The company released semi-annual report, income, return net profit and deduction of non-return net profit + 5.96%, 65.17% and + 67.13%, respectively. The income of the drug manufacturing business with higher gross profit margin grows rapidly, and the company's management expenses are controlled reasonably, which leads to the improvement of profitability. In the future, driven by the rapid growth of sales of AdenosylMethionine preparations and API exports, we look forward to the release of profits from the company's pharmaceutical business and maintain the "prudent recommendation-A rating".
The gross profit margin rose in the second quarter and profits increased rapidly. The company's 17Q2 revenue was 630 million, + 8.99% compared with the same period last year, and the net profit was 31.71 million yuan, + 77.75% compared with the same period last year, achieving rapid growth. 17Q2 gross profit margin was 18.43%, up 3.71% from the same period last year. We estimate that it is mainly due to the increase in the share of revenue in the pharmaceutical manufacturing business with higher gross profit margin in the second quarter. 17Q2 sales expenses are + 50.46% year-on-year, with a rapid growth; in the same period, management expenses are-16.80% year-on-year, with good control.
17H1 profits were significantly driven by the second quarter. The company's 17H1 revenue is 1.254 billion yuan, + 5.96% compared with the same period last year; the net profit is 42.68 million yuan, + 65.17% compared with the same period last year; excluding the influence of interest, the net profit is + 48% year-on-year. The company's 17H1 gross profit margin is 18.65%, which is + 2.58% year-on-year. We estimate that this is mainly due to the increase in the proportion of revenue from the pharmaceutical business with higher gross profit margin in the second quarter. The sales expenses are + 20% compared with the same period last year; the management expenses are-2.16% compared with the same period last year, and the increase is reasonable.
Pharmaceutical business: the income of 17H1 parent company (pharmaceutical wholesale business) is 844 million yuan, + 3.91% compared with the same period last year, and the gross profit margin is 5.15%, down 0.48% from the same period last year. We estimate that the company's distribution business is subject to the scale of the business, and the gross profit margin is relatively low, and the gross profit margin has declined recently under the influence of the two-vote system, secondary bargaining and other policies. However, the parent company has realized the growth of profits through the effective control of expenses. The business income of traditional Chinese medicine and prepared pieces of traditional Chinese medicine is 120 million yuan, which is + 13.43% compared with the same period last year. It should be noted that due to the increase in retail sales of prepared pieces of traditional Chinese medicine, the statistical caliber is not comparable with the wholesale business data of Chinese medicinal materials and prepared pieces of traditional Chinese medicine last year. In terms of profitability, 17H1, a subsidiary of Chinese herbal medicines, has an income of 76.76 million yuan and a net profit of 6.79 million yuan, which is significantly higher than that of the same period last year (the annual income of 16 years is 84.7 million yuan, and the net profit is 7.5 million yuan). The 17H1 income of chain subsidiaries (pharmaceutical retail business) is 231 million yuan, + 12.72% compared with the same period last year, and the net profit is 10.07 million yuan, + 22.06% compared with the same period last year. We judge that the growth rate of net profit is faster than that of income because of the optimization of variety structure and the realization of cost control by increasing labor efficiency.
Pharmaceutical industry: we estimate that due to the arrangement of current expenses, the net profit of the pharmaceutical business has declined compared with the same period last year.
17H1, a pharmaceutical subsidiary, earned 211 million yuan, + 26.80% year-on-year, 31.56% gross profit, + 0.47% year-on-year, and net profit 8.7 million yuan, down 31.76% from the same period last year. The performance of the API business is outstanding, with 17H1 revenue of 109 million yuan, + 29.92% compared with the same period last year, and gross profit margin of 24.60%, + 3.11% year-on-year. Mainly exported sisomicin and netilmicin raw materials benefited from stricter domestic environmental protection. 17H1 export revenue was 25 million yuan, + 114.36% over the same period last year, and gross profit margin was 37.58%, an increase of + 6.80% over the same period last year. The 17H1 income of the preparation business was 98.93 million yuan, + 23.49% compared with the same period last year; the gross profit margin was 39.29%, down 1.93% from the same period last year. We estimate that 17H1 AdenosylMethionine sales are about 10 million yuan.
Yuezi Center: homologous Health is expected to make a profit in 17 years, and expansion is imminent. The subsidiary company has an income of 5.37 million yuan and a net profit of 830000 yuan (a loss of 1.34 million yuan in 16 years). We expect it to make a profit in 17 years. The first monthly center of the company has been on the right track, and the opening of the second has entered the stage of site selection.
Maintain the "prudent recommendation-A rating". In 17-19, net profit is expected to increase by 38%, 30% and 24% respectively, corresponding to EPS of 0.19,0.24 and 0.30 yuan respectively. We expect the release of AdenosylMethionine after the solution of the process problem and the increase in the volume and price of rice star API exports, we are optimistic about the gradual release of the company's profit space in the future, and maintain the "prudent recommendation-A" rating.
Risk tips: the implementation of the two-vote system in the company's downstream customer loss; industrial product sales do not meet expectations.
