Key points of investment
Incident: The company announced its 2017 interim results report on the evening of August 25.
The reviews are as follows:
Financial expenses have dragged down performance, and the steady increase in vacuum blood collection has narrowed performance losses. The company released the 2017 H1 performance report, with revenue of 235 million yuan, a year-on-year increase of 4.88%, a year-on-year increase of 0.13 million, a year-on-year increase of -9.31%, corresponding to Eps of 0.04, specific Q2 revenue of 126 million, a year-on-year increase of 5.7%, a year-on-year increase of 15.6%, and a year-on-year increase of 0.07 million, a year-on-year increase of -4% over the previous year. Looking at business revenue, vacuum blood collection systems accounted for 57%, and revenue increased 7.48% year-on-year. The decline in the company's performance was mainly due to Shenzhen Yanghe's current investment income (-2 million) The decrease compared to the same period last year and the increase in corporate financial expenses (102 million, an increase of 83% over the previous year). Property expenses were mainly due to the increase in interest on the company's payable bonds.
Continue to increase research and development and promote the medical “product+service” strategy in an orderly manner. The company has been in a year of transformation for the past three years. There has been a lot of investment in R&D. The long certification cycle for some products has put some pressure on performance, but it has not affected the company's development strategy from a single medical device manufacturer to a large medical group of “medical products+medical services”. The company combines “digital medicine”, “mobile medicine”, and “telemedicine” with its offline medical service resources to create a truly patient-centered, integrated online and offline (O2O) medical service solution, continuously improving the user experience: during the reporting period, Guangzhou Qiaohui adopted continuous technology and quality improvements. The ability to maintain customer service relationships shows a business model that continues to grow steadily. The accelerated formation of overall hospital digitization solutions helps the company transform its product business into a project business and greatly increase customer stickiness.
The actual controller plans to increase its holdings by 1 to 10 billion yuan, demonstrating confidence in future development. The company was in a stage of historical change and rapid development in 2017. Based on confidence in the company's future development prospects, the actual controller, Mr. Deng Guanhua, and senior management of the company plan to increase their stock holdings by 1 billion yuan within the next 24 months from April 26, 2017 (the current market capitalization is only 3.4 billion dollars, 2.9%-29% of the total share capital) and promise not to reduce their holdings within 6 months.
Profit forecast: Based on the company's leading position in the vacuum blood collection field and the new “medical product+medical service” model created in the future, the company's short-term performance pressure will not affect medium- to long-term endogenous and epitaxial advancement. We forecast that 17/18 revenue in the next two years will be 586 million and 676 million yuan respectively, and the net profit of the mother will be 4839 million and 67.09 million respectively, up 59% and 39% from the previous year, corresponding to EPS 0.16 and 0.22; we gave the company 84PE in 17, corresponding target price of 13.44 yuan to maintain the “increase in holdings” rating.
Risk warning events: risk of expansion in the medical service sector; risk of extended mergers and acquisitions; risk of sales in overseas markets