Key points of investment
I. Incidents:
The company released its report for the third quarter of 2017. The company's revenue for the first three quarters of 2017 was 6.587 billion yuan, a decrease of 0.59% over the previous year, net profit attributable to shareholders of the parent company was 446 million yuan, an increase of 16.14% over the previous year, and net profit attributable to shareholders of the parent company after deduction was 415 million yuan, an increase of 400.79% over the previous year.
Revenue for the third quarter was 2,007 million yuan, down 1.82% from the previous year, net profit attributable to the parent company was 89 million yuan, down 5.79% from the previous year, and net profit attributable to shareholders of the parent company after deduction was 608.392 million yuan, an increase of 350.43% over the previous year.
II. Our view:
The decline in the API sector and cost increases in the third quarter reduced the company's profit growth rate.
The company's revenue for the first three quarters of 2017 was 6.587 billion yuan, a year-on-year decrease of 0.59%, net profit attributable to shareholders of the parent company was 446 million yuan, an increase of 16.14% over the previous year, and net profit attributable to shareholders of the parent company after deduction was 415 million yuan, an increase of 400.79% over the previous year. Among them, revenue for the third quarter was 2,007 million yuan, a year-on-year decrease of 1.82%, net profit attributable to the parent company was 89 million yuan, an increase of 64.67% over the previous year, and net profit attributable to shareholders of the parent company after deduction was 608.392 million yuan, an increase of 350.43% over the previous year. Excluding non-recurring income, the company's profit situation declined. Affected by the decline in APIs and strengthened management, the company's gross margin increased.
3. Profit Forecast and Investment Rating:
In the short term, due to the company's combined platform performance and efficiency improvements, and the increase in API prices to increase the profits of its subsidiaries such as Wichida, we expect the company's net profit to the mother in 17-19 to be 821, 9.82, and 1,139 million yuan. EPS was 0.74 yuan, 0.88 yuan, and 1.03 yuan respectively, and the corresponding PE was 20.34X, 17.01X, 14.66. In line with the progress of the company's chemical platform integration and consistency evaluation, we maintain the company's “buy” rating.
4. Risk warning:
Antibiotic product sales fell short of expectations due to policies such as price fluctuations of APIs falling short of expectations, company consolidation progress falling short of expectations, and industry resistance restrictions.
