Events:
On April 27, the company released its annual report for 2017 and quarterly report for 2018: revenue in 2017 was 1.697 billion, down 39.3% from the same period last year; the net profit realized and deducted from non-return was 38 million and-37 million respectively. In the first quarter of 2018, revenue reached 518 million, an increase of 117.53% over the same period last year. The net profit of returning to home and deducting non-return net profit were 44 million and 43 million respectively.
Main points of investment:
The business divestiture reduces revenue, and the net profit of returning home increases greatly.
In 2017, the company's revenue fell 39.3% from the same period last year, mainly due to the divestiture of the original drug distribution business during the reporting period, directly leading to a 64.3% decline in revenue in the pharmaceutical sector as a whole. The net profit of returning home increased sharply in 2017 compared with the same period last year, mainly due to 1. 5%. The original chemical business due to urea, methanol products market average sales price warming, resulting in the company's chemical business operating profit increased compared with the same period last year; 2. The performance of the pharmaceutical manufacturing sector grew steadily, with revenue from the company's western medicine business reaching 390 million in 2017, an increase of 34% over the same period last year. Due to the transfer of subsidiaries, a large amount of investment income was recognized in 2017.
The chemical business has reversed, and the pharmaceutical business continues to grow steadily.
In 2017, the revenue of the company's urea products reached 654 million, down 20.08% from the same period last year. Due to the early capacity loss, the domestic urea production capacity gradually became stable. During the reporting period, the average sales price of the company's urea products increased by 22.05%. The revenue of methanol products reached 412 million, an increase of 32% over the same period last year, benefiting from the reversal and rebound of domestic methanol prices in 17 years. In 2017, the average sales price of methanol increased by 43.56% compared with the same period last year. The company's chemical sector business substantially reduced losses in 2017, and the trend of improving chemical business continued to the first quarter of this year. Sheng Jitang, the main body of pharmaceutical business, achieved revenue of 565 million in 17 years, an increase of 21.34% over the same period last year, and net profit of 174 million, an increase of 33.65% over the same period last year. Shengjitang's core products focus on a few treatment areas such as diabetes, with the rapid trend of population aging, the diabetes market will continue to grow in the future, and the company's pharmaceutical business performance growth is more sustainable.
Continue to dig deep into the field of diabetes and actively lay out the big health industry.
The company has 7 diabetes varieties approval documents, its products metformin enteric-coated tablets, glimepiride tablets, rosiglitazone hydrochloride tablets are classic hypoglycemic drugs, the market demand continues to grow. At the same time, the one-time evaluation of metformin enteric-coated tablets and glimepiride tablets is being carried out smoothly, in addition, acarbose and other related varieties are being studied. The company continues to dig deep into the field of diabetes treatment, enrich the product portfolio, and constantly improve the core competitive advantage in the field of diabetes treatment. In addition to the pharmaceutical business, the company has also invested in the Sheng Jitang Diabetes Hospital and Cancer Hospital projects, making use of the advantages of Sheng Jitang Pharmaceutical in the professional field of diabetes in the past 20 years. To build a demonstration base integrating medical treatment, medical research, clinical scientific research and popular science health care, the synergy effect of pharmaceutical business and health industry layout will gradually appear.
Profit forecast and investment advice:
It is expected that in 2018 and 2019, the company will achieve a net profit of 121 million and 147 million respectively, with a corresponding EPS of 0.07 yuan and 0.085 yuan respectively, and a current share price of 81 times and 67 times respectively. Be cautious and bullish, recommend it for the first time and give it a "overweight" rating.
Risk factors: the risk that the price of chemical products is lower than expected, and the risk of intensified competition in the market of diabetic products.
