2017H1 performance is lower than expected.
Paulette announced 2017H1 results: operating income of 322 million yuan, an increase of 20.33% over the same period last year; net profit belonging to the parent company was 38.29 million yuan, an increase of 30.15% over the same period last year, corresponding to 0.26 yuan per share. The company deducted 30.78 million yuan in non-net profit, an increase of 12.57% over the same period last year. The company deducted non-performance growth lower than we had expected.
Trend of development
The guardianship sector is under pressure, and government subsidies affect non-recurrent gains and losses. The company's 2017H1 revenue and net profit attributable to the parent company increased by 20.33% and 30.15%, respectively. Factors such as a 9.42 million increase in government subsidies are the main factors affecting the non-recurrent nature of the company. Among them, the income of monitor products in the first half of the year was 997.58 million yuan, down 6% from the same period last year, and the gross profit margin was 47.05%, down 1.04% from the same period last year. At present, the competition in the domestic monitoring market is relatively fierce. With the promotion of the company's to c-end products, the company is expected to maintain a steady growth of about 5% in the future; the revenue from hemodialysis products is 223 million yuan, an increase of 34.46% over the same period last year; and the scale effect begins to show, with a gross profit margin of 34.46%, an increase of 2.06% over the same period last year.
Hemodialysis plate orderly development, wait and see the process of quantitative change. Through a series of mergers and acquisitions and independent research and development, the company has gradually laid out the whole industry chain of hemodialysis since 2012. Since 2017, the company has successively acquired Creddy and increased capital to enter the dialysate market in central China, and acquired a 49% stake in Shenbao Medical to further distribute the Shanghai channel, with the layout of production and sales gradually full. the gross profit has increased significantly; the company acquired Qingyuan Kanghua Hospital in 2016 and Xiantao Tongtai Hospital in 2017. In the future, taking the nephropathy specialist hospital as the starting point, driving the development of surrounding affiliated hospitals or hemodialysis rooms will open a market for the upstream products of the company.
The server is the key to scale, wait and see the development of nephropathy hospital model. The chain of service is the key to the scale of hemodialysis industry. the existing independent hemodialysis center and nephropathy hospital model have their own advantages and disadvantages. The company initially chooses the "junior college, small comprehensive" mode of nephropathy hospital, which is conducive to patient diversion and is not conducive to the early development of the industry. The future development model needs further observation.
Profit forecast
Taking into account the lower-than-expected growth of the guardianship sector in the first half of the year, we lowered our earnings per share forecasts for 2017 and 2018 by 3 per cent and 5 per cent respectively from RMB0.58and RMB0.74 to RMB0.57and Rmb0.71 respectively.
Valuation and suggestion
At present, the company's stock price corresponds to the 2017 / 2018 Pamp E as 44X/35X respectively. We maintained a neutral rating, but lowered our target price by 16.67% to 25.00 yuan, which is 0.4% upside from the current share price. The target price corresponding to the 2017 / 2018 Pswap E is 44Universe 35X.
Risk.
The merger and acquisition of nephropathy hospital is lower than expected, the development of chain hospital model is slow, and the performance of traditional monitoring products fluctuates greatly.