This report is read as follows:
The company's three quarterly reports in 2017 revealed that the overall performance was slightly lower than expected and was still optimistic about the follow-up integration of the collectivized drug platform to tap the potential and maintain the overweight rating.
Main points of investment:
The performance is slightly lower than expected and the overweight rating is maintained. In the first three quarters, the company achieved operating income of 6.587 billion yuan, year-on-year-0.59%, return-to-home net profit of 446 million, year-on-year increase of 16.14%, deducted non-return net profit of 415 million yuan, year-on-year growth of 400.79%-1.82%, profit contribution of 89 million, slightly lower than expected. With the recovery of Wechida production capacity and product price elasticity, the fourth-quarter performance is expected to improve. We maintain EPS0.67/0.78/0.91 yuan in 2017-2019, the current price corresponds to 2018PE19X, maintain the overweight rating, and maintain the target price of 20.84 yuan.
Environmental production restrictions on Wichita are affected in the short term and are expected to continue to improve after the gradual resumption of production. Due to the environmental inspection in the second and third quarters, Wechida's production capacity has been reduced, affecting the current performance. With the environmental production restrictions of companies such as Wichita, Coren and Federal, the prices of 7-ACA, 6-APA and penicillin industrial salt continue to rise, and the performance is expected to continue to improve after the gradual resumption of production. Haimen is still expected to reverse its losses for the whole year despite a sharp reduction in losses in the first half of the year. Tianwei, Zhijun and wholeheartedly expect stable performance.
The expenditure of sales expenses is high, which affects the profits of the current period. The company's Q3 sales expenses were 380 million, an increase of 160 million over the same period last year, which greatly affected the profits of the current period, which is expected to be related to the recognition of more expenses in the third quarter and increased marketing. In terms of management expenses, Q3 decreased slightly compared with the same period last year, and management optimization is beginning to see results.
The follow-up potential of the collectivized drug platform is expected to be tapped step by step. Considering the resource integration value of the group drug platform, the growth potential is gradually released after management optimization, and achieve coordinated development with the group business platform. At present, more than 60 varieties of the company plan to carry out consistency evaluation, and many varieties have entered the new version of the medical insurance catalogue. under the superimposed price elasticity of raw materials, the follow-up performance is expected to be gradually improved.
Risk hint: group company integration is not as good as expected risk; product promotion is not as expected as expected risk.
