In the first half of 2017, the company achieved an operating income of 9.222 billion yuan, an increase of 45.00% over the same period last year, a net profit of 236 million yuan, an increase of 135.34% over the same period last year, and a non-net profit of 238 million yuan belonging to shareholders of listed companies, an increase of 130.88% over the same period last year.

Support the main points of rating

The speed of epitaxial mergers and acquisitions will be accelerated and the nationwide commercial layout will be expanded. In the first half of 2017, the company added more than 20 new drug and equipment circulation companies in the form of mergers and acquisitions and self-establishment, expanding outward on the basis of the original advantageous areas, seizing the tide of merger and integration of the circulation industry under the pressure of the two-vote system, and striving to become a leading enterprise in the pharmaceutical circulation region.

The endogenous growth is steady, and the equity incentive increases the internal motivation. With the maturity of the company's business model, the scale effect is gradually magnified, and the cost control is also effective. the cost of opening up the market in the early stage is gradually mature with the market, the expense rate continues to decline, and the profit growth rate is much faster than the income growth rate. At the same time, regional group companies have been set up in Shandong, Hubei, Anhui, Henan, Heilongjiang and Hunan provinces to improve their bargaining power in the process of bidding and centralized procurement, sort out the shares of regional subsidiaries and implement equity incentives to improve internal motivation.

A variety of financing channels provide financial support for the rapid development of the company. The company carries out multi-channel financing through corporate bonds, trust loans, medium-and short-term bonds, ABS and other ways to provide sufficient capital guarantee for the company's development, and the cash flow and asset-liability ratio will be significantly improved.

Main risks faced by rating

The risk that the speed of M & An is not as expected; the risk of extending the account period; the risk of related policies.

Valuation

The company speeds up the nationalization of horse racing enclosure, further speeds up mergers and acquisitions, and has a sound internal growth momentum. It is estimated that the net profit for 2017-2019 is 1.03 billion yuan, respectively, and the corresponding earnings per share is 0.29, 0.38 and 0.49 yuan respectively. Maintain the target price of 9.24 yuan, corresponding to 25 times 18-year price-to-earnings ratio, maintain the buy rating.