Events:
The company announced "the motion on the plan to invest 1.6 billion yuan in the construction of Kangmei Puning traditional Chinese Medicine Industrial Park", "the proposal on the planned investment of 1.4 billion yuan in the construction of Kangmei Kunming Great Health Industrial Park", "the proposal on the planned investment of 7.7 billion yuan in the construction of Kangmei Wisdom Pharmacy", "the motion on the planned investment of 2.8 billion yuan in the construction of Kangmei Wisdom Pharmacy Cabinet Project" and so on.
Main points:
Throughout the development history of Kangmei, we will find that the management of the company is very forward-looking:
The leading position of traditional Chinese medicine has been gradually established (2002-2012): the company began to distribute the prepared pieces of traditional Chinese medicine in 2002, entered the trade of traditional Chinese medicine in 2006, and began to lay out the whole industry chain of traditional Chinese medicine in 2007. gradually establish the leading position of traditional Chinese medicine.
The layout of the terminal ecosystem (from 2012 to the present): the consumption attributes of some valuable traditional Chinese medicine and the fragmented market of traditional Chinese medicine gradually let the management realize that the future of the company lies in the terminal. At first, the company tried direct selling and pharmacy trusteeship, the former in the consumer market outside health insurance, while the latter in the hospital channel with the largest proportion of drug revenue; later, superimposed Internet factors, on the basis of pharmacy trusteeship, the company created the first "smart pharmacy" model to achieve prescription outflow in subdivided areas; since then, the company has explored medical services and acquired a number of high-quality hospitals. Now, as the business model of the wisdom pharmacy is gradually mature and the growth logic has been straightened out, the company plans to invest 10.5 billion funds into the wisdom pharmacy and the derivative project of the wisdom pharmacy, the wisdom pharmacy cabinet, and the company's terminal ecosystem will be gradually improved. take the lead in the layout of the terminal.
So, knowing that the investment layout in the company's management history is very reliable, let's first take a look at the details of this series of investments announced by the company:
1. Wisdom Pharmacy (7.7 billion): the city central pharmacy, 48 central pharmacy and 5 satellite pharmacy with 15 wisdom pharmacies to be built across the country, with an investment deadline of 3 years.
2. Smart medicine cabinets (2.8 billion): to be placed in public spaces such as residential areas, hotels, schools, airports, office buildings, subway stations, pedestrian streets, etc., it is estimated that a total of about 50000 smart medicine cabinets need to be put in, with a planned investment completion period of 3 years. As the terminal extension service entity of the wisdom pharmacy, the wisdom pharmacy cabinet takes the automatic medicine vending machine as the offline entity to realize the comprehensive one-stop service of medication consultation, remote diagnosis and treatment, OTC drug self-help purchase, prescription medicine and traditional Chinese medicine decoction, scheduled delivery to home, etc., and provide 24-hour self-help purchase of drugs such as family basic planning drugs, emergency drugs and so on. The equipment integrates cameras, touch monitors and measuring devices such as body temperature, blood pressure and heart rate, and realizes comprehensive pharmaceutical services such as remote diagnosis and treatment and medication guidance with the help of network technology and Internet of things technology. And take the vending machine as the mobile terminal entrance, relying on Kangmei e-commerce, intelligent prescription platform, smart pharmacy, logistics and distribution, customized delivery cabinets, etc., to provide consumers with safe, fast, controllable and traceable drug distribution door-to-door services. specific services include: offline drug sales, online booking, comprehensive pharmaceutical services, storage, insurance, drug replacement, advertising media.
3. Puning traditional Chinese Medicine Industrial Park (1.6 billion), Kunming Great Health Industrial Park (1.4 billion):
Puning traditional Chinese Medicine Industrial Park: after completion, it will increase the annual output of about 20,000 tons of traditional Chinese medicine slices and about 25 million (bottles / boxes) of health food; the inventory of goods in the warehousing and logistics center will be about 1 million pieces, supporting the circulation of drugs of about 6 billion / year; the new annual output value of traditional Chinese medicine is about 3.01 billion yuan.
