Core ideas:
The homed net profit increased by 6.54% compared with the same period last year, and the performance was lower than expected.
According to the semi-annual report released by the company, the operating income, net profit and net profit after deducting non-return in the first half of the year were 1.952 billion yuan, 184 million yuan and 171 million yuan respectively, up 13.08% from the same period last year, 6.54% from the same period last year and 3.36% from the same period last year. In the second quarter, the company realized operating income, net profit and net profit of 1.021 billion yuan, 83 million yuan and 78 million yuan respectively, up 3.19% from the same period last year, down 7.89% from the same period last year and 20.55% from the same period last year. In the second quarter, the performance decreased significantly compared with the previous quarter, and the performance was lower than market expectations.
Core antineoplastic drugs are a drag on industrial growth, and the decline in gross profit margin affects profit performance ① in the first half of 2017, the company's revenue from prescription drugs reached 1.515 billion yuan, accounting for 77.64% of operating revenue, an increase of 6.15% over the same period last year. Among them, the income of antineoplastic drugs was 936 million yuan, accounting for 47.96% of business income, down 0.99% from the same period last year, significantly lower than the 10.68% growth rate in 2016, which is a drag on income growth as a core business segment. We expect the core product Eddie to decline and Lobaplatin to continue to grow rapidly. In other categories of ②, the income from cardiovascular and cerebrovascular drugs was 238 million yuan, an increase of 12.19% over the same period last year. Liqi Huoxue dropping pills and Dandenao Tongnao dropping pills are expected to grow rapidly.
The income from gynecological medication was 179 million yuan, an increase of 37.96% over the same period last year. The revenue of OTC products reached 76 million yuan, a sharp drop of 32.5% compared with the same period last year. ③ 's overall gross profit margin in the first half of the year was 73.47%, down 6.2pct from a year earlier, which is related to the rapid expansion of the company's medical services industry, most of which are not yet profitable.
Medical services continued to expand, with superimposed and tabulated factors growing rapidly in the first half of the year. In the first half of the year, the income from medical services reached 359 million yuan, an increase of 93.22% over the same period last year. Among the medical service subsidiaries, Guannan County people's Hospital made a net profit of 19.42 million yuan in the first half of the year, while Huainan Chaoyang Hospital made a net profit of 38.37 million yuan in the first half of the year. Other hospitals and doctor groups merged in the second half of 2016, resulting in a rapid year-on-year increase in apparent income, but most of the new mergers are not yet profitable.
It is expected that the performance in 17-19 will be 0.55 yuan per share, 0.72 yuan per share and 0.92 yuan per share, respectively. The company's new products have entered the health insurance catalogue. The industry expands to oncology specialist services, with great long-term potential, but profitability decreases in the short term. We downgrade our 17-year performance forecast. It is estimated that the EPS for 17-19 years will be 0.55 EPS 0.72 yuan per share (2016 EPS 0.49 yuan per share). Current prices correspond to PE times 25-19-15, maintaining a "buy" rating.
Risk hint
The risk of price reduction through bidding for core products; the risk of unsuccessful merger and acquisition
