Item:
The company released its 2017 semi-annual report on the evening of July 25. During the reporting period, the company achieved an operating income of 222 million yuan, an increase of 22.92% over the same period last year, and a net profit of 34.71 million yuan, an increase of 18.40% over the same period last year. The company's first-half results continued to maintain the momentum of rapid growth, in line with our expectations.
Main viewpoints
1. The income of core varieties grew faster than expected, driving the overall performance to maintain the momentum of rapid growth.
During the reporting period, the company's marketing strategy of further strengthening market construction, increasing market investment, expanding and penetrating the main market achieved initial results. The core variety "Foci" brand Liuwei Dihuang pills achieved sales revenue of 50.69 million yuan, an increase of 48.49% over the same period last year, exceeding our previous expectations, and led the company's overall business income to achieve a rapid growth of 22.92% over the same period last year, reaching 222 million yuan. Although sales expenses increased by 33.06% compared with the same period last year due to increased market investment, the company's comprehensive gross profit margin remained stable at about 29%, while the management expense rate further dropped to less than 9%. The financial expense rate continues to remain negative due to the improvement in the efficiency of idle capital management and control, resulting in a net profit of 34.71 million yuan after deduction, an increase of 18.40% over the same period last year. The company's operating income and net profit both maintained a rapid growth momentum of about 20%, in line with our previous expectations.
two。 The new plant will be put into production soon in the second half of the year, and the research project is progressing smoothly.
The Foci Pharmaceutical Science and Technology Industrial Park project invested by the company in Lanzhou New area has completed all the main projects, the construction progress of the follow-up supporting projects is as expected, and the equipment is being installed one after another, and it is expected that the GMP certification will be obtained before the end of the year and officially put into production. The scheduled commissioning of the new production area will formally solve the capacity bottleneck that has plagued the company for many years, and the release of production capacity will promote the company's performance to achieve further rapid growth in the future. At the same time, the "standardization project of rhubarb and other six kinds of traditional Chinese medicine slices" led by the company has started the construction of the planting base, and the "300 traditional Chinese medicine formula granule technology transfer project" of Lanzhou Chemical Institute is also carrying out the research on relevant varieties, technology and quality standards. Once the supervision of traditional Chinese medicine formula particles is liberalized in the northwest region, the company is expected to seize the market opportunity by virtue of years of industry accumulation.
3. Investment advice:
From 2017 to 2019, we expect the company to achieve operating income of 429 million yuan, 600 million yuan and 840 million yuan, and net profit of 74 million yuan, 96 million yuan and 118 million yuan, corresponding to earnings per share of 0.15,0.19 and 0.23 yuan, respectively, and corresponding PE of 63 times, 49 times and 40 times, respectively.
4. Risk Tips:
The production capacity of the new factory area is not as high as expected; the marketing promotion is not as expected.
