Key points:
1. Leading distribution leaders of Chinese herbal medicines
The company is a leading Chinese herbal medicine distribution enterprise. In the early stages, it successively acquired specialized markets for Chinese herbal medicines such as Bozhou in Anhui, Puning in Guangdong, and Yulin in Guangxi, and built Kangmei Traditional Chinese Medicine Stores in many places. Currently, Kangmei's Chinese herbal medicine trading market accounts for about 75% of the national trading market. Kangmei's Chinese herbal medicine price index is the first national price index compiled by large private enterprises out of 12 national-level major commodity price indices deployed and compiled by the National Development and Reform Commission in 2012.
II. The policy benefits the most
The “Chinese Herbal Medicine Protection and Development Plan (2015-2020)” jointly formulated by the Ministry of Industry and Information Technology, the State Administration of Traditional Chinese Medicine and other ministries and departments was officially announced by the Chinese Government Network on April 27. This is China's first national plan for the protection and development of Chinese herbal medicines.
We believe that listed company Zhongkangmei Pharmaceutical has benefited the most from the introduction of the Chinese herbal medicine protection and development plan. The Chinese herbal medicine distribution development direction proposed in the plan is highly compatible with the company's current development situation; it can be described as tailor-made.
According to the plan, standardizing and modernizing the circulation of Chinese herbal medicines is the main task in the future. This can be seen as the future development trend of the circulation of Chinese herbal medicines.
In recent years, due to frequent problems with the quality of Chinese herbal medicines, the standardization and modernization of the circulation of Chinese herbal medicines and the construction of a traceability system for Chinese herbal medicines proposed to guarantee the quality of Chinese herbal medicines have been unanimously recognized by the government and industry associations. In this context, requiring local governments to support a small number of leading enterprises and the concentration of the Chinese herbal medicine distribution market to a small number of leading enterprises has also become an inevitable trend. In particular, the “Plan” proposes to build a modern Chinese herbal medicine warehousing and logistics center to support the construction of e-commerce trading platforms and modern logistics distribution systems. This is also an inevitable trend where only a few leading enterprises have resource support, and Kangmei, as China Leading companies in the distribution of medicinal herbs have long been at the forefront of the industry in the above fields, so they have benefited the most.
In the early stages, the company successively acquired specialized trading markets for Chinese herbal medicines such as Bozhou in Anhui, Puning in Guangdong, and Yulin in Guangxi, built Kangmei Chinese Medicine stores in many places, and independently developed Chinese medicine distribution systems. Kangmei's Chinese herbal medicine trading market accounts for about 75% of the national trading market.
“Kangmei Traditional Chinese Medicine Network” is the first batch of e-commerce demonstration platforms for Chinese herbal medicines by the Ministry of Commerce. It integrates the herbal medicine price index, herbal medicine information consultation, and electronic trading of Chinese herbal medicines.
Kangmei Chinese Herbal Medicine Bulk Trading Platform (Kangmei e-Medicinal Valley) is an e-commerce platform that targets bulk trading of Chinese herbal medicines. At the beginning of 2015, e-Medicine Valley's average daily turnover had already exceeded 1 billion yuan.
Whether judging from planning or modernization, in the field of Chinese herbal medicine distribution, the company has a unique first-mover advantage and leading advantage, so it is expected to become Alibaba in the field of Chinese herbal medicines.
IV. Investment Strategy
The company's 2015-2017 EPS is expected to be 1.51, 1.95, and 2.45 yuan respectively, and the corresponding PE is 24.0, 18.6, and 14.8 times respectively. Currently, the company's valuation is low in the industry, giving the company a “buy” rating.