Revenue growth slowed slightly in the first quarter, and net profit increased by 10.99% compared with the same period last year.
In the first quarter of 2019, the company realized operating income of 271 million yuan (- 7.56%), net profit of 57 million yuan (+ 10.99%) belonging to shareholders of listed companies, and net profit of 42 million yuan (- 17.86%) after deduction. The net operating cash flow in the first quarter was 11.15 million yuan, an increase of 96.83 million yuan over the same period last year, mainly due to an increase of 173.996 million yuan in cash and tax rebates received by the company from the same period last year. The monetary fund decreased by 89.3381 million yuan, or 71.37%, compared with the beginning of the period, mainly because the company paid 64.3759 million yuan for the end of the project and equipment for the new traditional Chinese medicine industrial park and traditional Chinese medicine technology research and development center during the reporting period.
In 2019, the company will continue to focus on the four business sectors of "classic Chinese medicine + high-quality traditional Chinese medicine + health wine + refined prepared slices".
Increase market expansion efforts, increase product market share and terminal sales rate in 2018 the company's pharmaceutical industry revenue of 1.494 billion yuan (+ 37.14%), gross profit margin is 83.95%; of which, revenue of traditional Chinese medicine products is 1.281 billion yuan (+ 34.83%), gross profit margin is 83.20%; revenue of high-quality traditional Chinese medicine products is 213 million yuan (+ 52.93%), gross profit margin is 88.49%. The main reason is that the company continues to strengthen the integration of internal and external advantage resources, increase strategic cooperation with regional leading businesses and top 100 chains, and increase product market share and terminal mobile sales rate. In 2018, the revenue of health wine was 52.5558 million (+ 106.49%), the gross profit margin was 68.73%, and the gross profit margin increased by 6.93% over the same period last year, mainly because the company continued to develop the market potential in key areas and increased the supply price of new products.
The R & D expenditure has increased sharply compared with the same period last year, and the sales expense rate has been well controlled.
The company's R & D expenditure in the first quarter was 12 million yuan, an increase of 207.68% over the same period last year, accounting for 0.71% of operating income, mainly because the company's R & D projects increased by 15 projects over the same period last year. The first quarter sales expenses were 113 million yuan (- 16.41%), and the sales expense rate was 41.66%. In the first quarter, the management expenses were 25 million yuan (- 13.99%), the management expenses rate was 9.12%, the financial expenses were 6 million yuan (+ 100.57%), and the financial expenses rate was 2.31%.
Valuation and rating
The company continues to strengthen the integration of internal and external resources of medicine, business and KA. By the end of 2018, the company's products have covered nearly 150000 chain stores across the country, including nearly 40000 management terminals. We expect 2019 to be an important year for the company to strengthen terminal mobile sales and improve operating cash flow, the company will further improve the market layout and marketing system construction, and effectively enhance the market share and terminal mobile sales rate of products. We expect EPS to be 1.44,1.90 and 2.34 yuan respectively from 2019 to 2021, maintaining a "buy" rating.
Risk tips: 1. The terminal turnover is lower than expected, which leads to the continuous increase of accounts receivable. The multi-channel promotion model leads to higher sales expenses of the company; 3. The release of new capacity is not as fast as expected.