million, an increase of 4,000%, 58% and 33%, respectively, corresponding to an EPS of 0.05,0.09 and 0.12 yuan. We gave the company a buy rating of 26 times PE in 2016, with a target price of HK $3 for the first time.
Catalyst: new indications approved, extension of new products on the ground
Risk hint: market competition intensifies; new product promotion is not as expected.
