Events:
The company issued an annual report: in 2018, the company achieved an income of 31.303 billion yuan, an increase of 8.65% over the same period last year; a net profit of 264 million yuan, an increase of 13.70% over the same period last year; a net profit of 244 million yuan, an increase of 17.87% over the same period last year; and an EPS of 0.26 yuan per share. 1.00 yuan (including tax) will be distributed for every 10 shares.
Main points of investment:
Income grew steadily, and Anhui and Fujian regained the momentum of growth.
The income of Q4 in 2018 is 8.05 billion yuan, which is the highest for the whole year. From the perspective of quarterly income, it is basically stable. In 2018, the revenue of wholesale business was 29.888 billion yuan, an increase of 9.50% over the same period last year, which was much higher than that of 17 years (2.90%). It was mainly related to the resumption of income growth in Anhui and Fujian, of which Anhui income was 7.075 billion yuan, an increase of 18.55% over the same period last year. Fujian income was 4.506 billion yuan, an increase of 10.89% over the same period last year In addition, Hubei continues to maintain rapid growth, with revenue of 2.817 billion yuan in 2018, an increase of 21.13% over the same period last year. On the retail side, revenue reached 1.212 billion yuan in 2018, down 7.30% from the same period last year, mainly related to the liberalization of health insurance in relevant regions and the intensification of mergers and acquisitions in the industry. In addition, the revenue of smaller e-commerce and logistics businesses in 2018 was 93 million yuan and 6 million yuan respectively, down 10.22% and 34.92% from the same period last year.
The gross profit margin has increased and the expense rate has increased during the period.
In 2018, the company's comprehensive gross profit margin was 6.61%, up 0.28% from the same period last year and 0.22% from the previous year, mainly due to the fact that the gross profit margin of the wholesale business further increased by 0.25% to 5.71% year-on-year with the increase in scale. Although the revenue of the retail, e-commerce and logistics businesses declined, the gross profit margin was well controlled, increasing by 0.05%, 4.77% and 4.59% respectively over the same period last year. In terms of expenses, the rates of sales expenses, management expenses and financial expenses were 2.63%, 1.21% and 1.11% respectively, an increase of 0.11%, 0.04% and 0.08% over the same period last year, among which the sales expenses were mainly related to the increase in the company's labor costs and asset depreciation amortization fees; the management expenses were caused by the increase in labor costs and R & D investment; and the financial expenses were related to the expansion of financing scale.
We will further improve the construction of regional networks and consolidate the development of the main industry.
The company continues to promote the construction of the market network, and completed the equity acquisition of Nanjing East China Pharmaceutical and Nanjing Jinling Pharmacy in 2018, further integrating pharmaceutical wholesale and retail resources. In addition, Nanjing Pharmaceutical headquarters is used as the provincial platform, aiming at the original blank area, new molecular companies have been set up in Changzhou, Taizhou, Suzhou, Lianyungang and Zhenjiang, Jiangsu Province, and the regional market coverage has been effectively improved. in 2018, a total of 6055 new effective customers were added to medical institutions and retail terminals, an increase of 29.34% over the same period last year. Hefei Regional Medical and Nursing Integration Project registered Anhui Tianxing Wisdom Pension Center Co., Ltd. and the "traditional Chinese Medicine Culture and Health Industry Center" jointly built by the company and Jiangsu Hospital of traditional Chinese Medicine, as well as PBM chronic disease management project through the Nanjing medical reform benchmark hospital and other new business, the continuous promotion of the new model, all provide new opportunities and growth points for the company's sustainable development.
Maintain the recommended rating.
We expect the company's EPS from 2019 to 2021 to be 0.30,0.35,0.38 yuan, and the current valuation level is low. Taking into account the advantages of the company's regional business leaders and steady growth in performance, the company maintains a "recommended" rating.
Risk Tips:
Internal integration risk; price reduction leads to lower gross profit margin risk; costs rise too fast and so on.
