Item:
The company released its 2017 semi-annual report on the evening of August 18. During the reporting period, the company achieved operating income of 1.952 billion yuan, an increase of 13.08% over the same period last year; at the same time, the net profit of returning to the mother was 184 million yuan, an increase of 6.54% over the same period last year. If the impact of non-recurrent profit and loss was taken into account, the net profit of the company after deducting non-recurrent income was 171 million yuan, down 3.36% from the same period last year. In addition, the company realized 278 million yuan in cash flow from operating activities, an increase of 73.43% over the same period last year.
Main viewpoints
1. Eddie's bidding price reduction is a drag on income growth. During the reporting period, Lobab continued to maintain high growth. During the reporting period, the company's pillar industry prescription drug business achieved operating income of 1.515 billion yuan, an increase of 6.15% over the same period last year, an increase of 0.77% over the same period last year, slightly lower than market expectations, while the sales expense rate was the same as that of 2016. As the company's single product with the largest share of revenue, Aidi injection has continuously confirmed the lowest national price in drug tenders around the country this year, which has had a great impact on revenue growth. However, with the good momentum of lifting restrictions on the use of the new version of the health insurance catalogue, it is expected that both income and net profit will exceed 100% during the reporting period, and it is expected to become a rising star of platinum drugs. We counted the latest bid winning situation of Aidi injection in various regions of the country and attached it at the end of the report. According to the PDB database, 34 areas have won the bid for Aidi injection, including 27 provinces and municipalities directly under the Central Government and 7 military regions. The lowest price in the country is 21.85 yuan / 10ml/, which has been confirmed in 10 provinces and municipalities directly under the Central Government, especially since the beginning of this year, the traditional advantageous regions of Sichuan, Beijing, Jiangsu, Guangdong and Guizhou have successively confirmed the lowest prices in the country, which had a great impact on the income growth of Aidi injection and dragged down the growth rate of the company's main business income to a certain extent. However, another major variety of the company, Lobab, benefited from the lifting of clinical use restrictions in the new health insurance catalogue, with a net profit of 46.8046 million yuan during the reporting period, an increase of 105.45% over the same period last year. We expect that the growth rate of revenue and net profit of Lobaplatin in the first half of the year will be similar. As a rising star of the third generation platinum drugs, the broad-spectrum antineoplastic drug Lobaplatin with fewer side effects is expected to maintain a high growth momentum in the next few years and become another revenue pillar of the company after Adi injection. On the whole, with the end of medical insurance bidding in key areas, the impact of bidding price reduction on Aidi injection is expected to hit bottom, while the high growth momentum of Lobaplatin is expected to be sustained and strengthened, and the company's pharmaceutical sector is building a bottom.
two。 The ecological chain of oncology diagnosis and treatment services is steadily advancing and is expected to become another pillar of the company's performance during the reporting period, the company's medical services business achieved business income of 359 million yuan, an increase of 93.22% over the same period last year, with an income share of 18.40%, an increase of 4.95% over the whole of 2016, which is surprising. However, due to the rapid increase in the share of medical services revenue, the company's comprehensive gross profit margin fell slightly to 73.47%, down 2.99 percentage points from the whole of 2016. The company's development strategy of "one platform, two major supports and three models" built in the ecological chain of oncology diagnosis and treatment services has achieved initial results. by the end of the reporting period, the number of approved beds in the company's hospitals has reached 1380, the number of oncology treatment center projects has reached 27, and the number of doctors' groups has reached 7. At the same time, the company has signed some projects that are expected to land quickly this year, adding momentum to the company's medical service business. Looking to the future, the company's focus on building the ecological chain of oncology diagnosis and treatment services is expected to continue to maintain the momentum of rapid growth and become the biggest contributor to the company's performance elasticity.
3. Investment advice:
We expect the company to achieve operating income of 40.94 yuan, 4.744 billion yuan and 5.674 billion yuan from 2017 to 2019, and realize net profit of 475 million yuan, 548 million yuan and 719 million yuan respectively, corresponding to net profit per share of 0.60,0.69 and 0.91 yuan, respectively. the corresponding price-to-earnings ratio is 23 times, 20 times and 15 times, respectively.
4. Risk Tips:
The risk that Loplatin sales are not up to expectations and health insurance control fees lead to slower-than-expected growth of pharmaceutical business, and the risk that the expansion of the ecological chain of oncology diagnosis and treatment services does not meet expectations.