Event

In 2017, the annual report of the company achieved an income of 920 million yuan, a net profit of 94 million yuan, and a non-return net profit of 86 million yuan, up 47%, 36% and 28% respectively over the same period last year.

Analysis

Excellent performance in the fourth quarter: according to the annual report in the fourth quarter, the company achieved an income of 303 million yuan and a net profit of 38.47 million yuan, an increase of more than 100% compared with the same period last year and month-on-month growth. At the same time, this expansion rate is sustained, according to the 2018 first quarter results forecast, the company will continue to maintain an excellent growth rate.

The number of terminals continues to grow and the regional layout continues to expand: the revenue from intensive marketing and services in medical inspection accounts for 80.64% of the business income in 2017, and the intensive business covers more than 60 terminals, and the number of terminals is growing rapidly. In 2017, 14 new holding subsidiaries were established, 10 companies were transferred or increased capital holding and shareholding companies, and at the same time, business strategic cooperation was carried out with China Resources Pharmaceutical and China Resources Phoenix in Shandong, Henan, Hubei and other places. the regional layout has rapidly expanded from the two lakes to the southeast coast, west and northeast, and the landing of the new regional contract is expected to be clear.

Upstream bargaining made a breakthrough: in 2017, the company strived for supply chain advantages through in-depth cooperation, renegotiation and channel mergers and acquisitions in supply chain integration, and the supply prices of active suppliers of 47 international and domestic brands further declined. the value of the company's platform has been gradually confirmed.

Cut into SPD supply chain management, enrich the source of income: the company acquires shares in a large supply chain, cuts into the field of SPD, and provides integrated services such as drug, consumable materials, diagnostic reagents, equipment supply, procurement, management, distribution, centralized settlement and so on. Through SPD, the company deeply participates in hospital management, enhances service attributes, enhances customer stickiness, and is conducive to the coordination of integrated services of supply, logistics, maintenance and quality control. Enrich and expand income at the same time.

The company received approval for a non-public offering in December 2017, with a financing amount of no more than 1.052 billion yuan. if it can be successfully landed, it will effectively supplement the company's cash reserves and help the company achieve sustainable expansion.

Profit adjustment

We are optimistic about testing the development trend of the intensive industry, regardless of the impact of non-public offerings, and considering that the newly established / M & A subsidiaries are expected to land new business, we predict that the company's EPS will be 1.917, 2.634 and 3.363 yuan from 2018 to 2020, an increase of 46%, 37% and 28% over the same period last year. Maintain the "overweight" rating.

Risk hint

The contract signed by the hospital is not up to expectations; the insufficient talent reserve affects the expansion; the scale expansion leads to the expansion of the operating net cash flow gap; the policy price reduction pressure; the stock price pressure caused by the lifting of equity ban in October 2017.

The ability of endogenous growth is considerable

In 2017, the company established / merged 21 subsidiaries, and the consolidated sales income was 177.9453 million yuan in the reporting period, accounting for 19.33% of the company's sales revenue in that year; excluding this effect, the company's endogenous income increased by about 18.4%.

According to the equity investment and statement profit announced by the company, we estimate that after removing the consolidation factor, the company's non-return profit is about 75.21 million yuan, an increase of 12% over the same period last year.

Therefore, no matter in terms of revenue or profit, the company has considerable endogenous growth ability.