Events:
The company issued a notice: it intends to issue 2.035 billion yuan of convertible bonds with a maturity of 6 years, and the conversion period starts from the first trading day six months after the end of the issuance of convertible bonds to the maturity date of convertible bonds.
Main points of investment:
Convertible bonds solve the problem of capital bottleneck. The company completes the merger and integration of Haimen base construction and Jiaozuo Rongsheng by the way of bank loan. the capital problem has always been the key factor restricting the company's industrial upgrading and extension of M & An integration. During the asset restructuring of the company from 2015 to 2017, it was proposed to increase financing by 1.51 billion yuan, but later, due to policy adjustment, the financing scale was reduced to 97.88 million yuan, and the capital problem remained unsolved. The issue of convertible bonds will solve the company's capital bottleneck, and it is expected that the financial pressure of the company will also be reduced after the conversion.
Financing to promote industrial upgrading, reserve extension power. The convertible bonds will be used for three construction projects and repay bank loans. Among them, the preparation project plans to invest 1.07 billion yuan to locate slow and controlled release and other high-end preparation varieties, standard reference to the export certification market, and is expected to explore and develop the international market in the future. The comprehensive utilization project of Wechida resources will upgrade and transform the sewage system to eliminate the risk of excessive discharge and limited production. The project period is expected to be 18 months. After putting into production, the environmental factors restricting the development of Wechida are expected to be effectively resolved. Convertible bond financing supplement the company's bank loans of about 610 million yuan, if the conversion, the company's asset-liability ratio will decline, a strong support for the company's extension integration.
The impact of Q3 shutdown is expected to recover gradually. In the third quarter, Weiqida stopped production and overhauled for a long time, the penicillin industry chain was seriously restricted by production capacity, and the performance was lower than we expected. Taking into account the current 6-APA transaction price has been raised to 230 yuan / kg, amoxicillin raised to 190 yuan / kg, Wichita production capacity is also basically restored. Q4 performance month-on-month performance is expected to recover significantly. At the same time, Haimens has obtained the approval of azithromycin, the API business is expected to further improve, Haimen base continues to reduce losses.
Profit forecast and investment rating: considering the impact of 6-APA production restrictions, we estimate that the company's EPS will be 0.64,0.73 and 0.88 yuan respectively from 2017 to 2019, with a current market capitalization of 13.7 billion yuan, corresponding to a PE of 16.86X in 2018. As the chemical pharmaceutical platform of Sinopharmaceutical Group, the company is expected to achieve breakthrough development and maintain buying rating through industrial and commercial linkage in the future.
Risk hints: the production limit time of environmental protection is longer than expected; the consistency evaluation is not as expected; the progress of convertible bond issuance and the construction of investment projects are not as expected; the uncertainty of the company's future performance.