Kunming Great Health Industrial Park: after completion, it will increase the annual output of about 10,000 tons of traditional Chinese medicine slices and about 35 million (bottles / boxes) of health food; the preparation center will produce about 35 million (bottles / boxes) of preparations; and the inventory of goods in the warehousing and logistics center will be about 1 million pieces. the amount of supporting drug circulation is about 6 billion / year, and the new annual output value of traditional Chinese medicine is about 2.68 billion yuan.
The company's total investment of 13.5 billion this time covers the entire manufacturing-circulation-terminal industry chain, with no doubt the focus on the terminal, and the investment in manufacturing lies in the preparation of the terminal volume. The investment in circulation is in line with the company's strategic layout of building national circulation enterprises:
Wisdom pharmacy: at the right time, capital investment crushes over competitors. The company's first wisdom pharmacy in Guangzhou began operation in June 2015. In just three years, it has covered Beijing, Shanghai, Guangzhou, Shenzhen, Chengdu, Chongqing and other six places, with a daily prescription of 26000.
During these three years, the company has experienced the initial exploration period and bottleneck period (there have been policy bottlenecks in the process of promotion in Beijing), as well as the imitation of the smart pharmacy model by other competitors. Now, the business model has gradually matured, the growth logic has been straightened out, and there is no longer any hindrance at the policy level. The company's investment of 7.7 billion yuan to promote wisdom pharmacy in all directions is bound to quickly enclose the land and crush competitors.
The benefit of the project estimated by the company is 145 billion yuan per year, while the new revenue of the wisdom pharmacy is currently 70-80%. In view of the fact that there may be more overlap with the company's traditional channels of prepared pieces of traditional Chinese medicine after comprehensive promotion, we expect the peak new income to be 80-10.5 billion yuan in the future. with a net interest rate of 23%, the incremental net profit is expected to reach 18-2.4 billion yuan.
Wisdom medicine cabinet: the extension of the tentacles of wisdom pharmacy, the product of Internet + 's medical and health care. We believe that the smart medicine cabinet will be the last kilometer solution of the company's "Internet + Medical and Health", the high-density encirclement of densely populated areas (there are only 40-500000 pharmacies in the country. The company's 50,000 smart medicine cabinets are already very dense), interconnected high-frequency, second-highest sticky service (one person, one file). Any location can be connected to a doctor at any time), one-stop service (offline drug sales, online booking, comprehensive pharmaceutical services, storage, insurance, drug replacement, etc.), the follow-up is expected to become an important terminal port when prescription outflow is promoted, prescription transfer platform is established, and Internet medical care is more mature.
Puning traditional Chinese Medicine Industrial Park-Kunming Great Health Industrial Park: the production capacity of prepared pieces of traditional Chinese medicine has increased by 50% to meet future demand. The company's current production capacity of prepared pieces of traditional Chinese medicine is about 60,000 tons. This time, the project in Puning and Kunming has increased a total of 30,000 tons of production capacity of prepared pieces of traditional Chinese medicine, which will be able to meet the production demand of the company's wisdom pharmacy after comprehensive promotion. At the same time, the infrastructure level of the company's logistics warehousing will lay a solid foundation for the next growth of the company's pharmaceutical business sector.
Conclusion:
We expect the company's net profit from 2018 to 2020 to be 50.04,61.96 and 7.636 billion yuan, with a corresponding growth rate of 22.03%, 23.80% and 23.26%, corresponding to PE of 23x, 18x and 15x. The company's terminal ecosystem is gradually improved, and the smart pharmacy model can be released in the future. The company is approaching the inflection point of a new round of take-off and maintains a "highly recommended" rating.
Risk Tips:
The volume of wisdom pharmacy is not as expected; the outflow of prescription is not as good as expected.
