Main points of investment
Items:
According to the company's semi-annual report, the revenue in the first half of 2017 was 360 million yuan, an increase of 13.44% over the same period last year, the net profit attributable to the company was 50.72 million yuan, down 10.84% from the same period last year, and the net profit after deducting non-profit was 49.72 million yuan, down 13.10% from the same period last year. The first-half results were in line with expectations.
Among them, Q2 achieved revenue of 189 million yuan in a single quarter, an increase of 18.01% over the same period last year, and a net profit of 26.29 million attributable, down 22.26% from the same period last year.
Peace viewpoint:
Asset impairment losses and increased R & D investment are a drag on performance. In the first half of the year, the company's revenue increased by 13%, while profits fell by 11%, mainly for two reasons. First of all, Mengzhou Company and Huisheng Company have a total impairment loss of 14.59 million yuan in fixed assets, which has an impact on net profit of 13.73 million yuan. Secondly, due to the increase of R & D investment in drug consistency evaluation, as well as the R & D project of Mengzhou Company, the total R & D investment increased by 11 million yuan. Excluding the above two factors, profits grew by nearly 30% in the first half of the year.
Environmental protection inspection storm starts again, VB2 prices are expected to continue to strengthen. In the first half of the year, the revenue of the company's API business (mainly VB2) was 299 million yuan, an increase of 14.02% over the same period last year, and the gross profit margin was 49.39%, which was basically the same as that of the same period last year. Since the beginning of this year, the price of VB2 has dropped from 265 yuan / kg to 155 yuan / kg at the end of June. However, driven by the storm of environmental protection inspection, it quickly rose by 50% from the bottom. At present, the company has resumed the quotation, and the market price has reached 237.5 yuan / kg. VB2 competition pattern is good, we judge that the momentum of future growth is sufficient, and the performance in the second half of the year is expected to exceed expectations.
The change in management demonstrates the company's determination to become bigger and stronger. The company announced that after the resignation of the former chairman, Mr. Gong Daoyi, Ms. Wang Pin acted as the chairman, and recommended by the major shareholder Changtou Group, elected an Jing and Yang Lin as directors. Among them, an Jing Dong, only 34 years old, once served as an assistant to the chairman of Renfu Pharmaceutical Group, while Wang Xuehai, chairman of Renfu Pharmaceutical Group, was hired as an external director of Changzhou Investment Group in 2015. This personnel change is of great significance. Renfu Pharmaceutical is especially famous for being good at epitaxial mergers and acquisitions. As a state-owned enterprise, professional managers with good background are recommended to join the board of directors, which reflects that it attaches great importance to the company and demonstrates its determination to become bigger and stronger in the future.
VB2 price strength and great flexibility, management changes to send a positive signal, continue to "recommend". Benefiting from the promotion of environmental protection verification, the price of VB2, the company's main product, continues to strengthen, and the performance is expected to exceed expectations and have great flexibility. At the same time, high-level personnel changes release a positive signal, and the company ushered in a good opportunity for performance reversal and business upgrading. From 2017 to 2019, the EPS is expected to be 0.74,0.89,1.07 yuan, maintaining the "recommended" rating, with a target price of 22 yuan.
Risk hint: price risk, management risk.