Core viewpoints
In 2018, the company realized income, net profit and deducted non-net profit of 31.006 billion, 1.821 billion and 1.016 billion yuan respectively, which was + 2.14%, + 17.6% and-10.99% respectively compared with the same period last year.
The marketing system was reformed and adjusted, and the performance was lower than expected. The company realized income, net profit and deducted non-net profit of 31.006 billion, 1.821 billion and 1.016 billion yuan respectively in 2018, which was + 2.14%, + 17.6% and-10.99% respectively compared with the same period last year. The slowdown in income growth is mainly due to the reduction of transfer business affected by the two-vote system, and the decline in non-net profit is mainly due to the fact that the company's marketing system reform is still in the process of adjustment, and the provision for impairment of Taifeng pharmaceutical goodwill is 92.9492 million yuan. Overall, the company's performance in 2018 was lower than expected.
All business sectors are under obvious pressure. The pharmaceutical industry sector was affected by the low opening to high opening of the "two-vote system" in 2018, and its operating income increased by 45.52% to 5.846 billion yuan compared with the same period last year, but the profit end was affected by the reform of the sales system, the increase in sales expenses and the rise in the price of raw materials for major products, and operating profit decreased by 3.56% to 640 million yuan. The pharmaceutical commercial sector reduced its allocation business under the influence of the "two-vote system". In 2018, the operating income was 19.448 billion yuan, down 2.97% from the same period last year. By increasing the proportion of gross profit business, the profit-making commercial sector maintained the level of the previous year and realized an operating profit of 624 million yuan. The income of the international trade sector in 2018 was 6.672 billion yuan, which was 4.68% lower than the same period last year due to the influence of the international market and the adjustment of the variety structure of some medical device business.
Fine investment promotion + "Dianqiang Netcom" strategy continues to promote, the performance is expected to recover. In 2018, the company's sales platform "Zhongjian Company" has been officially put into operation and began to undertake the sales of preparation products in the industrial sector. we believe that Zhongjian's fine investment model is expected to enhance the profitability of the industrial sector in the future. In the second half of 2018, the company has successively set up new subsidiaries in Dongguan, Huizhou, Jiangmen and Shenzhen in Guangdong Province, and acquired Essen Pharmaceutical and Baohe Hall in Henan Province. we believe that the company's business sector is expected to accelerate with the continuous promotion of the "Dianqiang Netcom" strategy.
Risk factors: M & An integration is not up to expectations, excessive competition leads to the decline of gross profit margin, and so on.
Downgrade to "overweight" rating. The company's industrial plate fine investment and commercial plate point strong Netcom strategy continues to advance, profitability is expected to continue to improve, revenue is expected to gradually recover. Considering that the short-term impact of the policy on the company is higher than expected, the company's EPS forecast for 2019-2020 is reduced to 1.43 yuan 1.53 yuan (the original forecast is 1.73 yuan 2.09 yuan), and the EPS forecast for 2021 is 1.79 yuan, downgraded to "overweight" rating.