Event: the company issued a semi-annual report performance forecast for 2017. during the reporting period, the net profit was 1.91-201 million yuan, an increase of 0% over the same period last year.
Core viewpoints
The performance forecast is in line with expectations and is expected to maintain a low growth rate for the whole year. During the reporting period, the company's performance forecast revealed that the return net profit increased by 0-5%, in line with the market and our expectations. The company's main product Tanreqing injection declined in the second half of 15 years and gradually stabilized in 16 years. At present, 17H1 sales remain stable. Affected by the pharmaceutical industry and market environment, there is great pressure on the sales of traditional Chinese medicine injection products. However, we believe that the company's main products have passed the low point of growth and entered a state of slow and steady growth, and it is expected that the full-year performance will continue to grow at a low rate.
The main product Tanreqing will become a series of products to promote the company's performance growth. The company develops a series of products around the core product Tanreqing injection, including capsule, oral liquid, children's 5ml dosage form and atomization research. Among them, Tanreqing capsule has been on the market for 15 years, the oral liquid is in the Ⅲ phase clinical study, and the children's dosage form is improving the supplementary approval opinions. We believe that the launch of a series of products will effectively fill and expand the current blank market and promote the company's performance growth.
Actively build a new product echelon, antineoplastic drugs may enter the harvest period. Through purchase and cooperative development, the company has successively obtained new drugs under development, such as Youxinding capsule, Dinggui Oil soft capsule, Shufeng Zhitong capsule and Huadan Anshen Mix. at present, Youxinding capsule is in the stage of IIb clinical research, the other three varieties are in the stage of Ⅲ clinical research, and the echelon of new products is gradually formed. In addition, the company also cooperated with Shanghai Yizhong Biology to develop "Paclitaxel Micelle for injection"; to increase investment in Shanghai Goebard Biology, and to obtain the priority purchase right of "laminin for injection". At present, Duranamine is in the stage of supplementary study in phase III clinical trials, and paclitaxel micelles are in the stage of phase III clinical studies, both of which may quickly enter the harvest period.
Financial forecasts and investment suggestions
We expect the company to achieve a net profit of $319 million in 2017-2019 (the original forecast was $325 million), corresponding to an EPS of $0.28, $0.30, and $0.32, giving the company a 17-year price-to-earnings ratio of 31 times its average valuation and a target price of $8.68, maintaining a "buy" rating.
Risk hint
If the company's new drug development and approval progress is not as expected, it will have a certain impact on the company's long-term development.