In the first half of 2013, the company achieved operating income of 598 million yuan, down 2.84% from the same period last year; operating profit of 244 million yuan, up 5.41% from the same period last year; net profit belonging to the owner of the parent company was 210 million yuan, up 2.62% from the same period last year; and basic earnings per share was 1.15 yuan.
Among them, the operating income of the second quarter was 290 million yuan, up 0.99% from the same period last year; the operating profit was 119 million yuan, up 5.35% from the same period last year; the net profit belonging to the owner of the parent company was 103 million yuan, up 2.28% from the same period last year; and basic earnings per share was 0.57 yuan.
Operating income fell compared with the same period last year, while gross profit margin rose year-on-year. During the reporting period, under the influence of national drug bidding and "limited resistance" policies, the company's operating income decreased slightly compared with the same period last year. The revenue from tablets mainly indapamide tablets accounted for 68.90%, and the operating income increased by only 5.55% compared with the same period last year. However, the gross profit margin rose 3.92 percentage points to 74.84%. The revenue from capsule products increased by 14.65% compared with the same period last year, while the revenue from injections and other products decreased by 31.72% and 10.25% respectively, which was the main reason for the decline in the overall operating income of the company. The change in revenue structure and the increase in the share of revenue from high gross margin products led to a year-on-year increase in the company's comprehensive gross profit margin of 5.57 percentage points to 67.96%.
The investment income promotes the profit level to rise slightly. The change in income structure and stagnation of income growth also increased the sales expense rate and management expense rate by 4.31 and 1.20 percentage points respectively compared with the same period last year, and the expense rate rose 4.74 percentage points to 29.15% during the period. The central pharmaceutical company acquired by the company holds a 17.56% stake in Tianshili Group, and the dividend received in the current period led to an increase in net investment income of 13.393 million yuan compared with the same period last year, resulting in a slight increase in profitability compared with the same period last year.
The variety is getting older, so we need to find a new engine. The company has "Shoubi Mountain", "Mei Fu", "Changmei" and other high-quality varieties related to hypotension, antifungal, asthma and other fields, among which the market share of indapamide tablets has always been absolutely advantageous. Over the years, the market share has exceeded 70%, ranking first in the country. On this basis, the company continues to develop a variety of dosage forms and formulations of compound preparations to firmly maintain the leading market share of this variety. However, with the increasing abundance of antihypertensive products in the market, the varieties of indapamide are gradually aging, and the data show that the dosage of indapamide in hospitals in Shanghai has gradually decreased in recent years, while the dosage of thiazide diuretics in combination with other antihypertensive drugs has increased because of its low price. And the company in the field of antihypertensive drugs outside the development of new products, in addition to the poor progress of the pneumonia vaccine project, there is still a lack of heavyweight new varieties.
The scale of the project under construction is large, and the capacity bottleneck needs to be solved urgently. The company's existing construction projects are being promoted at the same time. It includes 832 million yuan investment in the construction of subsidiary COVID-19 Pharmaceutical API and preparation project, 845 million yuan investment in the construction of new production base project, and 269 million yuan investment in Tianjin biochemical Pharmaceutical 23-valent pneumococcal polysaccharide vaccine project. Vaccine and other projects research and development, construction cycle is long, approval and marketing effect is not clear, whether the progress can meet expectations is still uncertain, and more additional investment also affects its profit expectations. The company's current production capacity is relatively tight, if the COVID-19 project capacity can not be put into use as soon as possible, the company's income and profit growth will be restricted.
Earnings forecast and rating: without taking into account the expected capacity release of the company's projects under construction, we estimate that the company's EPS for 2013-2015 is 1.86,2.17,2.43 yuan respectively, and the corresponding dynamic price-to-earnings ratio is 19 times, 16 times and 14 times respectively based on the latest closing price. The company's product market share is stable, there are many high-quality products, and the pharmaceutical business is growing steadily; the production capacity bottleneck needs to be solved urgently, and the company needs new varieties as the driving force for growth; at present, the valuation of the company is reasonable. To sum up, maintain the company's "overweight" investment rating.
Risk hints: 1) the risk of lower gross profit margin caused by the sharp reduction in general drug prices; 2) the risk that the progress of projects under construction is not as expected; 3) the risk that the effect of new drug research and development and market promotion is not up to expectations; and 4) the risk of capacity bottlenecks that cannot be solved in the short term.