Events:
Hyundai Pharmaceutical released a report for the first quarter of 2018, saying that in 2018, Q1 achieved operating income of 3.109 billion yuan, an increase of 31.36 percent over the same period last year; net profit belonging to shareholders of listed companies was 173 million yuan, up 8.64 percent over the same period last year; and net profit belonging to shareholders of listed companies excluding non-recurring profits and losses was 168 million yuan, an increase of 9.39 percent over the same period last year, and EPS was 0.16 yuan.
Viewpoint:
1. Q1 performance is in line with expectations, the operation is gradually on the right track, and the revenue is slightly higher than expected.
The company's first-quarter revenue was 3.109 billion yuan, an increase of 31.36% over the same period last year, and its net profit was 173 million, a growth rate of 8.64%. The revenue growth rate exceeded 30%, and the performance was in line with market expectations.
2017 is the first year after the restructuring of the company, the company's results in the four quarters in 2017 were 159 million, 198 million, 89 million and 70 million respectively, the base in the first and second quarters was too high, and it was seriously dragged down by subsidiaries and expenses in the third and fourth quarters. With the company's performance of 173 million in the first quarter of 2018 and good operating cash flow, our judgment is a positive sign that the operation is gradually on the right track.
The company's revenue exceeded 3 billion in a single quarter, and the company's revenue in the four quarters of 2017 was 2.37 billion, 2.21 billion, 2.007 billion and 1.93 billion, respectively. The revenue base in the first quarter of 2017 was the highest, with a growth of more than 30% on the basis of a high base. We judge that there is a high probability that Wechida has resumed normal production. (Wechida's annual income from normal production is about 3.5 billion, the annual revenue in 2017 is 2.5 billion, the average per quarter in 2017 is 600 million, and the average in a normal year is close to 900 million per quarter. The difference of 300 million has an impact on the company's quarterly revenue of about 10%. If Wichita is out of production, the company is unlikely to achieve 30 per cent revenue growth.
We believe that the reasons for the high revenue growth in the first quarter are as follows:
Preparation plate has a high growth rate, cefuroxime axetil quickly released after the first batch of consistency evaluation, other key varieties including nifedipine, methylprednisolone and so on have obvious high-speed growth. The first batch of cefuroxime axetil tablets passed the consistency evaluation and did a lot of market work. On April 10th, the order will be led by consistency evaluation varieties, and a press conference will be held to drive more than 800 products to be officially released.
Raw material medicine plate Weiqida normal operation, and now the 6APA price is better. Now the price is more than 240, which is higher than the same period last year, which brings flexibility.
After the reorganization of the company, the overall layout of the company will continue to drive revenue-side growth in the future: the company's marketing is divided into five major areas, and the enterprises share sales channels after classification. The daily internal management of the five major plates takes the five vice presidents as the specific persons in charge of the five plates. Anti-infection, endocrine, cardio-cerebrovascular, tumor, API, hemp essence plate. Each sector has a leading enterprise, leading enterprises with subsidiaries to do the overall marketing layout of each plate. There is a similar (market, variety) coordinated promotion. The individual performance of the leaders in each sector is linked to the overall performance of the plate.
In terms of financial indicators, the company's sales expense rate is 26.84%, which is faster than that of the whole of last year (17.49%), and 175.93% year-on-year growth is much faster than the income growth rate, mainly due to the accelerated growth of the preparation sector, the company's increased product promotion efforts, and the increase in terminal channel fees; the management expense rate is 7.44%, which is lower than 11.42% for the whole of last year (3.98pp), and the company's cost reduction and efficiency effect is still reflected. The company's financial expenses are basically stable, with a comprehensive gross profit margin of 48.19%, a substantial increase compared with 43.33% for the whole of last year. On the one hand, there is the impact of the two-vote system, but it is mainly due to the rapid growth of the preparation sector that has driven the company's overall gross profit margin. The company's gross profit margin is expected to continue to rise in the future.
2. Looking forward to 2018, pay attention to the consistency evaluation of preparation plate, the release of new medical insurance varieties and the follow-up changes of API plate.
2017 is the first year after the reorganization of the company, which is seriously affected by the raw material drugs and the failure of the restructuring company to meet its performance commitments. But in the long run, the company is positioned as a platform for the national pharmaceutical industry. The company has a large number of high-quality varieties, new medical insurance varieties, consistency evaluation varieties, and there is huge room for improvement in the future. At the same time, the API sector was seriously lower than expected in 2017, so we should continue to pay attention to the production and operation of the company's API sector.
The logic of the company's future growth is as follows:
The new capacity is put into production to further consolidate the position of the "chemical medicine platform": the project has an investment of 1.45 billion yuan, with a production capacity of 5.5 billion tablets / tablets / bags / bottles, and is expected to contribute nearly 3 billion of the income scale in the future, providing a guarantee for sustained growth.
Consistency evaluation: the company currently carries out consistency evaluation of more than 60 varieties. The first batch of cefuroxime axetil has passed the consistency evaluation.
Carding and integration of existing varieties: after the completion of the reorganization, the company has 21 products worth more than 100 million yuan. Through the integration of resources, resources will be allocated more efficiently in the future, and the disorderly product layout scattered in various factories will be reasonably planned and integrated. The echelon position of modern pharmaceuticals in key areas will be more stable.
Health insurance catalogue flexibility: the company and its subsidiaries, there are a number of new products into the health insurance catalogue. The new products in the health insurance catalogue will have a positive impact on the company, especially the exclusive products such as dextromethorphan sustained release suspension, minapram tablets and Jinye Baidu granules, which are expected to release volume in the future and make a positive contribution to the company's profits.
API: Haimen is expected to reverse losses, 6-APA, 7-ACA, penicillin industrial salt raw materials contribute elasticity.
Extension: as a chemical platform, the company's expectation of extension is still strong.
We expect that after the completion of the reorganization, the company, as a chemical platform under the National Pharmaceutical Co., Ltd., is expected to continue to improve its operating efficiency. It is estimated that the net profit from 2018 to 2020 will be 713 million yuan, 886 million yuan and 1.05 billion yuan, respectively, with a corresponding growth rate of 38.24%, 24.24%, 18.47%, 0.64 yuan, 0.80 yuan, and 0.95 yuan, respectively (excluding the cancellation and thickening of 53.5 million of the shares that did not meet the performance commitment for the time being), and the corresponding PE is 17x, 14x, 12x respectively. Maintain the "highly recommended" rating.
Risk Tips:
Recombination and integration is lower than expected, and water needle and antibiotics are limited.
