Main points of investment
Items:
The company released its 2017 annual report: revenue reached 921 million yuan, an increase of 46.74% over the same period last year; net profit attributable to 93.8474 million yuan, an increase of 36.17% over the same period last year; and net profit attributable to non-deduction was 86.3004 million yuan, an increase of 28.17% over the same period last year, basically in line with expectations. At the same time, it is proposed to increase 15 shares for every 10 shares and pay out 1 yuan (including tax).
Peace viewpoint:
The gross profit margin has rebounded significantly and the expenses have been well controlled:
Growing revenue increases the company's ability to bargain with upstream manufacturers. The decline in gross profit margin caused by terminal price cuts in mid-2017 improved significantly in the third and fourth quarters. The gross profit margin for the whole year was 33.68%, a decrease of 1.14PP compared with the same period in 2016, of which Q4 realized a gross profit margin of 35.38%, a decrease of 0.49PP compared with the same period in 2016, which was significantly narrowed.
In terms of expense rate, the sales expense rate was 8.79%, an increase of 0.67PP over the same period last year; the management expense rate was 7.87%, down 0.14PP over the same period last year; after financing, the cash was relatively abundant, and the financial expense rate was 1.07%, which was 0.24PP lower than that of the same period last year, and the expenses were well controlled.
The company is currently in a period of scale expansion, with a large investment, and the net cash flow of operating activities in 2017 is-63.2522 million yuan. The corresponding inventory (mainly instruments and reagents that have not yet been shipped) increased by 125 million yuan.
2017 to achieve rapid expansion and basically complete the deployment of sites throughout the country:
2017 is a year of rapid expansion and nationalization of the company's business. Through cooperation and mergers and acquisitions, the company has entered Shandong, Jiangxi, Henan, Fujian, Chongqing, Guangdong, Tianjin, Beijing, Sichuan, Henan, Hebei and other provinces and cities. It has covered most of the provinces with high demand in the country.
At the end of 2017, the original value of fixed assets-intensive sales business assets was 339 million yuan, a net increase of 82 million yuan, an increase compared with the net added value of 67 million yuan in 2016. We believe that the company's intensive business expansion is still in the process of accelerating.
2018 deepen services to help medical institutions enhance their capabilities:
While expanding rapidly, the company still maintains a good business structure, accounting for 80.64% of intensive business, covering nearly 60 customers. In 2018, the company will promote SPD business as one of the strategic directions, more deeply involved in the hospital management system and expand the product line still IVD to low, high-value consumables and other areas, greatly increasing the supply of individual hospitals. For hospitals, SPD business can improve operational efficiency and reduce costs. Now that the drug bonus is cancelled in the hospital, the attractiveness of cost-cutting to the hospital has greatly increased.
The first SPD order was launched in Inner Mongolia in early February and is expected to be replicated in other regions.
With the continuous promotion of IVD intensification, the discourse power of leading enterprises will be further enhanced, and the "recommended" rating will be maintained: IVD intensive supply mode reduces intermediate circulation and hospital procurement costs, which is in line with the trend of two-vote system and terminal price reduction, and has continued to develop in the past year.
The leading enterprises in the industry expand with the help of capital power, and the market share continues to increase to promote the right to speak, so as to obtain more favorable agency prices. Selis has laid the foundation for the nationalization of the business over the past year and introduced the ability to deepen SPD services, which is expected to be reaped in 2018. Taking into account the dual improvement of the company's coverage of provinces and business, the EPS for 2018-2020 will be raised to 1.87 Universe 2.67 Universe 3.55 yuan (excluding undetermined M & A factors, the original forecast for 2018 Placement EPS will be 1.69 Placement 2.23 yuan in 2019), maintaining the "recommended" rating.
Risk Tips:
(1) Channel expansion is not as expected: the company's expansion plan across the country is not realized as scheduled, which may have a negative impact on performance.
(2) risk of price reduction: if the terminal price of the product is greatly reduced, the company may have a decline in gross profit margin because it is unable to transfer the pressure of price reduction to the upstream enterprises in time.
(3) Policy risk: if there are policies that are not conducive to the IVD industry or intensive supply, it may affect the performance of the company.