Events:
The company released its 2018 annual report. In 2018, the company's operating income was 689 million yuan, an increase of 24.14% over the same period last year, and the net profit of returning to the mother was 102 million yuan, an increase of 14.18% over the same period last year, deducting the net profit of 99 million yuan, an increase of 17.85% over the same period last year. At the same time, the company issued a revised announcement on the performance forecast for the first quarter of 2019, raising the estimated net profit of 2019Q1 to 12.5636 million yuan-14.9566 million yuan, an increase of 5% 25% over the same period last year.
Event comments:
The operating cash flow improved, and the medical rehabilitation equipment plate grew at a high speed. In 2018, the company achieved revenue of 689 million yuan (year-on-year + 24.14%) and gross profit margin of 41.87% (year-on-year + 1.69Pct). From a sub-sector point of view, the revenue of the pharmaceutical bioautomation sector is 524 million yuan (year-on-year + 17.86%), and the gross profit margin is 32.71% (year-on-year-1.19Pct). The rehabilitation medical device sector achieved revenue of 165 million yuan (year-on-year + 49.44%), accounting for 23.94% of the total revenue, and the gross profit margin reached 70.97% (year-on-year + 5.49Pct). The pressure on the company's cash flow eased somewhat in 2018, and the net inflow of operating cash flow increased to 14.3547 million yuan from-21.6577 million yuan in 2017, mainly due to the increase in cash inflow from operating activities in the reporting period.
The performance commitment of the subsidiary is completed, and the extension M & A deepens the strategy of "one body, two wings, two-wheel drive". In 2017, the company acquired long Zhijie and Bo Rihong and entered the field of rehabilitation medical devices and packaging. Long Zhijie achieved non-return net profit of 53.2108 million yuan in 2018, exceeding the performance commitment of 651500 yuan; Bo Rihong achieved non-return net profit of 15.6921 million yuan in 2018, exceeding the performance commitment of 692100 yuan. Long Zhijie and Bo Rihong both successfully fulfilled their performance commitments. it shows that the company has a strong ability to integrate mergers and acquisitions. In 2018, the company controlled Zhejiang Jinan Pharmaceutical Machine (55% in April 2018) and entered the traditional Chinese medicine market, while its subsidiary long Zhijie held Guangzhou Shi Rui Medical (80% in March 2018) to expand its business to the field of maternity rehabilitation. The four acquisitions / holdings in recent years have demonstrated the company's strategic path of gradually extending the industrial chain through an epitaxial development path, combined with first-mover advantages and endogenous growth in the fields of pharmaceuticals, health food and intelligent equipment. The company is expected to achieve long-term sustainable growth under the background of industrial information / intelligence and population aging.
Investment in R & D has increased steadily, and intellectual property rights have achieved fruitful results. In recent years, the company has increased its research and development efforts in the pharmaceutical biological automation plate and the medical rehabilitation equipment plate, extending the industrial chain to high value-added areas. In 2018, the company invested 37.304 million yuan in R & D (+ 30.54% compared with the same period last year), accounting for 5.41% of the operating income. In addition, all the funds invested in R & D were spent. By the end of 2018, the company has a total of 301 R & D personnel, including 20 invention patents, 158 utility model patents, 41 appearance patents and 72 software copyright.
Investment advice:
We have updated the company's performance forecasts for 2019 and 2020, and added the performance forecast for 2021. We estimate that the company's net profit from 2019 to 2021 will be 1.19 yuan / 1.37 yuan / 154 million yuan respectively, the corresponding EPS will be 0.44 amp 0.50 RMB 0.57 yuan, and the corresponding EPS E will be 154 million times that of 26-23-20. Considering that the company's customer base is stable, orders continue to increase, and subsidiaries long Zhijie and Bo Rihong have successfully fulfilled their performance commitments in 2018, the company's controlling shares Jinan Pharmaceutical Machine and Shi Rui Medical have entered the market of traditional Chinese medicine and maternity devices, with a year-on-year increase in R & D investment and fruitful intellectual property rights. We maintain its "overweight" rating.
Risk Tips:
The development of rehabilitation medical devices is not as expected; market competition aggravates the risk; goodwill impairment risk.