The company recently announced an investment plan of 13.5 billion yuan. We are optimistic about future project returns.
Key points to support ratings
The company recently issued a number of investment proposals. Projects include investing 1.6 billion yuan to build Kangmei Puning Traditional Chinese Medicine Industrial Park, 1.4 billion yuan to build Kangmei Kunming Health Industrial Park, 7.7 billion yuan to build Kangmei Smart Pharmacy, and 2.8 billion yuan to build Kangmei Smart Medicine Cabinet.
The company plans to invest in the construction of 15 smart pharmacies in urban central pharmacies, 48 central pharmacies, and 5 satellite pharmacies across the country. At the same time, 50,000 smart medicine cabinets will be placed in public spaces such as residential areas, hotels, schools, airports, office buildings, subway stations, and pedestrian streets. From all sides, smart pharmacies have entered a stage where the business model is becoming increasingly clear. Currently, it is also the stage where the company is rapidly replicating its business model in large numbers. Through rapid horse-racing circles, it is speeding up market seizure and building strong barriers to get rid of competitors' follow-ups. The significance of the large number and rapid deployment of smart pharmacies across the country for the company is not only increasing the market share of Chinese medicine tablets; at the same time, he is also building the foundation of the “Internet+Healthcare” C-side business model as a carrier for pharmaceutical services. Meanwhile, the smart medicine cabinet will form the last kilometer layout of the company's O2O medical service in a closed loop, forming a high-density encirclement of the community. High-frequency interactive user scenarios will gradually be formed, leading to a highly sticky 2C business model. However, after the completion of the Puning and Kunming Health Industrial Parks, the company's production capacity of traditional Chinese medicine tablets expanded by 50%, which will effectively guarantee the rapid growth of the tablet business.
The main risks faced by ratings
The risk of a shortage of talent in the context of rapid business expansion. The risk of capital costs rising in macroeconomic situations.
valuations
The company has entered a situation where the stronger the scale, the more growth points, the stronger the stronger the stronger. From a leader in the entire Chinese medicine industry to a leader in pharmaceutical distribution and service (online and offline), the company is building an “Internet+Healthcare” giant with a Chinese model. The business gradually evolved from a B2B model to a 2C business model. We raised our profit forecast. The estimated net profit for 18-20 was 5.259 billion yuan/6.708 billion yuan/8.579 billion yuan (+28.23%/27.55%/27.90% compared to the same period), and the EPS was 1.06/1.35/1.73 yuan respectively. The current stock price corresponding to PE is only 22/17/13 times, which is a relatively neutral type of pharmaceutical stock with large market capitalization. The 2019 PE was given 35 times, the reasonable market capitalization level was 234.8 billion yuan, and the reasonable stock price level was 44.1 yuan, maintaining the purchase rating.