Main points of investment
Event: the company released its annual report in 2017. from January to December 2017, the company achieved an income of 921 million yuan, an increase of 46.74% over the same period last year, and a net profit of 93.85 million yuan, up 36.17% from a year earlier.
Endogenous steady growth + epitaxial mergers and acquisitions landed, and the company's performance showed high growth: from a quarterly point of view, the company's Q4 in 2017 achieved operating income of 303 million yuan, an increase of 79% over the same period last year, and a net profit of 38.4668 million yuan, up 101.36% over the same period last year. the company performed well in the fourth quarter. The company's performance achieved rapid growth in 2017, on the one hand, due to the stable endogenous growth, on the other hand, the performance of channel extension mergers and acquisitions gradually appeared. In terms of gross profit margin, the company's gross profit margin in 2017 was 33.68%, down 1.15PCT from the same period last year. In terms of net interest rate, the company's net interest rate in 2017 was 11.58%, down 0.14PCT from the same period last year. In terms of period expenses, the company's sales expenses were 80.92 million yuan, up 58.83% from the same period last year; management expenses were 72.43 million yuan, up 44.18% from the same period last year; and financial expenses were 9.81 million yuan, up 19.14% from the same period last year. The corresponding sales expense rate, administrative expense rate and financial expense rate are 8.79% (+ 0.67PCT), 7.87% (- 0.14PCT) and 1.07% (- 0.25PCT), respectively.
The channel layout continues to increase, and the SPD business is officially launched: in 2017, the company actively carried out channel distribution through self-construction and acquisition. The company's channel layout has gradually expanded from the advantage of the two lakes to the southeast coast, the west and the northeast, and has successively obtained contracts in Shandong, Henan, Jiangxi, Hebei, Inner Mongolia and other new business areas. When the company chooses the contract partners in the channel layout, most of them have good business resources locally, which ensures the smooth expansion of the company's business in the new region. In 2017, the company made strategic contracts with China Resources Pharmaceuticals and China Resources Phoenix in Shandong, Henan, Hubei and other places. In Shandong, the company has obtained five contracts in about a year and made rapid progress. At the same time, the company actively innovates its business model on the basis of the original IVD intensive service, expanding its business scope from the original intensive business of the laboratory department to the overall supply, procurement, management, distribution and centralized settlement of medical consumables, and innovates a new SPD business model. On the one hand, SPD business expands the purchasing scale and profit volume of a single hospital, on the other hand, it further enhances the service attribute and customer stickiness through deep participation in hospital management. We believe that the company has long-term experience in intensive supply and has obvious advantages in SPD business expansion. Up to now, SPD business has been successfully landed in Inner Mongolia and other places.
Actively expand upstream high-quality suppliers, focusing on opening downstream hospital customers: the company has become its first-class agent in China or some provinces by establishing strategic cooperation with well-known large-scale suppliers of in vitro diagnostic products at home and abroad, including Siemens, German BE, Austrian TC, Merier, Becton Dickinson & Co, Kehua Biology, Mindray, etc., through annual large-scale procurement to reduce procurement costs, unit cost has a certain advantage. During the reporting period, the company also cooperated with Caprico to localize the flow reagents, establish the production, sales and supply system of Caprico brand flow products in China, increase the asset ratio and further improve the structure of the company's products. Downstream customers, the company's intensive business has covered nearly 60 customers, through signing long-term (6-8 years, long 10 years) business contracts with customers to ensure the sustained and stable growth of the company's performance. During the reporting period, the company's collection business income was 742 million yuan, accounting for 80.64%. We believe that with the continuous promotion of the company's collection business, the proportion of collection business is expected to further increase.
Investment advice: we believe that 2018 is the year of the company's business layout, and it will be harvested gradually after 2018. with the endogenous growth and the gradual landing of new projects, the company's performance will rise sharply. we expect the company's collection business to grow by more than 50% in 2018, and the gross profit margin is expected to stabilize gradually. We forecast that the company's earnings per share from 2018 to 2020 will be 1.85 yuan, 2.67 yuan and 3.52 yuan respectively.
Risk hints: Channel expansion is not up to expectations, competition intensifies, price reduction risk, policy risk.